when asked whether the united states should have a value added tack, white economic adviser paul volckers, it is not as tax sick an idea has it has been in the past. volcker also said if at the end of the day we need raise taxes we should raise taxes. steve moore join us. steve, i bet the democratic white house just about had a stroke on that one. is that letting the cat out of bag? is that idle chatter or something that is realistically on the table and everybody better get ready? >> not question a lot of liberal elements had long wanted taxes to pay for the new programs. >> greta: in addition to the income tax. >> that's the critical point. i'm sure viewers will say wait a minute i'm for a national sales tax if it is replacement for corporate and personal income tax. what is being put on the table here is a national sales tax. that's what a value added tax is. >> greta: it is a tax on every change in value of a product pushed on. >> if you bought a $300 iphone under 20% added value tack the cost might be $360. this major tax it hits the middle class. in addition to state sales taxes. a

paul volcker did this in the 1980s. if the wall street traders know the fed will make these itsy-bitsy changes, that's not restraint. that's what i want to end, because as we just heard from mary thompson and the wamu story, and we know now from history, this risky trading was a big part of the meltdown that taxpayers had to bail out. i want the fed to be interest rate cowboys. >> let me say that i think you're right, larry, that this quarter point us to death thing is wrong, and i think swift, strong action when rules deck at a time it, but let me warn you, the thing that caused the nasdaq to crash was the greenspan 50 basis point surprise hike. i'd much rather see the fed follow more of a taylor rule and let everybody, all participants and stakeholders -- >> i don't think the fed should be thinking about bailing out the stock market or -- >> you're absolutely right. >> they should be thinking about long-term -- in saying zero interest rate, and i'm saying the fed should be unpredictable, unanticipated, peter. >> and i

paul volcker said this bailout would not set a presidents but the markets knew it set a precedent and we got a new phrase in the financial industry if not in the public lexicon which was too big to fail. and the independent bankers association which represented small banks understood the imp cases of its president at the time warned these big bobcats have the ultimate anticompetitive government subsidy. they are too big to fail and regardless of how mismanaged they have -- when the government wants more of something it subsidizes it. if you want more corn, subsidized corn. if you want a financial crisis built up over decades based on the banks and other financial companies borrowing for the purpose of reckless speculation, then subsidize banks and other financial companies borrowing for the purpose of reckless speculation. and that is exactly what the government did with this new policy. banks and later other financial institutions could borrow at rates that they could not have otherwise borrowed at because their lenders knew this was, in effect, lending to the government but at a hig

his top economic advisor paul volcker says in a speech that it's on the table. i guarantee you they're looking at it because there's no way they can pay for all this spending. they've got to -- you can only tax the rich, the so-called rich, making over $200,000 a year, so much. and of course they're going to add all that fica tax to the so called rich starting in 2013, 2014. not indexed for inflation. that's like the minimal tax, which was put in place 30 years ago to make sure that nine ultra rich people in the country paid some. >> neil: fair enough, so so you think. you're arguing that they might not be considering it immediately now, but it is under consideration. the idea of a federal 5% sales tax, which would be a quarter of what the average is in europe, is under serious consideration if for no other reason than to pay for all this spending. >> absolutely. and do you see any modifications, simplification of the income tax, the 16th 16th amendment? no talk about having a flat tax that steve forbes and dick army promoted effectively and the national retail

as if that was not enough, others, including speaker nancy pelosi and obama economic adviser paul volcker, support a european-style value-added tax. higher

paul volcker floated it as blatant and open as it could be. i thought then all of america should have lined up and shot that trial balloon down. now we've got the president speaking about it being a novel idea for americans. we know the president has been actively engaged in supporting about anything that he can import from western europe including spain's cap and tax program as the model we should follow. we know that's a catastrophe. value added tax, catastrophe out of much of europe not all of europe. that's what i expect they are going to try to prepare the groundwork for. i don't know how they pay for obama care unless they do something like this value added tax which is insidious, regressive and taxes the people that have the least amount of income and gives government the maximum opportunity to maximize tax revenue. it is a horrible thing to think about in a free country. if we a vat tax it will be a big step towards the death knell of the liberty of a formerly free people. >> sean: it has been tried to europe and only resulted in lack

well, one economic adviser paul volcker seems to think it is a good idea. well, it is a vat-tax, right, john? >> well, it could be, maria. this is a long process of the obama administration trying to figure out how to come to terms in the long run with the debt and deficits that the united states is facing and one sign of the debate came today when paul volcker, the former fed chairman who is an adviser to president obama talked about the potential need to raise taxes of some sort to curb those deficits which policy people in both par i thes think that in the end that is what it will come down to. chairman volcker said there are several options to be undertaken. one is a carbon tax, and one is a broader-based energy tax or a vat tax or consumption tax, and if you look at what the administration is saying that what the u.s. economy needs in the long term is that it needs to consume less, and save more and invest more and export more, and consumption tax would be a step down the road, buts a sign of to political difficulty, i just left a briefing on white hou

dole and members of the finance committee met with paul volcker, and he said if you pass a big package that cuts the deficit by a specified amount, he would ease off on interest rates. that was the motive they had, and the members of the finance committee, particularly republicans, it took that as a challenge, and we put together in 1982, and tefra was the tax piece, but there was a spending cuts piece. it was the three-legged stool. it was tax increases, spending cuts, and interest savings. it did get enacted, and volcker cut interest rates and that broke the back on high interest rates. it was a remarkable payoff for the country. it was a political exercise. while the compromise with people, -- while he compromised with people, he put together that package without a single democratic vote in the senate. chairman rostenkowski passed it without a republican vote in the house. it was the democrats that supported it in the house, and the republicans in the senate. it was a remarkably bipartisan in a bicameral way, because both chairmen realize they have the responsibility of doing someth

former federal reserve chairman paul volcker was also there. the president spoke about the so-called volcker rule, which is likely to be included in the bill and proposes limits on risks banks can take as well as their size. >> it's a good case and i think he made it. there's agreement on that, a wide range of agreement. it's the centerpiece of the bill. >> reporter: on the floor of the new york stock exchange, some traders were all ears as the president made his plea for financial reform. others seemed uninterested, choosing instead to carry on with business as usual. u.b.s. floor trader art cashin said there is general support among his colleagues for change. >> we've got to find out how to correct the errors without throwing the baby out with the bath water. it worked very, very well up until some of the safeguards were ignored and some of the pieces fell apart. >> reporter: cashin also said getting financial reform done would be a helpful event for the stock market. >> it will clear up the uncertainty, we'll know how you have to deal, what

i guess this comes from paul volcker. good idea in your view? >> no. it's very popular in washington. it's popular with politicians because, as you know, a value-added tax disguise is most of the tax. it's a tax on each stage of production, and, therefore, consumers don't really know how much tax they are paying, so it's been very popular in europe. i don't think it's a good idea here in terms of knowing -- i think transparency should be the rule. also, it tends to be quite regressive. it is another form of a sales tax, and it does take a much bigger bite proportionally out of the salaries of people who are moderate means and out of people who are very large income earners. >> what about the other news of the week? chinese president hu will be in washington next week. we've got expectations that the president of china will discuss making china's currency more flexible. why is this important, and do you think it will happen? >> well, it's very important over the long term because unless chinese -- the chinese appreciate their currency, move it up relati

at the beginning of the 1980's, paul volcker, then chairman of the federal reserve board under president reagan, essentially put this country through a crushing recession, unemployment got to 10.8% but it did purge of the society from inflationary psychology and you had a gradual decline of inflation and gradual decline of interest rates that triggered a boom in the stock market and triggered really two decades of prolonged prosperity. and most of that, in my view, stemmed from the triumph over double digit inflation, which stabilized the economy and, like a set, led to much higher stock prices and home prices, but ultimately that prolonged and -- that prolonged prosperity gave rise to the plan into a crisis that broke in 2007 because people got complacent and careless. host: you continued this theme in a recent column march 22 in "the washington post." "the washington post." you sugge

recently i heard a lot of people in the last was greenspan talking about paul volcker's proposal rulethat these organizations should not be trading in their own accounts with our money but just as greenspan said the other day i agree with him but it just isn't practical you won't be able to separate ze accounts from the proprietary account of the bank, the personal trading to the other trading. others say you can't separate it. it sounds good but in the real world it won't work. do you think it would work? >> it certainly could be but i testify to the senate banking committee in february on this issue. there were a number of representatives of the industry fighting against it and all my left was john reed, the former head of citibank's who says he regrets putting together the size of citibank and he also said in his view you could impose this kind of restriction on proprietary trading for any large bank for example. now i think the deeper more troubling question is how much difference would make. what they find other ways to get around that and find other ways to take excessive risks?

congressional budget office is taking the lead from federal reserve chairman bern nan i can and paul volcker calling the national debt unstainable. is he predicting dire consequences if political leaders don't scale back spending, increase taxes or both. the report predicts an increase in public debt from $7.5 trillion at the end of 2009 to $20.3 trillion if president obama's fiscal budget is implemented as rin written. quote, cannot be solved through minor tinkering. what about it? >> you know what's interesting to me about that story is that we have -- some of us in the media have confused the tea party movement with being just a bunch of crazy people out there yelling racial epithets. i understand that's what we cover. i understand that happens at a certain level of the tea party movement. there's a lot of people in this country who are very concerned about the size of the deficit and the growing deficit. they don't belong to the tea party but their concerns are similar. >> you're exactly right. look what is happening in greece. today it looks like it's in danger of default. our deficit i

during the crisis that paul volcker had to deal with from '79 to '82 it was considered you know, major problem. the inflation got out of hand at 15% and he had to come in a do something and i guess the question is, how much did he have to sh writtenk the balance sheet -- shrink the balance sheet during those three years? >> not very much. he was focused on money growth in particular. so he wasn't clearly in same where we are now these large unused balances. i would point out he was focused on m 1 and m2 growth. m 1 and m2 are not doing anything now. they're very flat. it's just the base as you point out. >> excuse me, but the prout -- truth is during that time which was considered very tight money the monetary base was still growing during those three years the monetary base grew 31%. so my suggestion is, it might not be so easy you know to cut back because even in a midst of an inflationary crisis like that maybe 6 months or a year from now hn you decide to do something maybe there will be an increase in m 1 and m2 and then it lab different ballgame when you're dealing with this. but

why would the es seemed former fed chairman, paul volcker be advocating this? >> i think paul volcker and ben bernanke thrown tlu up their hands and say we're never going to tee see a president to reduce spending. we have to balance our budgets. we need new taxes. i think that is surrendering to the issue because i think the american people are going to fight this tooth and nail. i also believe that frankly, businesses, if they see the prospects of a vat. they are going to hold back on hiring and putting out new products. the uncertainty that, i think, is making this economic recovery so slow and so tepid, it will only continue. >> gregg: the prospect of a vat may discourage economic growth at this point. we're so on precipice, still. let me switch to something else. i couldn't help but notice your newspaper, "wall street journal" editorial page and the president's economic adviser larry sommers. editorial page argues if we continue to pay people for not working, hey, they're not going to work. it sounds pretty good but sommers makes a counter argument. expendi

now we got paul volcker talk about a national sales tax that almost has to be a certainty at this point. the only two pictures giuliani said this, he will join us later, the only two people he won't take pictures with at the white house are netanyahu and the dalai lama every other world dictator seems to get coddled by the administration. is america setting itself up for a dramatic decline economically and will the world have contempt for america as a sole super power? >> i think the two things are parallel and are part of why i would use the word dangerous. the fact they are talking about 10 trillion dollars of additional deficit over the next decade. must have of it will be owned by the chinese and saudi arabians you have to ask to what extent at an economic level are we going to nation a national security crisis. the fact they are determined to cripple our industry when everyone realizes having national security and energy keeping the money at home creating less expense energy here is vital to our economic future. combined with unilateral disarmament mindset. i think the term dangero

writ wri writers who articulate -- paul volcker said in the volcker rules, we should take apart these banks and dis aggregaaggregate power psh. >> but the bill doesn't do that. >> no, it doesn't. is it progress? yes. does it answer the problem? no. >> should they blow it up and start over? you know this stuff as well as anybody. >> do they need to go further than they have? absolutely. do they need -- the biggest issue rj four letters, tbtf -- too big to fail. they have explicit guarantees behind them so they can borrow. when they lose money it's on our shoulders. that asymmetry creates a desire for risk that is dangerous. that got us here in the first place. this bill does not go anywhere close to where it should go in terms of eliminating that asymmetry and this is where we should be looking at this. >> and you're a democrat. coming up, what may be next for eliot spitzer along with other things. as well as the question everyone is asking, will he run again? [ female announcer ] switch to the new and improved swiffer sweepervac, and you'll dump your old broom. but don't worry, he'll

why not make fed policy much more unpredictable in terms of its tightening like the paul volcker did in the 1980s. otherwise, it's a give away to wall street. >> so that's the legitimate criticism to me about the experience from 2003 to 2005, in particular. i think low rates were calculated risk that steve explained pretty well. the economy was otherwise not performing as well as it could be. it was a jobless recovery and more than that, early on, and then later on there was evident disinflation. >> hey, guys, let's not forget, 2007. i want to go back -- >> unpredictable fed. i want the market to be scared of the fed. i want the market to think the fed is some wild and crazy cowboy coming in that's going to shoot down these bubbles. that's the problem. no one is afraid of the fed any more. >> there's a school of thought at is by former boston fed president and she calls it constructive ambiguity and the idea is if you're somewhat ambiguous about policy, that ends up helping policy and not a lot of fans of that. >> i like that. an old friend of mine from the new york fed many, many ye

the deflationary will be behind us and that the real issue of inflation begins to rise which, paul volcker said, you cannot have a system where you have large deficits, but very large expansion in the monetary base, and not altogether inflation. it has never happened. >> what can the fed to do about some of these long-range problems? >> it is mainly out of the hands of the federal reserve in the sense that these are very deep- seated, political, cultural problems. what bothers me specifically is that in recent months we are exhibiting an absolute inability to cut anything. the c-17 which is a great cargo plane, we have too many of them according to the air force. they are trying to cut back and they are running into difficulties. the other day the space program had some cuts and everyone started to grumble. the thing which bothers me the most in this game playing is the issue of financing the consumer protection agency with federal reserve funds. the reason they are doing that is it appears to be unappropriated funds and it does not affect the budget deficit. that is not like getting pay-g

. >>> last week white house economic adviser paul volcker is saying the u.s. should follow europe's lead and institute a vat or value added tax. is he right? joining us now, former labor secretary and cnbc contributor. also former chairman of the council of economic advisers under president reagan. thanks to both of you for joining us. really quick before we get started, martin, let me start with you. you're a member of nber. they said today it is too early to call an end to the recession. a lot of private economists think it ended in june or july of last year. do you agree with that? >> i agree with the nbr's statement that we still don't have enough data to be sure either about the date or, in my judgment, about whether we are definitely out of a recession. >> does that mean you don't think we are out of recession yet? >> i think there's a risk of -- less of a risk than a month ago, but nevertheless, a risk, a that this economy could turn back down again. and if it did that sometime soon, i don't think we'd want to call the increase that we've seen in the la

white house economic adviser paul volcker suggested this week the united states should consider a value-added tax as a way to get the deficit under control and of course that brought a firestorm of reaction. the national republican senatorial campaign committee said, quote, it shouldn't surprise anyone that the obama white house would advocate a european-style tax to help finance their european-style government health-care plan. it's almost as if the democrats think the american people will forget that we're in this situation because of the reckless spending agenda. leonard burrman is a professor at syracuse university and dan mitchell is a senior fellow at the cato institute. gentlemen, good to have you with us today. i think we can all get on the same page that we can't have these skyrocketing deficits and something has to be done. everybody in washington is clearly on the same page on that one. mr. burrman, how would a national sales tax affect the treasury? would more money actually come in and would we be more of a solvent nation if we were to go down this way? >> well, there is some con

. >> what no one is talking about with the possible exception of paul volcker who i think gets this,s really scaling this back to where finance was. >> neither party is willing to let a big company go down, because the economy would collapse probably. here's the question. does barack obama tend to fight this slowly or quickly? would he rather have a summer of war with the republicans on this issue or a quick win in the next two weeks? what would he rather have? >> i think he rather fight this for a while. >> i disagree. quick win. supreme court nomination coming up. they want to do an energy bill. maybe harry reid wants to do immigration bill. >> take it while you can. >> they don't mind a couple days of debate. i think a quick victory then goes on to other things he wants to do. >> i like a good dispute. thank you eugene robinson and susan page. >>> guess whose new memoir is coming out soon, entitled "decision points." that's in the "sideshow." written by a man known as the decider. the question is who wrote it. everything is better with swanson broth in it. made with garden vegetab

and one of the people who put it out there is former fed chairman and president obama advisor paul volcker who was speaking for himself. >> chris: but she a top obama advisor. he said it's not as politically toxic as it once was. first, is he right? is it politically feasible? how would the president square that with the pledge not to raise any taxes on anyone making less than $250,000 a year? >> first, he couldn't. if you look at the v.a.t. as something put on top of the existing income tax structure, no. he can't. by the way, the president has now taken to saying he's not going to raise income tax on people under 250. >> chris: that's not what he said -- >> i know but in the last two speeches or so. >> oh, okay, then. >> i'm not saying it's okay, i'm just pointing it out. v.a.t. is a cash machine and regressive, giving both sides something to like and hate about it. the only way i imagine a v.a.t. tax enacted in a grand bargain with extremely deep, deep, deep income tax cuts. you can't put it on top of the existing system politically. and it couldn't happen until we had a huge debate abo

it restricts and this was the important point that former fed chairman paul volcker has stressed, it stresses the proprietary activity, some of the risky activities of these institutions, so, yes, this bill is a direct attack on too large to fail by making failure a possibility as it has to be in a market system, and by making these institutions much safer and much sounder. senator kaufman is exactly right. >> lastly, we only have a minute left, but there have been reports lately that you're thinking of leaving. i know you've said that the reports are not true but are you committed to staying in your current position throughout at least november 2012? >> jake, you know that in this town when it comes to personality stories, usually it's the case that those who talk don't know and those who know don't talk. >> well, you know -- >> i am having an enormously satisfying experience working with this president and that's what i'm committed to doing and serve at his pleasure. >> until november 2012? >> i serve at his -- >> assuming that he would like you to serve -- >> i serve at his pleasu

one of his top economic advisors paul volcker this week suggested that the u.s. have to consider it. but the president hasn't proposed that. but let me, if i may, go on to another subject. the day after the house passed healthcare reform, which i know is one of the issues that you're most incensed about, you went to the floor and filed, i believe it's the first piece of legislation that would repeal obama-care. question: how would you handle the 30 million americans or more that are currently uninsured? >> well, my bill is hr-4903. i encourage people go to michelebachmann.com to sign the petition to repeal obama-care. we can do it. i won't be an easy lift. it will be tough, but we have to retake majorities this fall in the house and the senate and two years from now have a new president. come february 2013, we can repeal obama-care. how would we take care of the 30,000 people -- >> chris: 30 million. >> sorry. thank you. 30 million people that don't have health insurance in the first thing that we should do is address the cost issue to make it more accessible for

maybe he's floating this idea the same way that paul vomer -- volcker mentioned this as a possibility. i think taxes will go up, we have a decifit, and the question is for whom, and that is something that would be a middle class tax hike. bill: you're agreeing with adam, to be clear here. >> well, i'm not agreeing in the sense that i don't think they're going to do it, and the other reason i don't think they're going to do it is that the senate just passed a nonbinding resolution, essentially saying, you know, that they're not going to even consider this, and it was overwhelmingly against the idea of a v.a.t. so i don't think there's even enough support on the hill. bill: it would be 85-13 in the senate, they took a resolution, the resolution says that a massive tax increase will cripple families on fixed incomes, and only further push back america's economic recovery. i want to play the sound bite, adam, and i'll let you respond to that, this from i believe october 2008, senator obama on the trail. >> how many people here make less than a quarter million dollars a year, raise your ha

order of 18% interest rates and dole and some other members of the finance committee met with paul volcker, the fed chairman of the time and he said if you pass a package that cuts the deficit by a specified amount, he would ease off on the interest rates and so that was the motive they had and the members of the finance committee in particular the republicans took upon that as a challenge, and we put together in 1982 -- tefra was mainly the tax piece there was a spending company called the three legged stool, the famous often talked about the three legged stool, and it was tax increases, spending cuts and interest savings which did get enacted and paul volcker did cut the interest rates and that put the back on the high interest rates that had remarkable pay off for the country. terrific cost and was a political exercise while he compromised with people. on that he put together tefra and that package with a single democratic vote in the senate. chairman past it without a republican vote so it was the democrats that supported the house and republicans in the senate up as though it was a re

we will hear from paul volcker and alan greenspan. that starts at 8:45 a.m. eastern. later, as a senate hearing on the annual budgets of the securities and exchange commission and cftc. the head of both the natural regulatory agencies will testify. live coverage at 2:30 eastern. >> sunday, a television analyst, author, and three-time presidential candidate pat buchanan on conservative i ideology. three hours with pat buchanan. sunday at noon eastern. host: california republican darrell issa is here to talk about the oversight of the securities and exchange commission, which is at the heart of the discussion. the suit that the sec filed against the firm. in general, what do you think about the job that the sec is doing? guest: this was one of the most unforgettable political move that the sec could have made. goldman sachs how things had they have a legitimate defense and believe they will prevail in court. having said that, the sec, released in the middle of the day this information. it is the largest suit in history, so by definition, the most controversial one to re

terms being tossed out, is this something akin to what's known as the volcker rule named after paul volckerr rule. it's basically a version of glass-steagall in which you say there are functions that aren't compatible. and it's basically like taking fireworks, fireworks are a good thing, but you don't store them in your living room. if they were accidentally set off, they'd burn down your house. high-risk lending doesn't belong in our lending banks because they have access to special taxpayer-insured deposits and windows from the fed where they get inexpensive funds to enable them to power up our economy by supporting our small businesses and families through loans, not for diverting into high-risk investigationing. jane: in some of our research your name came up as a potential sponsor of an amendment that would talk about limiting the size of banks going forward. are you for that? not for that? >> this is a sherrod brown amendment, and i do support it. it establishes caps on size so that any one institution is not so large that when it goes down, it takes our whole economy with it. you thi

. >> recently i've heard a lot of people talking about paul volcker's proposal rule that these organizations should not be trading in their own account with our money in just a screen said the other day i agree with them, but it just isn't practical. you won't be able to separate the account from the proprietary accounts of the bank, the personal trading to the other training. now i've heard others say, you can't separate it. sounds good, but in the real world it won't work. to you think it would work? >> yes, certainly could work. i testify to the banking committee on february and this issue. they remember us representatives of the big unit defining against an omnibus was john reese, the former head of citibank who says he regrets putting together the sizes get a bang. he also says in his view you could impose this kind of restriction on proprietary trading for any large bank, for example. i think the deeper more troubling question is how much difference that would make it what they find other ways to get around that? would they find other ways to take excessive and i'm sure they would. so

all the big guns in finance are saying exactly the same thing, whether it's ben bernanke or paul volcker, they're saying get a grip on this devment here's what i think we're going to do. there's going to be a middle class tax hike, we're going to start taxing what we spend, what we buy, the things that we buy. there's going to be more taxes on the rich, starting january 1st of next year, and i do believe that there's going to be some of this modification to social security, a later retirement age, and greater taxation of income for social security spending. it's a combination, but mostly, it's higher taxes, coming right at us. megyn: it's interesting these come out, stu, after the health care bill passes. now we have the administration officials coming out and saying we're up to our eyeballs in debt and it can't be sustained and taxes are going to have to go up, we're spending on programs, like social security is going to have to go down, or a combination of both. i mean, is this a result of the health care law, or is that just one of many factors? >> the health care law makes things wor

. >> paul volcker said we are adding towards that. and i believe him. they dialed it back. but what are we going to do about the deficit. the republicans started it with the deficits don't matter motto which was nonsense. they started it. obama is adding to it in a breathtaking way. both parties have to stand up to the plate and say we have to tax the rich more, tax the middle class more. we can't leave on you children these crushing deficits. my son is precious to me, i don't want to leave him crushing deficits. if i don't get a new boat this year, that's fine. the book is about buying simple port foal yoas and being rich when you -- simple portfolios and being rich when you retire. megyn: what is the name again? >> the little book guide to bullet-proof investing. or so simple even a caveman can do it. megyn: thank you very much. if you enjoyed that interview and you want to see it again or if you missed any of it you can head to our web site foxnews.com/america live and catch the whole thing in addition to other things behind the scenes. check it out. foxnews.com/america

demand the government rein in spending and get the financial house in order, top economists like paul volcker alan greenspan are now floating the idea, possibility that perhaps what the country needs is another tax, okay? and they argue the u.s. should consider as a way to get ourselves out of the deficit, adopting a european-style, what they call the vat tax, value added tax, and you might find it hard to value added in this! a tax that is based on your consumption and, basically every time you buy something, to help juice up the economy, not only will you help the economy, you'll also get taxed. welcome to a brand new hour of "america's newsroom," everybody, i'm martha maccallum. and it is good to have you with us. bill: i'm bill hemmer and i miss the kids already, right? martha: they were great. bill: yesterday the senate overwhelmingly voting against the prospect of implementing the vat tax and the white house also distancing itself from the idea and policymakers argue it could help solve our debt problems, amy kellogg is in london with a closer look at how the vat tax works in the u.k.,

what's known as the volcker rule and there is a tall guy sitting here in the front row called paul volcker who we named it after. and it does something very simple. it places some limits on the size of banks and the kinds of risks that banking institutions can take. this will not only safeguard our system against crises, but also make our system stronger and more competitive by instilling confidence here at home and across the globe. markets depend on that confidence. part of what led to the turmoil of the past two years was that in the absence of clear rules and sound practices, people didn't trust that our system was one in which it was safe to invest or lend. and as we've seen, that harms all of us. so, by enacting these reforms will help ensure that our financial system and our economy continues to be the envy of the world. so, that's the first thing. making sure that we can wind down one firm if it gets into trouble without bringing the whole system down or forcing taxpayers to fund. number two, reform would bring new transparency to many financial markets. as you know, part of what l

what paul volcker said yesterday was we've got to go after the middle class. obama's economic adviser. and he's right. if you're going to do this through taxes, the only place left where there's money left to tax, it's the middle class. jon: taylor and michael, thank you both. jane: do you know what you're eating? turns out the food and drug administration may not. there is a troubling new report just out today about what is not being checked in our food supply. and tiger woods is about to tee off at the masters, just a little over an hour from now as nike launches a very different type of tv ad with the voice of his deceased father. take a listen. >> i want to find out what your thinking was, i want to find out what your feelings are -- jane: what do you think of it? eerie? effective? or both? here's what some of you are saying from our blog, debny says the ad is a cheap shot using the deceased father to gain sympathy from the public. weigh in, go to foxnews.com/happening now, or e-mail us, happening now at e-mail us, happening now at foxnews.com, we'll conti

and dole and some other members of the finance committee met with paul volcker was the fed chair at the time. and he said if you pass a big package that cuts the deficit by a specified amount, he would -- he would ease off on the interest rates. and so that was the motive that they had. and the members of the finance committee and i believe it the republicans took upon that as a challenge. and we were -- we put together in 1982 and tefra was mainly the tax piece. but there was a spending cut piece. and it was called the three-legged stool, the famous -- i often talked about the three-legged stool. it was tax cuts and spending cuts and incentives. and volcker cut the interest rates. and it had a remarkable payoff for the country by a terrific cost. and it was a political exercise while he compromised on people with that. on that he put together tefra and that package with i don't think a single democratic vote in the senate. the chairman passed it without without a republican vote in the house. so it was the democrats that supported it in the house. and the republicans in the senate. and

paul volcker has come up with this idea but i believe paul volcker was making a lot more sense on theoutside looking in than when he was brought to president obama's side and is on the inside looking out. his proposals make no sense whatsoever. he made much more sense before obama up brought him to his side but he is proposing proprietary trading and private equity operations that have nothing to do with it. they are more a symptom of the problem rather than the problem itself. these firms are being run by people who get rewarded for taking risks with other people's money and have no accountability for their behavior. if you want to change that you have to create what i call the william cohan rule. if you take for lack of a better number the top 100 people at these firms and create security that is representative of their entire net worth and the 500 people at these firms would be a large number, very big security and you put that at the bottom of the capital structure on the right side of the balance sheet. the first thing to get lost at any time is that capital. including people's e

more from paul volcker from "the wall street journal" on april 8. host: next is a call from alabama, will on the line for republicans. we're talking about the vat tax. what do you have to say? caller: i say no to the vat tax. she cut the size of government, cut the spending, cut the salary, and cut the pensions. -- they should cut the size of government, cut the spending, cut the salaries, and cut the pensions. host: robert on the line for independentdemocrats. caller: thank you. i am for the administration getting everybody together, sitting down, and try to figure out what we can do to generate revenue. the idea of the value added tax , if that is a possibility, let's talk about it. we have to generate some revenue, or we have to do the hard choice of cutting spending. social security and medicare -- we do not want to talk about that because that takes up a lot of our budget. we have some hard choices to make. i hope that all the republicans and democrats come together and sit down and have an educated and informed discussion about how we increase

at the beginning of the 1980's, paul volcker, then chairman of the federal reserve board under president reagan, essentially put this country through a crushing recession, unemployment got to 10.8% but it did purge of the society from inflationary psychology and you had a gradual decline of inflation and gradual decline of interest rates that triggered a boom in the stock market and triggered really two decades of prolonged prosperity. and most of that, in my view, stemmed from the triumph over double digit inflation, which stabilized the economy and, like a set, led to much higher stock prices and home prices, but ultimately that prolonged and -- that prolonged prosperity gave rise to the plan into a crisis that broke in 2007 because people got complacent and careless. host: you continued this theme in a recent column march 22 in "the washington post." alan greenspan potts a flawed analysis of the financial crisis. guest: greenspan is an interesting figure because when he retired in our early 2006, he was praised lavishly across the political spectrum by most professional eat communist,

speakers included former president clinton, bob rubin, and paul volcker. we will also hear from several members of the president's national commission. >> of 1 to welcome me to the 2010 fiscal summit. advocate the great minds around the room. -- i look at the great minds around the room. it is our hope that we can come together in this summit and make progress on reaching consensus in three main areas. first, the nature and magnitude of our fiscal challenge. second, the feature and a general direction of solutions. third, how do we educate and activate american citizens to do something about it? we have all kinds of ideas and of ideologies represented here. while we may not agree on a whole lot else, most of us agree on one thing -- are present physical course is unsustainable. at a time of multiple bailout, one of comfortable thought lingers in the back of our minds. who is going to bailout america if our policies continue to stumble down this unsustainable path? once he put it down, do not be able to pick it up. [laughter] i believe the issue be addresse

speakers included 4 -- former president clinton, bob rubin, and former federal reserve chairman paul volcker will also hear from several members of the national debt commission. [inaudible] >> i look at the great minds around this room and i'm truly humbled, although i know there are many that doubt such a thing as possible. [laughter] it is our hope that we can come together in this summit and make progress on making consensus in three main areas. first, the nature and magnitude of our fiscal challenge. second, the future -- the nature and general direction of a solution. and third, how we educate and activate american citizens to do something about it? but got all kinds of ideas and ideologies represented here today. while we may not agree on a whole lot else, most of us agree on one thing -- our present fiscal course is unsustainable. at a time of multiple bailouts, one uncomfortable all lenders in the back of our mind. who is going to bail out america if our policies continue to stumble down this unsustainable path? as some of you know, this is an issue that is close to my heart. i have

some talk also about the value-added tax, but that -- i think paul volcker talked about that. >> he didt made sense. he's -- anyone that saw him back when he was reagan's guy and thought of him as a big conservative, you can't put him into any box, i guess, can you? comes up with some interesting -- >> you cannot. but you can put him in a central banker box. he really liked that role and he liked that environment and he did that very well, and he continues to speak out and he doesn't -- he's a very thoughtful, very straight-forward guy. >> do you think it makes sense to bring the volcker rule in and -- >> it's very difficult. >> do you think it makes sense to do a vat? >> a vat makes a little bit more sense. i think the volcker rule's going to be very difficult to implement. >> but you're saying this is somebody who's an adviser to financial firms at this point. i mean, why is it so difficult to put in place? >> conceptually, people like the idea of making sure that you're not taking insured deposits and using them to essentially bet the bank on things like that. and i think as the bill

the bill would also enact what is known as the volcker rule, and there is a guy and a front row, paul volckerplaces some limits on the kind of risk banking institutions can take. this will not only safeguard our system against crises. this will also make our system stronger and more competitive by instilling confidence here at home across the globe. markets depend upon that confidence. part of what led to the turmoil of the last two years is in the absence of sound practice, people did not trust it was safe to invest or land. that harms all of us, so by enacting these reforms, we will help ensure our financial system and the economy continues to be the envy of the world. that is the first thing -- making sure we can wind down one firm if it gets into trouble without bringing the whole system down are forcing taxpayers to fund a bailout. #2 -- reform would bring new transparency too many financial markets. as you know, part of what led to this crisis was firms like aig and others who were making huge and risky bets using derivatives and other complicated financial instruments in ways that defi

instead, paul volcker has done the nation a great service in telling us what obama and his congressional allies are planning. if that is not the case, if the president and the democratic leadership in congress really are not planning a v.a.tt. attack, let them decare their opposition to a v.a.t. plainly. every current and would-be member of congress would say where they stand on the v.a.t. and unless they favor a huge government, much higher taxes and less transparency from government, they will stand against it. mr. president, i agree with mr. foster, every current member of congress should say where they stand on the v.a.t. with this amendment, i'm giving members of the senate that opportunity. several of my colleagues have explained to me that they would support a v.a.t. if it was replacing the federal income tax or the current corporate tax structure. i say to those colleagues that i have not seen a shred of evidence from the administration or anyone in congress that the v.a.t. would be used as a replacement tax. i am supremely confident that if and when it is offered, the v.a.t. wou