 Okay thank you folks and again thanks to everybody on C-SPAN this is quite a panel following boy these the first two panels were excellent so if you all weren't here some of you were but we you have great great acts to follow so let me just briefly go over the people who we have with us today and then Peter I'm gonna turn it over to you for the first question thanks to all of you for joining us we're lucky to have Jane Harmon who is now the president and CEO of the Woodrow Wilson International Center for Scholars Allen Greenspan the former chairman of the Federal Reserve System Governor Engler the head of the business roundtable David Stockman former director of OMB and Senator Warner who is the sitting senator and also one of the gang of six and heavily heavily involved in this issue so we're gonna talk pretty much about anything you want as I keep saying this is really one of these Washington Port policy reforms where you're welcome to answer whatever question you wish you had been asked instead of what you actually were asked and we want to have a rich discussion but what we do want to focus on is sort of where the politics and the economics of this issue are right now and where they're headed and to continue the theme that we've had in the past two panels of going big and I just have to observe that it's been pretty remarkable because I did say if people disagreed with go big they were allowed to but across the board it has been a pretty powerful argument for both the political and economic arguments of why urging and supporting the super committee to come up with a full fix is a useful and almost necessary endeavor so Peter over to you let me start first of all with the chairman Greenspan if I could the economic argument here we've had a lot of discussion about going big what the right figure might be a lot of people throw out the four trillion dollar figure from an economic standpoint what is the right number and how quickly do we have to get there it's not the four trillion the reason basically is that as I think everyone in this panel is acutely aware having the experience of been involved in these various things that there is a tendency in government to underestimate the size of the problem and indeed if you look at the underlying economic assumptions that are being made with respect to forecasts that are made it's pretty clear at this stage that we are running under and are likely to continue to do so and that if you fit those data to either CBO's base or anybody's base you end up with significantly larger deficits because remember when you're dealing with a deficit which is remember very sensitive to changes in receipts on the one hand out lays on the other and small changes give you very substantial changes in the deficit all the biases that I can see work in the direction of essentially increasing the size of what we are dealing with on top of that we have a very serious problem in that we are not we don't have a large deficit which can be collapsed very quickly by discretionary outlays or the end of a war I remember with the deficit at the end of World War two collapsed and it collapsed largely because the war was over spending went down what's driving this deficit is very substantially entitlements and when entitlements are pushing the deficit they are very difficult to bring down once the country grants an entitlement it is very difficult to rescind and I would suspect if I just to look at the raw figures not look at CBO but just look at what I would internally expect my judgment is that we are dealing with an issue in which the actual growth in the gross domestic product or any of the other measures of potential revenues is essentially running into a problem which I don't think we've confronted before namely a significant slowing in the rate of growth largely because we are taking the most productive people in the economy and retiring them and they will be around for quite a substantial period of time receiving benefits and the people who are on the cohort that's coming in to support to replace them are the these are the students who did so poorly in 1995 and since on those international exams so the combination of a significant slowing in the working age population and therefore in the civilian labor force and even putting in reasonably optimistic productivity numbers adjusted for the fact that the cohorts are changing within this in the labor force gives us a set of data which gives me a figure that is possibly five six trillion dollars to close and this is a pretty substantial margin that I think we must have to work with Dave Stockman former budget director someone who's weighed in on these issues you were pretty outspoken even earlier the chairman just told us five to six trillion dollars should be the appropriate target for this super committee deficit reduction over 10 years how do you get there what's your mix see is a huge problem that is really being underestimated and I want to say why before I do that I want to okay before I do that I want to thank Charlie Cope for recommending my book triumph of politics that I wrote 1986 I don't know if it's any good but when I got when I was run out of town on a rail I did write a book my publisher gave me 800 copies to distribute to my friends I still have 795 copies left so if anybody needs one I have a lot of books very few friends I think this 10-year thing is really causing us to play a numbers game to get lost in a miasma of numbers that is resulting and we're losing track of how serious this problem is because we talk about go bigger I agree go bigger go sooner but whether you're doing a one and a half trillion or four trillion remember that's against the 10-year baseline if you can see that far in the future which is 200 billion dollars so we're asking should we cut the deficit by 1% of that 10-year baseline of GDP or should we cut it by 2% when the fact is we've been locked in to 8 to 10% of GDP deficits for the last four years when the fact is our GDP has been growing since the recovery or the recession ended in June 09 at 44 billion a quarter we've been a month we've been borrowing a hundred billion a month and there's no lead up to an equation in which we're borrowing at twice the rate at which GDP is growing so if you look at a realistic view going forward that GDP has only grown 1.5% annually in the last 11 years that the non-farm payroll number today 131 million is the same number we had in January 2000 that the manufactured industrial index today in August is the same as it was in 2000 that our economy hasn't grown for 10 or 11 years at a time when the Fed still had money to print which it doesn't now when we still had a lot that we could borrow and run deficits that we can't now that when we had a housing market that was booming that is busted now if you put all those things together then the outlook going forward is far worse than what's in the CBO baseline the underlying problem is at least 10 to 15 trillion if we do nothing and yet we have one party say no taxes the other party saying don't touch social security and both parties say the military industrial complex we need a defense budget in this world that's 80 percent bigger than Eisenhower left when he warned about the military industrial complex in 1961 so I would say Alan is right 5 billion but it's really 10 billion on that note senator Warner is a seating member of Congress I don't know if you want to run for the Virginia Hills after hearing all that or not the political reality of trying to get anything done in this environment I know you've been working both Democrats and Republicans to talking about going big the reality of trying to get there first of all you know great panel now I feel a ton of great panel thanks for my and all her work these numbers can become so overwhelming they've moved into part paralysis we should at least all agree that what we did and even the the process we set up which has got some very good things in it in terms of this the so-called super committee you know let's not set the bar so high that we that if we do actually get that 4 trillion that we once again say it's not a some level of success number one number two there are people up here a ever-growing matter of fact we had 38 of them last week 26 of them standing up together publicly I may be the only voluntary group of bipartisan folks in the whole town willing to say yes tax reform that generates revenues entitlement form that maintains a sustainability programs building on great work that a lot of folks in this room have already done we're all in in terms of supporting the super committee and the as a relative new guy up here I think the the process the process ability of the super committee to kind of forge a grand bargain and kind of do this not in a sequential basis but do it in that kind of one mother of all votes is something that we would be really remiss if we didn't give it our all over the next few months and we do need you know I can I can give I've got my own PowerPoint in terms of how deep the hole and what we've got to do but we kind of know the frame of the probe of the problem we're gonna have to deal with revenues we're gonna have to deal with entitlement we're gonna have to deal with the defense we're also gonna have to have a growth agenda here because we can't cut our tax our way out of this entirely as well we ought to be able to demonstrate that we can walk and chew gum and that means do some short-term you know and stimulated efforts in terms of of growing the economy because as both of the both the chairman and and talking just mention you I've looked at all those numbers in terms of where the GDP is where productivity is which is coming back up but those economic numbers are employment numbers are still so low and say short-term growth with medium and longer term real deficit reduction and one of the things that we built upon for example the very good work of the Simpson bowls was real enforcement mechanisms because one of the things that happens is you know nobody believes when Congress acts that they're going to actually enforce what they say we've got to put some real hooks into that but I would argue as well that we need everybody's everybody's oars in the water at this point this will not happen unless the business community the political community the the budget thinkers all kind of agree that we're going to go help this super committee get to this big or not and candidly at this point man with one last quick comment I'm sure we'll get back around the margins 10% on either side to my mind I feel very strongly about something but I'd be willing to move on those margins to get an agreement I think one of the biggest single thing with one of the things that was so self-inflicted and what we did to our economy at the end of July beating of August is both from the business side and from the individual consumer side people who are uncertain we just put an extra dose of uncertainty and oh my gosh if our political leadership can't even put a plan together balance long-term balance our books then I'm going to cut back with them a business person or consumer in terms of spending I think one of the best things we can do for job growth right now is get this at least four trillion dollar real enforceable plan in place and but if everybody says well it's got to be my way or the highway approach we're not going to get there and I'm actually out relatively I'm much more optimistic today than I was at the beginning August that leads me to Congresswoman Harmon your a few months removed from your time in Congress your arms length of you now of what's taking place here you as optimistic is Senator Warner or are you more skeptical I I want to be optimistic I'm impressed that Mark is optimistic since he's been hitting his head against a wall for the last six months while I've been luxuriating at the Wilson Center but let me make a few points first of all I'm not an economist obviously I'm just a repub recovering politician so so I'll start with this quick story which is that some of you will remember Andy Stern anyway well that I ran for governor of California at the end of the 90s and someone came up to me and said how big are you and I said big enough to run for governor of California I think the question is how big is Congress and the president in terms of this issue of going big and I want to point out that Congress and the president were big enough in the 90s to do these things I was there so was John Spratt so was Dave McCurdy I think Mark was not there Mark was doing productive things elsewhere but we were there and I made the tough vote I don't know how Dave voted or John did for the Clinton budget in 1993 my first term which was a career threatening move I came back to Congress by a margin of 800 votes out of 225,000 cast and most of the women elected with me in 92 to open seats lost their elections Marjorie Margolis Ms. Minsky was the poster woman for this I also was one of the hearty little band of 40 in the penny Kasich conspiracy 20 Democrats and 20 Republicans where we proposed to cut a hundred billion dollars from the budget and we came within four votes of getting that passed a hundred billion in today's terms it would be substantially larger came within four votes of passing that against the objections of the White House and most moving parts of the then Clinton administration and I also of course was part of the large bipartisan group to vote to balance the budget in 1997 that was only 14 years ago folks and look what happened it's a question of are we big enough or are elected leaders big enough to do this they used to be bigger and something happened and I think at risk is you know not just our short-term future but whether America remains a superpower whether America is in the top tier of countries in the world this is these stakes are huge so what do I think is is possible I don't know if I'm as as optimistic as Mark but I did write an op-ed piece with Vin Weber a month ago we were in the same place talking about this problem and said exactly the same thing so we decided that between us we had 15 terms of service in Congress and we would write a job join op-ed which says politics aside debt solution clear and our point was that the president could request Congress to introduce on a separate track from the budget committee no offense bowl Simpson or something close enough to that plus an infrastructure bank or some short-term jobs funding mechanism but infrastructure bank which has been a very popular idea with both parties seem to fit the bill because it would generate jobs fastest and that could proceed using the regular order through the committees of Congress hopefully putting pressure on the budget committee and involving more members to help them get to the right result so am I optimistic that this could happen I'm disappointed that it isn't happening I'm disappointed that the president didn't ask for this in in in January after his commission heroically came up with a grand bargain that is at least the bones of where we ought to go I'm disappointed it it couldn't be done by the president and John Boehner in the summer and I'm disappointed that it isn't being done now and I just would close with I hope everyone it's probably been mentioned in prior panels everyone's read the Tom Friedman piece today but he says we can either have a hard decade or a bad century and so I'd like to vote for the hard decade Governor Engler you have a unique perspective as a former governor someone obviously represents business interests here the CEOs that you represent are there oars in the water to quote from Senator Warner on this issue I think there's no question that they are and they used the example earlier today we just included a business roundtable meeting and Maya was kind enough to come down and spend a fair amount of time just walking through some of the options that are in front of the Congress and in front of the nation and there there's a lot of interest in and you had CEO saying oh and by the way this isn't a short period of time because when you had 20 percent 30 percent drops in revenues in companies they had to act and they didn't have they didn't take it over a few months or a couple of years you had that you had to start making decisions tomorrow morning and you had to make some by the end of that day and the next day and you got at it the other interesting point is around the country today there are examples in both parties governors Democrat or Republican with legislative bodies in some cases split control some cases the opposite party some cases their own party and they've all been making decisions to balance their budget and some of the the magnitude of the cuts are on the order of what Governor Warner faced when he first took office in Virginia or what I had waiting for me back and way back now in the old days of 1991 in Michigan so so they've had to step up I mean it's it is a proportion and I think Dave Stockman captured it isn't it one percent or two percent you know over a period of time a decade it seems to me that this is also in going very big here an opportunity for a great deal of creativity I mean it's got to be a legislators dream to get a one up you know up and down vote no amendments that just never happens in this world in Washington you couldn't get really that to happen in the state legislature very easily but so the idea that you can put one thing and that argues just screams for a very large package because the bigger it is the tougher it is to vote against if it's the solution you you don't want to go small you want to go humongous because it's just impossible to vote against at that point and yes there'll be lots of things that people won't like but there'll be much more that they will like and the beneficial effect of acting is what carries the day and I actually think we ought to probably be thinking about since we ever passed budgets on an annual basis maybe part of the work of the special maybe give us a budget an annual budget for each of the next 10 years at some some baseline amount and in certain agencies I'd be saying that ought to decline each year but they know for 10 years it's going to decline so they the good managers that we've got the professionals in the bureaucracy can manage that over time they can do it through attrition consolidation I probably also the special committee give the president unlimited reorganization authority to get the 19th century structure into the 21st century and so that you could use the the technology and capture that as another way to drive what at least the chairman of IBM has said could be as much a trillion dollars out of cost when you take say 5,000 data centers and take that down to maybe the 50 you really need I mean you just I mean there is so much opportunity here it's like a target-rich environment but nobody's in charge and the special committee has not to tee it all up now somebody still got to execute and that's what elections are for but you know once the responsibility is fixed the direction is set I either somebody will step up or there'll be somebody new to step up sort of the way to work and and I think there are models at state level I think there are models in some companies so Washington can do it so let me pick up on the sort of theme of going big in the way that some of you are talking about before we start making go big from four trillion and savings to 10 and 20 trillion and savings which is where I'm worried we're headed I also think there's the real benefit of thinking about going big in bringing other pieces into this right this is a chance to make a debt reduction in economic growth strategy and that means there's a space for a jobs component there's a space for regulatory reform there's a space for a whole lot of things that contribute to economic growth along with debt reduction and one of the things we know now from the work of rogue off and Reinhardt and there was a new paper presented by Steve Chichetti at Jackson Hole about the fact that where we are at debt levels right now is probably already a drag on economic growth right so if you put in place a multi-year sensible debt reduction plan that can be part of a pro-growth strategy and we talked about this a bit in the first panel if you do the tax reform right if you do the entitlement reform right so that you protect investments and and scale back on consumption if you do it in a way that creates certainty and I think this point about multi-year budgets putting in place a budget that people can count on for a number of years can really help a business led recovery which I think is the key to getting out of the downturn where we are right now and if you put in place a plan that leaves this fiscal space at front up front so that we can continue to recovery that all something to gain so I guess I would like the panelists to weigh in on how debt reduction or debt consolidation can feed into an economic growth strategy but also separately because if we're going big we can put other policies into this what is the most important pro-growth policy hopefully that doesn't make the deficit worse that you think should be part of a package whoever wants to jump in certainly chairman Greenspan the one thing which we know is that the number of endeavors on the part of various countries to rein in deficits of this type of problem that almost everybody in every study that I've seen indicates that the endeavors that are essentially implemented by sharp reductions in spending have been far more successful in solving the problem without maximum problems with respect to the economy the IMF for example which did the largest study indicated that to be sure both tax increases and expenditure cuts will tend to cut the level of economic activity but the difference between the two is very large and the more interesting issue which we don't know the answer to is and this is where the bull Simpson initiative I thought was really very clever going to tax expenditures the issue is what will a very large reduction in tax expenditures due to economic activity if it behaves more like outlays which I suspect it would be then the impact of that trillion dollars a little over trillion dollars that we have there annually is potentially a very important beginning to get at this particular problem and I think the governor is raising a very important issue when he says that when you do it big there are more ways in which people can agree with it and if you have a very specific single issue in which there are innumerable people who are against it but there is another factor out here which we can't disregard it's called the bond market when I was originally asked when the Simpson and bulls as chairman before the committee's report came out I was asked what I thought the possibilities of Simpson bulls essentially setting the framework for deficit deduction and I said something like the Simpson bulls initiative will pass the Congress the only question is is whether it is before or after a bond market crisis and we can stand here or sit here and argue whether or not we're dealing with a large number or small number but we have to ask ourselves what would we do if all of a sudden the markets began to erupt negatively on thinking that the Congress in this country is incapable of coming to grips with the problem of this size and I hesitate to think what the consequences could be and I hate to think what the politics would be well in I think it was 2008 Los Angeles passed a ballot measure by a vote of about at least two thirds to raise taxes to raise sales taxes by half a percent to fund infrastructure build out in Los Angeles for mass transit light rail and maybe I think that was essentially what it was and that measure has been generating revenues for the last three years Los Angeles has proposed that it be able to front load that build out by borrowing money in an infrastructure bank or in some other mechanism to build out in 10 years what that tax measure would fund in 30 years and by doing that it would build it would generate hundreds of thousands of jobs in the short term I'm telling this story because people including Republicans voted to tax themselves to deal with the transportation meltdown in Los Angeles in a way that would one solve that problem and to solve the huge unemployment problem at the same time and therefore if there were some form of infrastructure bank not necessarily funded with new revenue Alan but funded with repatriated earnings or you know pick a flavor funded somehow that could help a city like Los Angeles get in the game of building transportation jobs fast and solving its problem I think that would be a huge win and the other point about the story I just told is the government or somebody would be paid back because this this sales tax is is generating the revenue to pay the government back so this isn't a handout this is a way to accelerate something that voters in in a large metropolitan city have have decided they need I'll just and Jane I agree with the infrastructure bank matter of fact it's the original three co-sponsors of the not grant version but the one that the chamber and labor agreed on I think John has been supported as well was a less about grants more about loan guarantees was Kerry Hutchinson and I so I think it's one of the tools although I do think a lot of these tools are kind of around the edges we've used our big bullets we've used monetary policy we've used fiscal stimulus so what can we do around the edges I get a little concern on these kind of panels that we we can spiral into a pretty dark place pretty quickly and Jane your comments earlier about yet there have been times bashing my head against wall but you know what is the choice you know is our rallying cry going to be in America at least we're better than the EU freeze I'm more generic freeze I'm thinking though you know in terms of stepping up and I this is why I gotta make you know the appeal I you know John and I were governors and we both struggle with challenges we you know we made a lot of hard cuts and I agree with John I got an angle completely but also in Virginia with the two to one one Republican legislature we raised revenues and we got named the best managed state we got named the best state in the whole country for business so I do hope we need to go big but before we layer on this super committee which has got a bogey at this point of 1.2 to 1.5 and I would like to see as many additional things added on as possible but if they only get five of the 20 that we want to add recognizing that if they're going to get a score they got to be done almost in five or six weeks let's let's do what is the four trillion dollar number everybody said at least as a minimum I would agree with the speakers we need to do more but if we take that step do it in an enforceable way do it in a way that shows the political leadership the political class in this country can actually work together on something and the point that I would say is a as a relative still newbie up here it won't get done unless the governors the state legislators the business leaders the thought leaders all are willing to kind of give a little and say with this super committee if you step out we got your back they suck well I think the reason we're not going big we all agree and I don't mean to say for a billion enough that would be a god send if we did it but the trillion excuse me billion an hour okay we spend a half a billion an hour right okay the point is there are too many people in this town who don't believe that it's real or necessary or urgent and it's evident in their behavior and part of the reason for that is they believe things that aren't true one of the great statesman who said in this room for many years was Pat Moynihan and he said everyone has a right to believe whatever they want to but they don't have a right to their own facts and we have a lot of people who believe things that aren't facts and one of them on the Republican side is you can't raise taxes in a weak economy well I'm sorry we're gonna have a weak economy for years and years and if we don't raise taxes we're gonna stay in this hole in 1982 the unemployment rate was 10.5% we were in a very bad recession there wasn't necessarily light at the end of the tunnel and Ronald Reagan signed the the TEFRA act of 1982 that was worth 1.1% of GDP of tax increases in the next two years that's the equivalent of 150 billion dollars a year in today's size of economy so the fact is the history shows that you have to pay your bills and if you don't like the economy because it's a little too weak to suit your fancy or because it hasn't been going anywhere for ten years which is true that doesn't give you the right to keep hitting the credit card until some economist tells you it's okay this we've had a business cycle recovery now we can start getting real about the deficit the recovery has already happened we are now in the permanent state of our economy it's growing at 1% if we're lucky and so we have to deal with that fact and if we keep doing stimulus after stimulus after stimulus we're just getting creating a cliff you know right now there's 500 billion worth of tax reductions that will expire in 2013 14 right now the baseline says the safety net's going to go from 400 to 300 billion a year in a year or two so the fact is we've got three and a half percent of GDP cliff that we're going to smack right into year after year unless we get started on it now because they're not going to allow all these tax cuts to expire they're not going to allow all these programs to expire and when you get back into the heat of trying to put that stuff into some kind of reasonable order you're going to not get very much deficit reduction done that's the problem this cliff it is huge it is 600 billion a year ready to hit us in 2013 214 so if they don't do it now we're going to be enough you're we're going to be a fly on the windshield of that cliff when we get to 2013 the energy speech not given is kind of right at the top of my list because we used to kind of shy away be a little nervous about saying energy independence for America today it's actually within our grasp if we think about it with what's happening with shale discovered with the improvements in the geology and the ability to find resources off our shores so you'd you'd you'd want to as part of this remake of the government under our budget balancing and cutting have a true energy department but that'd be an energy exploration and production department and you you get serious about about exploration and I'm very happy this past week they finalize the air quality permits for shell off Alaska there's tremendous resources there we believe I think we're going to have to redo our nuclear base we've got 20% of our electricity day comes from nuclear those plants concern aging out so that we need to get that sorted out and then while we're making decisions and I'll just run through a couple of things on the list you would you would have FERC and figure out on transmission lines today just the power the kilowatts we generate we lose anywhere from 5 to 8% of those in transmission there's a wonderful business plan an ROI if we just upgrade all the existing transmission without building we need to build new and that's a different story and you need permits for that but for heaven's sakes where you've got transmission lines you'll be able to upgrade a lot of jobs and you can't do those offshore that's all work here the other thing you'd probably do if you're doing energy efficiency at the same time is in every public building in America where it's owned by the federal the state governments or local governments or schools there since we're going to probably keep those in the public sector for a lot of years you would actually complete all of that that's something Bill Clinton talked a little bit about but makes perfect sense again thousands of jobs there if we were actually doing the oil and gas exploration since those royalties aren't in the budget because they've never they've never been scored I'd probably do some reservation of some of that and I do the entire Mississippi River basin and get those locks dams upgraded with some of the royalties I'd get that big pipeline built from Alaska more royalties come off of that I'd probably open up another million or two acres of federal land use some of those royalties to upgrade all of our national parks so that we've got tens of millions of people go there and they all need work you know and so that's just that's my energy speech I'd also if I move over to one other one 30 40 billion dollar project no public funds needed for the next generation air traffic control system that is a crud group will win there or more it's energy efficient it's less polluting it's less hassle and it's an export potential for us and it's a high-tech to boot I'd probably fix the export controls because our study says 60 billion dollars stuff we could sell the other place in the world as opposed to the British the German the Japanese and our allies sell it so I mean that's just to get us warmed up all of these are administration introduced ideas but they've gone nowhere in three years this is the time if you want to deal with a 9% unemployment rate and as I said I didn't get into Dodd Frank I didn't talk about education and talk about health care and I didn't get into a really regulatory reform so we're just getting warmed up with millions of jobs here major suggest you suggested that's all low and hang free let me just ask I mean no no no I think we have to make one I've got to make one because I got you know I gotta go make sure we actually get some of these these trade agreements through to right now which is another piece of this and you know in a lot of what John's talked about one of the only Democrats looking at offshore off of Virginia I I would take on the conservation piece on the public buildings and say if you've been on unemployment trust the youth beyond expert at time you know you can finance that retrofitting of those buildings and you could train up and use revenue stream from unemployment for in that youth category there's a whole series of things that we can do but I got it but we also have to acknowledge and one of the ones that drive McRae's with the FAA bill when every bill becomes a all or nothing for one side or the other and every operation of government in terms of continuing becomes a potential shutdown nightmare we do an enormous disservice to this country and while we can go through the litany of all our proposals that none of them many of them are bipartisan I've got a regular form that I'm working on with Senator Portman I think they would which is actually copying some of the things the Brits have done we call it regulatory Pego they call it one in one out yeah but until we can deal with this debt over until we can show that the political leadership in the country can actually get something done we got to restore some level of confidence as everybody said and we can go dark we can talk about the old days we can talk about how big the problem is or we can take this next three months two and a half months and say we're gonna be all in helping the super committee then have a plan be if they're not successful first thing is we got this opportunity and let's not have another one of these sessions you know in January talking about what we didn't do when we had this opportunity as John said to have that one major vote where you at the end of the day this isn't this vote in you know you're either for the country moving forward or you're for more paralysis we can't frame it that way cannot be one Democrat versus Republican and the only way we'll get to that kind of vote is if everybody here gets their origin of water and frankly more than the way they did in the last debate thank you all go voting let you guys solve the rest of the problem thank you Mark is Mark is right but if the campaign of 2012 has started then what comes with that is that you get more bang for the buck if you blame the other guy for solving for not solving the problem then if you work with the other guy to solve the problem both parties do this they play the blame game and what's wrong with that picture is we don't solve problems and Congress has shrunk in its ability to solve problems in the 90s we solve this problem now it's unsolved or or back and and I you know it's the incredible shrinking Congress so how does that turn around the way it turns around is with a few people who have the guts to say doing this right going big is more important than getting reelected and I think if one person would do that and I certainly salute Mark for his courage and and his message but if a few people would do this let's pick some from each party maybe that could start turning around this this terribly broken and destructive paradigm I actually thought John's list was good the growth agenda I just like to put out there my thought not in terms of static versus dynamic exploring again I'm the non-economist here but in terms of the dynamic nature of the economy if we had a growth agenda that might need some some you know a little jump start here at the same time as we're trying to do a responsible deficit reduction plan then we end up with faster deficit reduction more confidence and we retain our leadership so it seems to me we ought to have that I just want to add a couple things on John's list that I think are important maybe this is as a Democrat I'm not against resource exploration but I think clean energy is a way under underused idea here not just clean energy in the United States and there are lots of ways we could develop clean energy including switchgrass and solar and a lot of things that won't fill our energy picture I'm one who does believe in nuclear energy so I'm not saying this is the only answer but clean energy exports are something we could really be doing why are we letting China do this and and sitting on our hands we know a lot about this and if we could ramp up the industry and for example take our largest consumers of largest federal purchasers of automobiles I think DoD and and make their fleets cleaner we would drive a market in developing mass producing cars and other things cheaper that could generate strong export so that's one the second one we have mentioned is immigration reform it makes absolutely no sense to have Caltech graduates you know geniuses in science and engineering leave because our immigration laws won't let them stay in this country 50% I think of the graduates from Caltech and their other schools in this boat have to leave our country immediately upon getting the best education on the planet export controls have to be changed and yes we do have to pass fair trade agreements it makes no sense to deny ourselves access to other markets and deny their access to us it also is a good national security agenda to have trade with countries rather than war chairman Greenspan if I could pick up on the economics here and and again if the super committee comes to to you and ask your advice for the ultimate plan that they must consider if they ask you about the mix what's the appropriate mix you've outlined how what the target should be for them how do they get there what would your advice be to them well I first would say what I think probably where Mark Warner's views of people converging is going to occur is not where I would start if I had my choices but I know my view of what ought to be done will get maybe one vote which would be mine and I'm not sure I'd vote for it myself but I do think that I think the president is indirectly acknowledged that he made a mistake in not addressing both Simpson when it came out it was an ideal time and in my judgment the the where we ought to go is basically to take bold Simpson which is I think a very cleverly constructed bipartisan approach to coming to grips with this problem and as I said before it has one extraordinarily clever part which none of us for reasons I do not understand have really approached which is the tax expenditure part of this issue in tax expenditures were trillion dollars a year and I would do basically what they do which is you start off with the assumption that all tax expenditures are gone and then you have to negotiate up a few items that would come into place and I don't think unless you do this that you're going to get anywhere near to a solution first of all there is no way to solve this problem without significant economic and political pain if we're going to try to do this on the cheap meaning no pain it'll fail or it'll be a whole series of budget gimmicks which we've all seen over the years so I would say at this stage that the quickest way to come to grips with this problem is to take bold Simpson they got a very detailed document I was very impressed with how much that commission did in such a short period of time and you could take that and put it with a little work at OMB and CBO and a variety of other places you can get every little item I don't think they did full line item in both Simpson but we're close but they're close to it so there's a budget out there which as the governor says you can vote up or down we ought to find out what the bold Simpson has got the votes bold Simpson doesn't have the votes then I despair at where this country is going and I despair incidentally because what's at stake here and Jane would know far more about this than I is the status of the United States in the world I mean there are a few little things that are going on studies which take a look at the military for example find that our whole infrastructure is deteriorating the average life that I think a committee that Norm Augustine headed indicated that a very significant part of our military infrastructure is very old and I think he gave me a number which I couldn't believe I still can't believe the average age of equipment of the American military is 50 years now I find that non-credible until I look that there are 50 52 C bombers still in operation and so the question then gets into budget terms is what does it require let's assume for the moment and I've granted this is not a valid assumption of restoring the existing military we have a we have a military which is built up during the Cold War to fight the Soviet Union and that's not what we would need going forward but to just to build up to where we were would require hundreds of billions of dollars to bring the technology up to something which in my judgment represents where this country should be and is I'm looking at the negotiations that are going on but with respect to the Middle East today and I've never seen the United States in a more lowered position diplomatically and there's no way of differentiating the budget this whole budget conference from the status of the United States as a world power in the years ahead John England Dave Stockman I was hoping to get you all Dave Stockman to weigh in on what the chairman is talking he talked a little bit about the zero option that both Simpson talked about trillion dollars getting rid of those tax expenditures maybe moving up from there you talked earlier about all the sacred cows out there as I can play out well I mean it's a huge sacred cattle farm is what it is I mean it's just not going to happen as a way of getting revenue into the coffer it might be a good idea for economic policy for the long run but for what we need in the middle term it is just going to be a massive political conflagration will do no good now the second thing I want to say is economic growth is a wonderful thing just like our laughter said it was but it has little to do with budget discipline in hard choices and the sacrifices and the pain that has to be distributed and growth is going to be what it's going to be it ain't much and there's not much Washington can do about it and what Washington has been trying to do about it is pathetic a 200 billion dollar payroll tax holiday for one year so people can buy more happy meals that they shouldn't have and coach bags that they don't need please give me a break more money for green energy so we can get another half billion dollar loss in one company like Solindra that we just saw go down the tubes yes this is fine stuff but this is how we got into the mess we're in we've got a swear off stimulus and growth management because there's no agreement on how to get it take the facts that are dealt by the economy take the real numbers that are out there and figure out how to distribute the pain that's really what the job is and everybody wants growth today and pain in the buy and buy and we're never going to get to the pain and as a result we're going to have I think a huge bond market upset as Alan said one of these days when they finally wake up that our governance system is paralyzed how much time well how much time so the bond market makes that reaction this bond market is totally artificial it's medicated manipulated I can't say enough words by the central banks of the world half of the 10 trillion is in central banks the Fed China so for it it's sequester their roach motels the bonds go in they never come out that's the only way we've gotten away with this so far but the central banks are done the people's printing press in China is not buying any more bonds the people's printing press of America is out of business and as a result of that we're going to have a test one of these days of the real bond market of real free market investors and how silly can they be to buy a three-year bond for 30 basis points when the acknowledged inflation rate as the Fed measures it which is totally phoning by the way at 2% and you're buying a five-year bond at 30 basis points there is going to be hell to pay and I think it's coming I don't know when but when it comes this this town isn't going to be ready to deal with it can you close us out on a good note Covina well I'm going to go with the earlier stock from the 1% to 2% reduction over a decade it shouldn't yet painful but it's but it really is to put it in perspective I mean yeah it you know it can be done and I do think the government has a bit to do with growth in the sense that it controls the permits that determine whether I can go forward and do something or not and to that extent until I can get them out of that role if they've got the permits in their hands I've got to get them and so there's that that interaction I don't think we need the public capital I think there's I mean we're awash in capital and money is almost free today to put to work let's get that going I do think the chairman's idea on on Simpson bulls is interesting and it would be it would be it would be great of great interest to me to see that that put forward I I and I think on the tax expenditures I have the privilege of being with the chairman Greenspan is he and Marty Feldstein and John Taylor talked a good deal about this to Senate Finance subcommittee and I think Simpson bulls was clever and in that they got at not just the business tax rates but they got at individual rates and I mean everybody can say well gee I'd like to I'd certainly like to while we're at it on the business tax station improve territoriality and the way that would work in that in a competitive way but if you gave me if I had to start with the position where Simpson bulls will leave me with a much lower rate you know I'm sort of I want to be in that conversation so I I think there's and and it and it finesses the difficulty because if you deal with individual rates then all the non-corporate business organization structures get treated appropriately I mean they they should not have as much to to be concerned about so so that's that to me is very would be very interesting I'd like to see them go plus on top of that but but the other the other thing is interesting about the committee we haven't said too much about this but it it really is a legislative process so my assumption is that if Congress puts it on the desk no matter what you get said somewhere else in town if something passes the Congress it's going to be signed I mean I think it would be unbelievably reckless dangerous and I think politically destructive and and Jane made a point earlier which you know in terms of people voting you know we always have every election it seems like or every every couple of elections we we suddenly discover a new truth that we should have seen it coming and I'm not sure that maybe the new truth in the 2012 election is that it's the you know simply retreating to the camps and waging war on the other camp may in fact be the the old that may have been the last election strategy and it may not it may not cut it in 12 because I think there's a level of anger and it's and it's reflected in the what often is called the Tea Party but it's really this Tea Party movement which is not a party but it is a movement and it it I think includes people who have been Republicans who've been Democrats who have been independence and they're brought together by the fact they're really irritating they're really upset and I think they sit in the middle and they hold a lot of sway and it's not they're not and it's all about I think some policy questions more than it is it's not a I don't look at that anything that socially or such kind of really unites them I think it's their their irritation at government and so so if I'm just lobbing arrows at the other guy maybe it's the wrong place to be well just to respond to that and to say something positive I thought I would have been thinking about that for an hour there must be something I can say but on the the Tea Party I would say the Tea Party is part of the problem not part of the solution yes it does reflect anger but it isn't it seems to have an ideological agenda and it imposes litmus tests on politicians who if they don't go along with the no tax pledge get a primary opponent and having had a number of primary opponents over the years that ain't fun and having had very tough elections you learn you grow you grow a thicker skin you know it's proof that you're in the middle if you get slammed from both sides I think the people who are really angry in this country are the people in the middle and I think that's why there's a lot of conversation about a third party these are people who think that people that that neither parties or neither extreme of either party is entitled to its own facts your point about Moynihan and that's what we seem to have the operating in a fact-free universe and these people are thoughtful and they want facts and they want us to actually do something so here's my positive point I think there are a lot of smart people in Congress in both parties who came here for the right reasons and they may not agree on everything we on this panel don't agree on everything except we do agree to go big but we want to solve this problem and we want to try out various ways to solve this problem I think that this this thoughtful group in Congress which is fairly large needs to be liberated and given a chance to engage in legislation here which it's not given a chance to engage the committee process is bypassed by and large the leadership drafts the bills it's it's a war of press releases rather than a serious thoughtful effort to solve a big huge problem my idea about Simpson-Bowles is yes it should be considered I wouldn't do the up or down vote now I think everyone will run away but I would introduce it on a separate track through the committee process and try to help the people in Congress in both houses who really have thoughtful things to say understand it and and try it out on their own constituents I actually think we could pass not it necessarily but something like it the baskets that it contains are the right baskets whether these precise prescriptions are right or not and give Congress a chance to be good and so that's my hopeful thought Congress has good people who could be good if given a chance well with three and a half hours of fiscal policy and public policy today I'm going to just say one closing word of thanks I mean I think we heard so much today about how real the problem is how large the problem is and one of the things that we focus a little bit more on is sort of the dangers of doing nothing because a lot of times this town the focus has been well I don't want to do that you know retirement age or means testing or taxes but instead if you think a little bit more about the cost of doing nothing which we heard from so many different voices today it's an incredibly powerful argument for why we need to act and I thought what chairman Greenspan said was incredibly important as well which is if you're not going to get your first choice it's not really an excuse to walk away from the table we need to find a compromise that's going to get this done so with all these truly remarkable voices today talking about this what what I guess I hope is that all these voices will come out of the shadows and that in the coming months we will be hearing over and over again this support for the super committee and the message from this panel in particular was not even go big or go really really big but somewhere along those lines in that spectrum I think that we can urge them support them and hopefully come up with a real resolution to this problem and it was great to hear so much about bull Simpson in particular which was a remarkable remarkable piece of work which I think changed the discussion in this country and perhaps that can serve as a really important lift-off point for this discussion to go forward so thank you so much to all the panelists and thank you to our co-moderator Peter Cook