i'm ali velshi. welcome to "your money." rick perry is proposing give you a tax choice. currently you can pay it under the cold or pay a 20% flat tax rate. the bottom line, most americans choose a 20%, and at the least this would amount to a tax cut for the wealthy. candy crowley is the chief political course it dent and anchor of "state of the union" on cnn. no one is sure what romney's proposal is, whether it's economically sound. after herman cain's success for getting attention for the 9-9-9 tax plan i can see why perry seized on the idea of a simple tax. i'm not clear on whether they succeed or fail on the economic plans or how sexy or simple the plan sounds or whether it has nothing to do with that and who has the best chance to beat president obama. >> it's somewhere in between there, ali. there are certain things to say in this republican primary that would make him or her a non-starter, and that is i'm going to raise your taxes. i will make big cuts in defense spending and there are big things we need to do with federal spending. those would be non-starters, but when you look at these plans, they're much more political productions than they are substantive productions. as we know, there are three branches of government including congress. no one looks at a candidate's plan and thinks this is going to happen on january 21st or 22nd or whenever the date is that this person first takes office, should they become president. we have poll after poll after poll that shows that most republicans want barack obama to be defeated. so in the end this will be by and large in the republican party a calculation on who can beat barack obama. >> for months we've been talking -- longer than months, in some cases for years about something called comprehensive tax reform. taking all these pages of the tax code and getting rid of them and doing something more simple. it took her main cain's 9-9-9 to get everybody studying it and seeing whether it made sense and whether it would work. did it surprise you that that got a great deal of attention, and now i think perry is coming up with something. it sounds simple. >> no, it doesn't. it is something -- herman contain picain picked that and said it over and over again. it works on the campaign trail but not when making policy. you go up there, and the homeowners or the home mortgage lenders, you know, come in. they want something different. the cpas want something different. so it is a -- it's something that draws attention politically. it didn't surprise me, because it had some simplicity to it. everyone hates the tax code because everybody has to go and do that every april 15th. you want to tear your hair out. so it's a great catch-all, and it's the way that republicans are saying that they can cut the debt. it's a two-fer going against something you hate and trying to deal with the debt. >> even i want to tear my hair out, so it's extra frustrating for me. governor perry says his plan will shrink all of this down to the size of a postcard. >> the best representation in my plan is this postcard. this is the size of what we're talking about right here. taxpayers will be able to fill this out and file their taxes on that. >> all right, steven. you're conservative and in favor of lower taxes. we all agree that a 70,000-page tax code sl a little much, but is a postcard, a flat tax not a swing too far in the other direction? >> you've written that a flat tax is like a porsche when right now we're driving out a rusted-out pinto. you wrote it's steroids for the economy. aren't there benefits to certain deductions? aren't there things that my economic behavior should be rewarded for versus penalized? >> well, you could make that case, ali. the problem is the tax code should become just a big swamp. we just keep adding more and more deductions. what about the mortgage deduction? what about the charitable deduction? what about the deduction for state and local governments? it goes on and on. nowadays you can get tax deductions for wind mills and bull sperm and all this stuff. it made this tax code that incomprehensible mess you were talking about, 72,000 pages. i do believe, especially, ali, among conservative republican voters voting in the primaries and caucuses starting in a couple of months, this idea of just blowing up the tax system and starting and replacing it with something very simple and clean and pro-growth has a lot of appeal. you're going to find very few republican voters who say, oh, i like the tax code just the way it is. >> however, the postcard idea ultimately in a year or two years, somebody is going to say, we need to reward this kind of behavior, because we need people to spend this way or invest this way. it doesn't stay a postcard necessarily. let me bring in diane swank into the conversation. i think this is one thing that almost every american except those that make money off doing taxes agree, 72,000 pages is rough and we need comprehensive tax reform. what should that look like? what should undertake tax reform? isn't that better done by experts and act ants than my presidential candidates who appeal to a fatigue with complexity? >> certainly i agree with that, and i think we are seeing some proposals for fundamental tax reform in the simpson boles plan and in the gang of six. we have seen fundamental proposals for changes in the tax code. i don't agree with the tax code. that said, let's get rid of the behavior distorting deductions in the corporate tax codes that allows us to bring money back to the united states from abroad. there's a lot of things we can do with the tax code. at the end of the day we had fundamental tax reench in 1986 under president reagan. it was the largest tax increase in history. be careful what you wish for, because i think that's where we're moving. the idea is to raise revenues and not reduce revenues and also reduce all these special interests involved in the tax code right now. >> let's talk about the other side of the equation. president obama, this week he introduced a new mortgage modification plan, an enhancement on the previous nine that they've had designed to help maybe another million, maybe a million and a half troubled homeowners. then he moved up the time line for helping college students cope with the cost of education. listen to what he said. >> college isn't just one of the best investments you can make in your future. it's one of the best investments america can make in our future. so we want you in school. we want you in school. but we shouldn't saddle you with debt when you're starting off. >> candy, first of all, is this go it alone on the economy, don't wait for congress strategy likely to work for the president? >> politically absolutely. i think this idea we can't wait is, you know, same song, different verse of, you know, give them hell, harry. this is about being against congress, which democrats interpret as being against the republicans blocking the president's agenda. so this is all a part of it. it's about -- he made changes to student loans, for some homeowners unable to take advantage of some of the lower rates. he's done some executive orders that would ostensibly help veterans, so these are all key voting groups. they are key kitchen table groups. these are the sorts of things people talk about when they talk about the economy. how is our kid going to pay for the education? how do we keep the home? these are actual issues people talk about. they don't talk about the gdp. i don't care how good the gdp gets, they aren't talking about them. that helps the president reconnect in a way that he has been and many people see him as having disconnected with the voters that he rallied so well four years ago. this is a way for him to reconnect. >> candy, diane and i that people don't talk about gdp thing. >> you guys talk about the gdp. >> steven, here's a good point candy makes. the president has decided he's going to work around congress and do things on the margins and force their hand. congress, particularly the conservatives in congress have been remarkably effective strategists since their election in 2010. this is a change in strategy. the president is working around it. you worried that could steal some thunder from this republican movement of cutting spending and controlling what the president does? >> yeah, it's probably a good strategy. that's what i would do if i were the president. it's interesting in the last couple of weeks president obama and even harry reid and others have talked about, quote, the republican congress. wait a minute. people forget the democrats still control the senate. everybody hates congress, right? i hate congress, you hate congress. it's a populist thing to do. i have to say one thing on this. i have two kids in college. i'm paying almost $80,000 a year. they go to pretty expensive schools. what is going on with college expenses right now is just putting -- it's out of reach of american families, and the problem is just keeping to give money to the schools and tuition and scholarships, all that is doing, ali, in my opinion is feeding the increase in the tu wi wigss that grow in the last 20 years two to three times of the rate of inflation. when i went to the university of illinois, it was $1,000 a semester and that wasn't long ago. >> there are people in america sending their students it to college. it's crushing them in the middle. diane, last word to you. sorry about the whole people don't talk about gdp thing. i guess we're isolated about that. people are talking about education and their mortgages and health care and they're talking about their jobs and veterans, but we still have this larger economic issue to solve. it doesn't look like we're solving it in congress. >> the bottom line is that's true. they talk about gdp but don't know it. they talk about all the things that influence economic decisions in their lives, and that's what gps is and we're talking about right now to make us feel good and not enough to make us pay all the bills on a mass scale we would like. that's where the fundamental problem is. >> the little bit the good news is that the gdp for the third quarter that came out on thursday at 2.5% for once wasn't worse than we thought it was going to be. we had a piece of economic news. whether you like it or not or even know what neit means, it wasn't worse. that today in this economy is a win. candy crowley, great to see you. we look forward to seeing you on sunday morning. steven and diane, always a pleasure. we have the tax code here. let's talk about taxes. 9-9-9 or a flat tax? the man behind the republican pledge not to raise taxes is only a fan of one of them. which one would he choose? that's next on "your money." plus a full serving of fruit. but it just tastes like fruit. v8. what's your number? all your important legal matters in just minutes. now it's quicker and easier for you to start your business... protect your family... and launch your dreams. at legalzoom.com we put the law on your side. we asked total strangers to watch it for us. thank you so much, i appreciate it, i'll be right back. they didn't take a dime. how much in fees does your bank take to watch your money ? if your bank takes more money than a stranger, you need an ally. ally bank. no nonsense. just people sense. no problem. td ameritrade has all kinds of answers. call us for quick help opening your new ira. or an in-depth talk with a retirement expert like me. stop by my branch for a free retirement checkup. retirement hows and how muches. when's. and what ifs. bring them on. it's free. you're gonna retire. and we're gonna help. retirement answers at td ameritrade. [ male announcer ] roll over your old 401(k) and get up to $600. ♪ and gewhoa.to $600. whoa. how do you top great vacations? whoa. getting twice the points on great vacations. whoa! use chase sapphire preferred and now get two times the points on travel, and two times the points on dining and no foreign transaction fees. whoa! chase sapphire preferred. a card of a different color. apply now at chasesapphire.com/preferred he's one of the most powerful, influential voices in the country. he's not an elected official. he's grover norquist, presidents of americans for tax reform, a conservative group that secured pledges not to raise taxes from 238 members of the house and 41 senators. grover, welcome back to the show. you've warned that those who sign the pledge and break it will pay a political price. so whether they're listening to you because you're respected or feared, your opinion on the tax plans being offered by presidential candidates matters. do you support rick perry's optional flat tax? >> i think it's a really good step in the right direction. it takes the top rate to 20%. it does what we need to do internationally. a lot of people have been talking about taking the corporate rate to 25% because that's the european average. the problem is we have state corporate income taxes of between 4% and 5% on average. you really need to take the american corporate rate to 20% in order to be competitive internationally at a total of 25%. of course, on the individual level same thing. most businesses pay taxes through the individual tax code. >> so, grover, your thinking is approximate if you may taxes low enough -- the money. i don't mean to speak for you. tell me if i'm wrong. the money people don't spend in taxes or businesses don't spend in taxes will be otherwise employed in a way to creates demand and grows the economy? >> certainly let people decide how to spend their money. people will spend it more wisely and effectively than the government would. you also have -- you have to do a lot of other things like remove the regulatory overhang that's threatening every business decision in america, cutting taxes is step one. you have to remove some of the threats of all of obama's regulatory impositions. >> post people who pay a personal income tax in america pay more than 20%. bottom line if you give an ochgs of the old system versus a flat tax, which rick perry is suggesting doing, i would guess most people choose doing the flat tax. is that a problem? >> over time this would be so good for economic growth you will have more resources coming in. but immediately i like the idea the alternative, the irs has this by a big house and live in a state with high taxes and get the deductions. if you organize your light around the irs' preferences, it's unsettles or unfair to say you change all the rules. instead what rick perry's plan does, here's an alternative system. you want to move into the alternative system? do. stay where you are? that's fine, too. >> here's an interesting thing. perry's plan proposes to attach government spending as a set percentage of gdp. the more we take in, the more we produce, the more we spend. the reverse is true. is there ever a case where you would favor flexibility on that sort of arrangement over a hard and fast rule whether it comes to allowing the government to deal with a fiscal crises where they have to spend money where businesses and consumers weren't spending it. >> i reject the idea that the government takes a dollar out of the economy and spend a dollar, which is the theory under which the government would spend money and help the economy. but i do like the idea and i think it's the third really important thing that governor perry does here. he sets as a goal 18% of gdp as government spending. it's at about 24, 25% right now. this is what bush never did. president bush over eight years never looked at spending a percentage of the economy as the metric by which you govern whether you are spending too much or too late. if he said 17% or 19%, i could have lived with that. the idea he's setting that as a goal and everybody who works for rick perry will know, we're trying to get spending as a percentage of the economy down is a huge step forwards. not been focused on in the last ten years. >> herman cain's 9-9-the plan is based on the sales tax. you said it wouldn't violate the pledge to raise taxes, but up don't like the idea? >> yeah. i do like the idea where he says present code is problematic to redistributionists and rates are too high. the retail sales tax but the transition to get there is scary to me. a new 9% retail sales tax on top of states sales tax and the 9% japanese style to replace the corporate income tax. those three taxes are likely to grow and to become less flat. i don't know why you create three tapeworms hoping that later you have one small one out of the deal. >> i heard that expressed. let me ask you one thing. since the last time we talked there's a lot of criticism about the conservative lawmakers that sign the pledge when it came to making a deal on the debt and budget. have you changed your position on how tough you want to be on anybody that wants to do anything that looks, smells or walks like a tax increase? >> the guz new is there's people in the last year if you didn't give the democrats tax increases we wouldn't get spending restraint. turns out they were wrong and the republican leadership and my position as well was correct, by telling obama the democrats' taxes are off the table, we got 2.5 trillion in committed spending restraint. we're going back to the table to finish the last there. some democrats want to renegotiate and have tax increases. the republican leadership has made it very clear that's not going to happen. the only way to get spending restraint is to say taxes are off the table. we learned this in '282 when we did it the wrong way and in '90 when we did it the wrong way and we learned in 2011, this year, we did correctly. taxes off the table and real spending cuts. >> thanks for joining us. the housing market has been immune to recovery. president obama says he can help homeowners even if if congress won't help him. we'll find out what is in the plan and what it could mean for your mortgage after the break. i do my best to make it work. i'm back on the road safely. and i saved you money on brakes. that's personal pricing. at aviva, we wonder why other life insurance companies treat you like a policy, not a person. instead of getting to know you they simply assign you a number. aviva is here to change all that. we're bringing humanity back to insurance and putting people before policies. aviva life insurance and annuities. we are building insurance around you. ♪ ♪ co-signed her credit card -- "buy books, not beer!" ♪ but the second that she shut the door ♪ ♪ girl started blowing up their credit score ♪ ♪ she bought a pizza party for her whole dorm floor ♪ ♪ hundred pounds of makeup at the makeup store ♪ ♪ and a ticket down to spring break in mexico ♪ ♪ but her folks didn't know 'cause her folks didn't go ♪ ♪ to free-credit-score-dot-com hard times for daddy and mom. ♪ offer applies with enrollment in freecreditscore.com™. ♪ [ male announcer ] with 50 horsepower, dual overhead cams and fierce acceleration, the gator xuv 825i will shatter your expectations. ♪ and so no one gets left behind, check out our all-new, affordable xuv 550s at johndeere.com/gator. the world needs more energy. where's it going to come from? ♪ that's why right here, in australia, chevron is building one of the biggest natural gas projects in the world. enough power for a city the size of singapore for 50 years. what's it going to do to the planet? natural gas is the cleanest conventional fuel there is. we've got to be smart about this. it's a smart way to go. ♪ the obama administration announced the latdest efrtd to help struggling homeowner this is week. it centers on allows more people whose homes are worth less than the mortgages to refinance at lower rates as long as they're current on the payments over the last 12 months. mr. secretary, welcome back to the show. good to see. >> great to be back, ali. >> this is the administration's tenth attempt to help struggling homeowners. we're nowhere near the goals that the president laid out two and a half years ago to help several mill troubion troubled homeowners. about 3.5 million are in that foreclosure range, three or four months behind on the payments, and the range of families i've seen that this new program is expected to help tops out at about 1.5 million. oo i'm not sure if that's a fair estimate. why can't we do something more and bigger to get all the those people out of trouble? >> ali, first of all, let's recognize the progress we have made. since the president came into office, over 5 million families have had their mortgages modifies. if you like just over the last year, the number of people getting foreclosed on is down 40%. so we are making real progress. the president's also said, we haven't done enough. we have to keep doing more. so let's be clear. this effort is a targeted efforts that was announced this week that there are 4 million families around the country who have fannie mae or freddie mac mortgages. they're underwater and paying rates of 6, 7% even though they're doing everything right. they're paying their bills, and they could benefit from about $2500 a year in reduced payments on average. >> right. >> that's like a major tax cut year after year. >> they can't do it because they're underwater. here's the thing. even in the last practice you september up the infrastructure -- when you talk about the 5 million that modifies, they're not all under a government program. it's a government influence tha that's helped the banks, what else could work? when you sit around with decision-makers or president and you talk about things that work, what are the options? can we take the mona homeowners owe and capitalize it into their own mortgages and extend the term of the mortgage? can the government do something with the houses sitting around there in clumps and hold onto them for five or ten years and release them on a controlled basis? help me out with options? what else is on the table? >> two specific things. this refinancing effort is important not for just for the 4 million borrowers. we sat down and attacked five major barriers to people refinancing. many of those could help other families that don't have a fannie and freddie mortgage. we'll give you an example. we figured out a way to automatically resubordinate second mortgages. many folks have a second mortgage, and they're blocked from refinancing. that automatic resubordination can help them refinance. another example is we've eliminated the need for an appraisal for many of these mortgages. that lowers fees, and it will allow other folks. if we can take these innovations and spread them more broadly to other parts of the market, we could have a bigger impact. the second thing i would say, the president was in las vegas monday on announce this. he said, look, this is an important step. we need congress to do their job. we need them to pass the americans jobs act. why? part is a project rebuild that would create 200,000 jobs, putting construction workers back to work, renovating and rehabilitating vacant and foreclosed homes. what would that do? that helps to lift everybody's property values. approxima if you live next door to a home foreclosed on, your own moem drops in value. we need to take this step as well, and we need congress to act. >> we hope this works. when do you think -- we're getting a lot of e-mails and tweets about this. for people affected by the new change the president made, when are they able to start the process of getting their loans modified? >> they should certainly get ready and start working with their lenders, but we think december 1st we'll start to see loans refinance under this. for those people who are most deeply underwater, it may take a little longer, around the 1st of the year. we're moving as quickly as we can to get this in place to help homeowners. we're going to do other things to make sure that we help this market. we've stabilized it, but we're going to keep doing thing to make a true recovery on our hands. >> when we satisfy we'll do other things, is there a new initiative under way? >> i would say two things. clearly getting the american jobs act passed would help a lot. we're pushing the banks to make right for all of the robosigning and other practices that have led many people into foreclosure. so we're negotiating with the 50 state attorneys general to get real principal write-down on loans as well. that's an important step that we're working on, and i hope we'll get there soon. >> all right, secretary donovan, always good to talk to you. thanks for being with us. housing and urban development secretary shean donovan. over the past 30 years, incomes have tripled for the top americans. how did the rest of us do? i'll tell you on the other side. luck? i don't trade on luck. i trade on fundamentals. analysis. information. i trade on tradearchitect. this is web-based trading, re-visualized. streaming, real-time quotes. earnings analysis. probability analysis: that's what opportunity looks like. it's all visual. intuitive. and it's available free, wherever the web is. this is how trade strategies are built. tradearchitect. only from td ameritrade. welcome to better trade commission free for 60 days when you open an account. [ woman ] welcome to learning spanish in the car. you've got to be kidding me. yeah, this is good. vamanos. vamanos. vamanos. gracias. gracias. gracias. ♪ trece horas en el carro sin parar y no traes musica. mira entra y comprame unas papitas. [ male announcer ] get up to 795 miles per tank in the all-new volkswagen passat tdi clean diesel. over a million people have discovered how easy it is to use legalzoom for important legal documents. so start your business, protect your family, launch your dreams. at legalzoom.com we put the law on your side. welcome back to "your money." pete is the host of sear yus xm standsup and will is a noted conservative commentator. we've heard about the we are the 99% and they're the top 1% in this country. it has tripled its income since 1979, up 279%. that's according to the congressional budget office. for people in the middle of the economic scale, after tax income grew by just 40% in that same period, and those at the bottom experienced an 18% increase over the same time. will, how does this disparity play into the political discussion? we've seen it play into the "occupy wall street" movements across the country. there's a realization and frustration. it's affecting people more now. >> first of all, inequality has come down over the last two years ago. it's down to 18% now. as that happens in economic recessionary environments. second point, so? that stat out of context means nothing to you. >> give me context. >> inequality has grown in the last 30 years. if it's attributable to corruption, we have a conversation to takes. >> there are people gathering in cities across this country who are not saying whaits attributable to, but it's happening. what's the cause? something has to be causing it to happen? >> this is the cause right here, this tax code is the cause. for 30 years there's an army of lobbyists hired by that top 1% to lobby for a tax policy that benefits them. the tax system is rigged for the top. it's rigged. it's not illegal. it's rigged. the middle class average americans don't have someone lobbying on their behalf. they have unions. >> pete and i don't disagree on this. i equality in and of itself out of context is not necessarily a problem. it's a bug in any system. in response to that i would have say we've gone 1500 years where the average income was $500 in this world. over the last 100 years it peaked to 6,000. >> the biggest problem is not the inequality but we have eroded the middle class that carries most of the burden of paying taxes in this country historically now is not as in as strong a position to continue to do so. >> the people at the top realize that can't be sustained. it can't be sustained the way its happening. let me be specific here. that's the world i'm looking for. 60,000 is what you pay a year. you pay less in your percentage of income if you may millions. how is that okay, will? how is it okay to pay a million bucks and pay less of a percentage than someone who makes $60,000 in a steel company or gold mine. >> it's overreacted. >> it's overreactive. warren buff set dent play less in taxes than his secretary. >> he he pays less of a percentage on his income. >> on his capital gains. >> people at that level make more money at capital gains. >> the percentage of rich people that make the majority of income off capital gains is low. that being said, we're arguing about that statistic. we agree. this is a problem. the reason that rich people have any way of avoiding the highest tax brackets is because in every one of these books, there is a hole and loophole and expenditure created by politicians to socially engineer a better world they envision. >> we agree on that point. this has to change. there's nothing better than illustrating this tax code to make people understand. there's 72,000 words in here. guys, a month after bank of america got pummeled by consumers and politicians for introducing plans for new debit card fees most other fees in the united states have decided tontd follow suit. now, on one hand, i'll tell you, companies like this including citibank have not charged those fees, but i wonder whether the banks don't want to get netflixed. >> they're saying this b of a decision hasn't reflected why they're not doing it. b.s. come on. what they do is make money. >> if b and a did it and hadn't gotten netflixed for doing it, you would have seen other banks follow suit? >> they say they're going to lose $2.2 billion. these other banks at that say they won't do it, believe me, they'll find a way to make that money back. they might be gambling saying, bank with us. they're charging 5 bucks. >> i bang at a bang that doesn't charge that fee. when i was on tv first, they said is it right? it's completely legal. you also have a right, but you won't do it, and leave a bank. 40% of banks in this country don't charge fees whatsoever. >> i'm suckered into the idea this is a free market -- an example. free market working. the bank say weerl do sgmp different and attract customers. it's in response to the dodd frank regulation, specifically the durbin amendment that puts extra fees on banks. do you think bank of america would have charged those fees? >> it costs under 10 cents apiece to conduct the transactions. >> now we're going to micromanage bank of america's? >> i side with my wallet. i go to a bank that doesn't do that. lots of americans are free to do the same thing. >> i'm with you. >> what a pleasure to see you both as always. europe has a debt crisis deal, but is it enough to avoid another global recession? we'll talk about that on the other side. [ engine revs ] what makes us number one in motorcycle insurance? we love bikes. we love riders. and most of all, we love to ride. perfect hair every time. leading the pack in motorcycle insurance. now, that's progressive. call or click today. banks and investors, private investors who hold greek debt get half of their money back in terms of plan. that hopes to ease substantially the greek debt load. number two, it shores up european banks in jens. bangs in europe are required to sharply increase the capital reserves to create a buffer against potential losses. the goal is to foster more confidence in the european banking sector, avoiding a run on the bank from investors and those who keep their money in those banks. finally the deal aims to boost europe's bailout fund for future crises. it creates new ways for others to investigate in the european union. watch china carefully. they could be a major investors, but will it be enough? despite the rally in stock markets after the news. nina covered the meetings in brussels and she's back in london. nina, is this going fob a sufficient deal to stop us worrying about whether europe is going to take the world into another reregs. >> the deal take is the delve in the deal tail and we haven't had all that many details in europe if you like. we saw the two strong men of europe, germany and also franc very much at odds clashing on verse issues. the real challenge is to see eye to eye in the future to implement all of this. they think about this before the g-20 gets under way in a week or so time. they had to to do tough talking with larger economic partners. >> that was my next question. into the new week i'm at the g-20 in france, and that's twha next big question is going tovenlt you've come to a framework and deal. how fast can they get down to the details and start implementing? >> yeah. that really is the sort of the trillion dollar question, isn't it? they said they're going it to be boosting that european bailout fund. the euro zone rescue fund if you like which is dubbed the esff, european financial stability facility to the tune of 1 drill trillion euros. they're starting from about $600 billion, and here's the catch. they won't put more money into it themselves. they have to convince other people outside the european union to put their cash into it. to do they have to offer solid guarantees. >> there's some interest the chinese may be interested in that if the guarantees are in place. nina, great coverage of it all week. tharngs for joining us today. so much of the immigration debate in the united states centers on protecting our borders, but what happens when in doing that, the best and the brightest of highly skilled workers are no longer able to beat down the door to get into the united states? then we have a different kind of immigration debate, and we're going to talk about it after the break. stay with us. ♪ it gives me warmth. ♪ [ boy ] it gives me energy to help me be my best. quaker oatmeal has whole grains for heart health. and it has fiber that helps fill me up. ♪ [ male announcer ] great days start with quaker oatmeal. energy. fiber. heart health. quaker oatmeal. a super grain breakfast. we asked total strangers to watch it for us. thank you so much, i appreciate it, i'll be right back. they didn't take a dime. how much in fees does your bank take to watch your money ? 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science, technology, engineers and math, they're known as s.t.e.m. the education debate focuses on the nude to train the american students for fields, but a particular focus of the immigration debate is now centered on making sure that the best and the brightest foreign born are able to fill shortages, labor shortages here in the united states. some people want to make it easier for non-americans to study and work in the united states if they can do things that not enough americans are trained to do. literally some thing we should staple a green card to people with degrees in science and technology and engineering and math. ron is an associate professor of public policy at rochester institute of technology. this is the director of research at duke university center for entrepreneurship and research for commercialization. welcome both gentlemen. you're boat very studied in this area. you say american companies are lobbying for more foreign-born highly skilled workers not because there's a shortage, but because they're cheaper than american counterparts. we hear from companies and universities and engineers themselves that the u.s. need to be more attractive to engineers in other countries. why don't you believe na? >> clearly, they're using it to bring in lower wage foreign workers on the temporary visa problems but to jettison older workers and bring in younger, foreign workers through these sners i think it isn't fair. i think that that's what needs to be put into place here. in fact, we have programs in place where american companies are forcing their american workers to train foreign replacements. we have that in place now. that needs to be fixed. >> we keep hearing the same rhetoric over and over again. he takes one or two examples of some stupid company. you need to meet real world companies. you deal with the googles and microsoft and all those great silicon valley companies. we have a couple of academics and folks who haranguing foreigners. if we had this policy, he would never be here. we need the best and brightest coming here to work here. we're making people work harder. this is why america is the greatest country in the world we have the immigration, we have the world's best and brightest. >> ron, is your concern companies are deliberately not hiring americans, deliberately trying to import younger engineering students and the fact that they are looking for cheaper wages. do you feel that's really widespread or is it like vic said, a few key companies can be fixed. >> i think it's quite widespread right now. you have companies like bank of america, ibm, pfizer, wachovia that had these policies in place. the question isn't -- wait i'm making statements -- that's been in the press. >> you're saying, ron, that there are companies and you named bank of america, ibm, pfizer that have policies that somehow do this. they have policies. >> that's correct. >> policies to hire younger workers and disclass older workers. show me one policy like. this would be a national scandal if it was true. >> they have this in practice. you want to look at the newspaper reports. >> you say it's a policy. don't look at the newspapers show me the policy. you're a professor on national tv talking about -- making huge allegation. prove your allegations. prove there's a policy from bank of america or any of these companies have. >> do they have policies that do this or are you saying it's widespread practice? >> they have it in practice. >> no they do not. >> what is it are they doing? are there people -- >> that's a dishonest statement. >> you're saying there are people deliberately not hiring american engineers or american students or they are displacing american workers. >> both. >> in farve of foreign born. >> both. >> in favor of cheaper and younger engineers. >> that's correct. >> is that legal? >> that's legal right now. under the l 1 program. there have been many cases -- there are cases of engineers who have testified before congress that they've trained their foreign replacement. >> some bad companies and some bad mistakes. >> like a.c. neilson. >> stupid manager did something stupid. all these big companies have policies do not hire americans to displace them this is complete nonsense. this is rhetoric that's hurting american competitiveness. we have this stupidity and it's scaring the best and brightest away. >> engineers trained in other places in the world or trained in the united states do not feel like this is a logical place for them to stay. is that a danger? >> there's really no evidence of that. in fact, foreign students -- foreign student enrollments are going up quite significant ifrom those countries. the question is how do you create enough demand in the u.s. to hire and absorb folks and the reason people are returning -- the reason people are returning is back the labor markets abroad are very, very good in their home countries. so, i mean it's not a question of us kicking them out. it's a question of, there are better opportunities abroad. what we really need to do is create more turns in the u.s. in terms of labor demand for these types of workers and then you'll keep them. >> guys, thanks for joining us. a heated conversation, a vibrant conversation. hopefully we'll have it again and try to get to the bottom of this. one thing we need to simplify the tax code. is a flat tax really the answer? my x, yz is next. when you're responsible for this much of the team, you need a car you can count on. we asked total strangers to watch it for us. thank you so much, i appreciate it, i'll be right back. they didn't take a dime. how much in fees does your bank take to watch your money ? if your bank takes more money than a stranger, you need an ally. ally bank. no nonsense. just people sense. ♪ [ gong ] strawberry banana! [ male announcer ] for a smoothie with real fruit plus veggie nutrition new v8 v-fusion smoothie. could've had a v8. i tell you what i can spend. i do my best to make it work. i'm back on the road safely. and i saved you money on brakes. that's personal pricing. it is time for the x, y, z. once again flat tax fever. gop presidential candidates beating off a long standing understandable frustration with this. the u.s. tax code. they are trotting out proposals to tucks it, make it easier, smaller, less complex. and the idea of a flat tax is once again being presented as a solution. but is it? the image of a simple postcard replacing endless forms, complicated software and accountants is very appealing but is it really the solution? let's consider where the flat tax is in use. there are about two dozen countries with a flat tax. the vast majority of which are small, relatively uncommon ply indicated economies. think iceland. many former communist countries that didn't use their tax code to steer consumer behavior because they were economies that didn't depend on consumer spending. not one of these countries adopt ad flat tax after tossing out a 100-year-old progressive tax system the sort that we have here in the united states. as a matter of fact, no major industrialized nation has ever made the swap for a flat tax system. why not? because as much as we all would like to think that there's a simple solution to a complex problem like this one, sometimes it's not that simple. i am not making the case that all of this is necessary. and that much of it is not the product of lobbyists securing prefrern shall treatment for their clients. but some of what is in here are legitimate and beneficial deductions that serve a purpose. the deduction for charitable giving help fund soup kitchens that government might have to pay for if individuals were not incentivized to give. tax reform should be a real priority but it needs to be done sensibly with consideration of the long term implications of each and every deduction that's removed. albert einstein once said everything should be made as simple as possible but not one bit simpler.