also, james wolfensohn has many claims to fame. yes, he ran the world bank but he hired paul volcker when he started his own investment firm. i'll talk to him about the global economy and more. later, an inside look at the silicon valley facebook, paypal, facebook, zynga. reid hoffman has been at the ground floor of all of them. and why is one of america's friends, india, friends with one of its sworn enemies, iran? playground politics are at large. i'll explain. but first, here's my take. we're going to hear a lot of polarized rhetoric over the next few months. the republicans and democrats will seem to disagree about everything. but there is one huge and important area where there is a possibility, a possibility of bipartisan action. that's tax reform. most americans, republicans and democrats, dislike the tax code. their right to do so. america has what is arguably the world's most complex tax code. the federal code plus irs rulings is now 70,000 pages long. the code itself is 16,000 pages. the state of france has only 1,909, only 10% of ours. and then there are others that have innovated and moved to a flat tax with considerable success. you have to understand, complexity equals corruption. when john mccain was still a raging reformer, he used to point out that the tax code was the foundation for the tax code of corruption. see, vast amounts of cash for campaigns and in return, they get favorable exemptions or loopholes in the tax code. in other countries, this sort of bribery takes place under bridges and in cash and in brown envelopes. in america, it is institutionalized and legal but it is the same thing. cash to politicians in return for favorable treatment from the government. the u.s. tax system is not simply corrupt. it is corrupt in a deceptive manner that has degraded the entire system of american government. congress is able to funnel money in perpetuity to its favorite funders through the tax code without anyone realizing it. for those who despair at the role of money in government. the simplest way to get it out is to remove the prize that congress gives away, preferential tax treatment. almost no exemptions does that. the simplest fix to our tax code would be to lower the income tax dramatically, and instead raise revenues through a national sales tax or a value-added tax. the u.s. is the only rich country in the world without a national sales tax. germany has one at 19%, britain at 20%, korea at 10%. what's the appeal of the consumption tax? the government loses several hundred billions of dollars a year to tax fraud. this is much harder to pull off with a consumption tax. second, it provides the government with a more stable source of revenue than income taxes. income taxes flux greatly. third, americans consume too much, often using credit and leverage to do so. a consumption tax would moderate this behavior. government will always get less of behavior taxes and more of what it subsidizes. ironically you the heavy reliance on income taxes makes the american system more progressive than those in europe. the federal government gets about 43% of its total tax revenues from taxes on individual incomes and profits compared with only 29% in germany and 22% in france. the balance for france and germany comes from the v.a.t., which is highly regressive. one recent oecd study showed that the top 10% in america pay a larger share of total taxes. 45.1% than do the top 10% in any of the 24 countries examined. in germany, they pay 31% of the taxes and in france, 28%. the best thing about tax reform is that it kills corruption. so if you ask me what kind of tax code i'm in favor of, i'm in favor of any new tax code that fills one requirement, it should fit on two pages. let's get started. if 2011 was the year of revolutionary change, maybe 2012 will be the year of electoral change. 26 nations go to the polls this week to vote for their president, prime minister, punching bag in chief. that includes four of the five u.n. security council members, the united states, of course, and also france and russia where mr. putin, not surprisingly, got the nod and china has a big leadership change coming, too. this represents 40% of the world's gdp. what does all of this potential change mean amidst all of the other challenges in the world? i have a great panel to talk about this. anne-marie slaughter and richard haas are both former members of the state department. on the other side of the story, bruce boinasketa is professor of politics at new york university. welcome. richard, when you were in government, would you find that there was an election? let's say sarkozy loses. will it make a difference? >> actually, it will. mr. sarkozy is running as though he wants to change france into germany and given the situation in europe right now, this might be an election that does matter. mr. hollande would implement 10 or 20% of what he's saying, it would make a difference. it would matter more than an election in a mature democracy would matter. >> anne-marie? >> i think he might want to do all of those things but i'm more worried about friends in german politics. i think the eu depends on france and germany and france and germany depend on the eu continuing. >> the issues you're talking about is hollande is proposing first a very, very large role for the state than france has? >> yes. >> 75% tax rates. and also proposing that the french get out of the business of this partnership with germany in forcing discipline on southern europe? >> yes. >> you think that they will have to continuing doing that but you're worried the germans won't be able to continue to do that? >> yes. the real concern is that germany decides it doesn't want to play the central role it has played in the eu, which has been the banker and the country that often makes sacrifices for greater political union and german voters are tired. it's in germany's economic interest to do that but politically, that's not as sure a thing as it has been. >> bruce, you do a lot of modeling for the cia, for the state department, for other governments. if you were to try to construct a model, do you think that -- about whether the euro is going to survive or collapse through this period of crisis, what would you say? >> i think the euro zone is going to likely survive for at least the next few years. longer term, that's a different story. i think richard is a little optimistic about the possibilities in france. >> you think sarkozy will likely win? >> i think he will likely win and i wouldn't think it will make a big difference who wins. they can move a little. they can't move far. i think we should note, with regard to france, that people thought when president obama was president-elect obama, that he was going to have policies were going to be radically different than george w. bush and on the domestic front he certainly has and in some parts of the foreign policy he has. but mostly, we're still in guantanamo. we're still in afghanistan. there hasn't been this radical shift. >> well, we're pulling out of afghanistan and domestically, hang on. we've had financial reform, we've had health care. not of the scale he proposed, but those have been bigger domestic changes that any other government -- >> there's one place that you have to admit, anne, significant continuity, vladimir putin becoming president -- i assume you don't think there will be much change in russian foreign policy? >> i'm not so sure. putin was elected, everybody knew he was going to be elected. that's not different. >> but he's already running the country. >> yes, he was already running the country and he clearly imagines another possible two terms. i do think he's going to be under different constraints. i think he is going to be facing either having to be much more repressive, really shutting down the opposition in a way to now that he has not done or he's going to have to start reforming in the way he says he wants to do. his own account is, i stabilized the country, i increased the national income, we're now growing, we're now strong. now i can turn to sort of a more orderly transition to democracy. that's his story. that would be a way out with -- given the political pressures, but it's also possible, certainly given his background, that that's all talk, in which case he's really going to have to tighten the screws on opposition and then we might really see a lot of turbulence. >> do you think that putin is a person with whom the united states can continue to deal and that he will be a likely cooperative partner on some issues like iran? because there's this whole idea that the obama administration has, which is we're going to reset relationships with russia, not because we love them but because we need for a bunch of things and we can establish a good working relationship. do you think that's likely? >> i think the administration was right to try the reset. it's probably now necessary to reset the reset. putin is a spoiler. when people face the kinds of choices that anne-marie described, i think likely he goes towards repression rather than opening, the tendency is to use foreign policy a bit to vent and distract and my hunch is that putin will be less of a partner than he will be going forward, which is not much of a partnership. i think this will be a rough relationship. we're not talking about going back to the cold war but essentially the united states is going to have to attack this without much help from russia. it might mean less and less role for the united nations. if china and russia are not there as partners in the u.n., increasingly multilateralism is going to have to be a little narrower without the formality of the u.n. >> well, in broader terms, there is a difference between china and russia. china is a country that wants to modernize. it has a a parochial selfish interest that it wants to guard. the russians, on the other hand, are the only other that is an oil state. russia benefits from national tension. they don't benefit from the international tensions being solved. >> i think that's exactly right. the chinese benefits from tensions being solved because it gives them cheaper oil and they need the oil and energy. the russian benefit from the price being high. and betting on what putin will do, if the price of oil is high, he will oppress because that's the efficient way when he's got money to take people to the streets and bash heads in. then he will become more oppressive. and it the price drops substantially, then probably liberalize because that would be the solution. the likelihood that oil is going to drop is not real. when we come back, we're going to talk about iran. and we are back with anne-marie slaughter and richard haass. russia benefits from crisis, the price of oil goes up and china on the other hand benefits from international tensions being reduced and oil prices going down. but you thought that they don't quite behave that way? >> there's a gap between what you think chinese national interest would dictate and what chinese behavior is. china ought to be there shoulder to shoulder partnering with us to get iran to behave. the last thing china wants is the straits to be closed and a war which would drive the prices to 3, $400 a barrel. they are a major importer. china is not there with us. they are essentially sitting back and they are not putting pressure on iran much with sanctions or anything else or even with north korea. >> do they care if iran gets a nuke? >> well, i'm not sure they care if iran gets a nuke. but, also, this is short-term interests over long-term interests because in the short term they can be cut deal with iran and get cheaper oil and actually benefit from the fact that everybody else is sanctioning iran. >> the longer term could be three or four months. they could find themselves where china has to do a rebalancing, they have a leadership transition and growth is coming down. they've got a lot to deal with on their plate. >> suppose you were to try and construct again using game material. win-win solution that is not a war. is there a negotiated outcome? because we're having negotiations. what i'm struck by is nobody wants to put out what is the solution? what is the kind of inspection regime that would be enough to survive the world but not so humiliating to the iranians that they would accept. >> we have a problem similar to north korea. in the sense that in both cases, we have a very close ally that feels threatened by their neighbor. we have this hostile neighbor that feels threatened and needs to deter. in the case of iran, therefore, i think the solution is for our government to decide, do we care more about the nuclear issue or do we care more about regime change? if there was a constructive regime change, that might solve the nuclear problem. but our pressures on iran may be exacerbating the nuclear danger because of the fears that we are contemplating regime change. >> so you're saying the more you threaten the regime with regime change, the more the regime will say, hey, i need to buy insurance. >> you're right. they need the capability to deter. >> i don't buy that. the iranian nuclear program has been in business a long time. they want to use their nuclear capability to bolster their role in the region. what we want to do -- i think there is a negotiation here. i think potentially there is a negotiation which says there has to be intrusive inspections, legitimately suspect facilities and have to be real ceilings on what it is you're allowed to do and keep based on what you've done in the past. i don't think we try to get iran completely out of the nuclear business. we don't humiliate them. but i think there's a potential deal. but we've only got a couple of months to do it. i think what the israelis are very clearly signaling is that unless there is serious progress and they are persuaded that they are not using that tactically to get stuff done, they are going to either act or they will act unless they have confidence that we will act before our window closes. so i think we've only actually got a few months to show that negotiations are really going to bear fruit. i believe the israelis are more likely to attack. >> most of the conversation is about concessions by them. it seems to me that there is a deal that could be put on the table that would tie their hands to reveal the truth of what their intentions are and that is for us together with our european friends to arrange to deliver the civilian energy that iran claims it needs. they pay for it. they pay the price up to what they are spending on their nuclear program allegedly for civilian purposes, and they are guaranteed the energy. as long as we deliver the energy, they allegedly have no reason to develop the nuclear capability. as long as they don't develop the nuclear capability, we have an incentive to deliver the energy. >> i don't think it's going to work because they obviously want to do some of this themselves. a lot of the conversation today has been about politics. you just recently had elections in iran. the so called principalists around the supreme leader. this can go one of two leaders in april. either against this backdrop where they are willing to show no compromise before their elections, you could see iranian flexibility, maybe they are worried about military attack, they are feeling the heat of these sanctions or just the opposite. they've decided they can brazen it out. they don't think the united states will make good on their threats or they might still be in better shape because they can throw the -- any inspectors out, there will be a rally around the regime effect inside the country. we don't know. but i think this spring is going to be critical because either negotiations are going to show some promise or not. and if not, israel has to decide whether it trusts the united states to act or whether israel is going to act itself. so sometime in 2012, this issue is going to come to a head and it's going to dominate the world, i believe this year. >> all right. the thing i worry about is the point you made, they have to make concessions but we have to make concessions. i only say this because i can't think of any time in history where a regime under pressure has just cried, i surrender. >> i agree. >> they are unlikely, particularly within divisions in their leadership. second of all, this is a hard time for us to make concessions. we have politics, too. and this is going to play out against the backdrop of an election year. >> and obama has space to go right but he has no space to go left on this issue. if he were to start negotiations with iran direct and make some kind of concessions. >> no, but talks are restarting. i think he's made it clear that he's willing to go to war. the country doesn't want war overall and if he can now say, look, we are keeping pressure on, we've kept the military option on the table. we're going to prove that diplomacy can work. i think he's got some room. >> do you think that's possible? >> he's going to be attacked. if he goes in that direction. but he can still do it under our constitution and under our process. no one can stop him. congress can't stop him. the republican candidates can't stop him but he's only got a couple of months. not, again, because of our politics. it's because of the israeli politics. >> and we've got to stop there. thank you very much. up next, the story of a country that seems to be everyone's best friend. its buddies with america and israel just as it is with iran. what country is it? we'll tell you when we come back. ttd#: 1-800-345-2550 ttd#: 1-800-345-2550 let's talk about the cookie-cutter retirement advice ttd#: 1-800-345-2550 you get at some places. ttd#: 1-800-345-2550 they say you have to do this, have that, invest here ttd#: 1-800-345-2550 ttd#: 1-800-345-2550 you know what? ttd#: 1-800-345-2550 you can't create a retirement plan based on ttd#: 1-800-345-2550 a predetermined script. ttd#: 1-800-345-2550 to understand you and your goals... ttd#: 1-800-345-2550 ...so together we can find real-life answers for your ttd#: 1-800-345-2550 real-life retirement. ttd#: 1-800-345-2550 talk to chuck ttd#: 1-800-345-2550 and let's write a script based on your life story. ttd#: 1-800-345-2550 [ kareem ] i was fascinated by balsa wood airplanes since i was a kid. 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[ cheering ] [ tom ] i wanna see that again. ♪ and now for our "what in the world" segment. i have a story for you. it's a story about a country that is america's friend, israeli's friend and yet it is also iran's friend. amid all of the talk of an israeli strike on iran, what is the country that stays friends with everyone? what in the world is going on? the country is india and it's been criticized in america for continuing to trade with iran despite coordinated sanctions on tehran. an article ran in "the wall street journal" that said they are calling it the mullah's last best friend. they have israeli defense is this, happens to be among the world's largest consumers and importers. the type of crude best suited for india's needs happens to be iranian's oil. there have been reports that the two countries reach