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