governor rick perry is proposing giving you taxpayers a choice. essentially you can pay your current income tax rate under this code or skip the accountants and software and 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 police kp correspondent, 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. this tax code helps us understand that. 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. its took herman 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. as opposed to to the complicated proposals put out by romney or huntsman. >> no, it doesn't. it is something -- herman cain picked that and said it over and over again. sim police itty and repetition work on the campaign trail. they don't work when you're making policy. what happens is 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. at least that's what the alleged outcomes would be. >> even i want to tear my hair out, so it's extra frustrating for me. steven moore joining us, editorial writer for "the wall street journal". 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 is 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've written 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 has 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. >> yep. >> and 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? who should undertake tax reform? isn't that better done by experts and act ants than my presidential candidates who appeal to as candy points out, fatigue with complexity? >> certainly i agree with that, and i think we are seeing some proposals for fundamental tax reform in the simpson-bowles 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. i don't agree with the flat tax. 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 when was the last time we had fundamental tax reform in 1986 under president reagan. at that time, it was the largest tax increase in history. eliminating deductions and simplifying the tax code. 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. this is the sorts of things people talk about when they talk about the economy. how are we going to pay for our kid's education? 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. they're talking about those issues. 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. >> that's right. >> 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 republicans and 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 tuitions which have been growing over 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 living with college age students and their retired parents who are consuming health care, which is increasing at that rate. it's crushing them in the middle. we'll be discussing a lot of that. diane, last word to you. sorry about the whole people don't talk about gdp thing. i guess we're isolated about that. this is a valid point that candy makes. 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. i think the reality is they do talk about gdp, they don't know about 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 be able to pay all of our bills on a mass scale that we would like. that's where the fundamental problem is. >> the little bit of 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 it 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." 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[ junior ] ...and they've helped build my business. you know what else is early? medicare open enrollment. now through december 7th. can i stick with my old medicare plan? sure! or find a new plan with better coverage, less cost, or both. medicare plans give you free cancer screenings and wellness visits and 50% off on brand-name prescriptions when you're in the doughnut hole. it's part of the healthcare law. so it's time to look, compare... and choose the right plan for you. learn more at 1-800-medicare or medicare.gov. 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 that if you make 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. >> so most people who pay a personal income tax in america pay more than 20%. bottom line if you give them an option 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? the government is going to get a whole lot less money. >> over time this would be so good for economic growth you will have more resources coming in. but immediately i like the idea of having an alternative. there are some people who were told by the government, these are the preferences the irs has buy a big house, live in a state with high taxes, you get these deductions. if you've organized your life around the irs' preferences, it's a little unsetting 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 when it comes to allowing the government to deal with a fiscal crises where some argue they had 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 spends the dollar, and makes the economy better, 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 was looking at spending as 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 9-9-9 plan is based in part on a national sales tax. you said it wouldn't violate the pledge to raise taxes because herman cain has signed that, but you don't really like the idea? >> yeah. i do like the idea where he says present code is problematic to redistributionists and rates are too high. he does the fair tax, the retail sales tax but the transition to get there is scary to me. he has three taxes, the income tax, only at 9%, okay, a new 9% retail sales tax. on top of all the state sales taxes that exist. and a 9% japanese-style vat to replace the corporate income tax. those three taxes i think would be likely to grow and 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 signed your pledge when it came to making a deal on the debt and on the budget. have you changed your position on how tough you want to be on anybody that does anything that might at some point might look, smell or walk like a tax increase? >> the good news there were 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. $1.2 trillion 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 '82 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. >> good to have you back. thanks for joining us. >> sure. >> grover norquist president for americans for tax reform. 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. in america's most in demand careers. we provide you with instructors who are professionals working in the fields they teach. it's an education designed for today, from a university that holds the same level of institutional accreditation as america's top schools. experience the university of phoenix difference at phoenix.edu. experience the university of phoen♪ difference we're centurylink... a new kind of broadband company committed to improving lives with honest, personal service, 5-year price lock guarantees and consistently fast speeds. ♪ 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. the obama administration announced its latest effort to help struggling homeowner this week. it centers and allows more people whose homes are worth less