After smiling on  Republicans who stepped away from Grover Norquist's no-tax hike pledge, CNN pressured the GOP House Majority Whip to raise income tax rates on Monday's The Situation Room.
Anchor Wolf Blitzer suggested a tax hike on those making over $250,000 a year, noting "those families and those small businesses did quite well during the years of the Clinton administration when the rate was 39.6. Why not go back to that?" [Audio here .]
When Rep. Kevin McCarthy (R-Calif.) responded "The economy was stronger then," Blitzer foolishly challenged, "The economy's a little stronger now than it was two years ago."
"I don't know if you've been out there," chuckled McCarthy, "a lot of people underemployed, out of employed, you see half of those college students coming out, a lot of them can't find jobs."
Blitzer also cited polls showing 70 percent of respondents believed the GOP wasn't cooperating enough with the President. He told McCarthy, "it will appear to a lot of Americans you're simply trying to protect the rich." And he followed up on the taxes. "What about raising it from 35 to 36 or 37 percent? Not all the way up to 39.6 percent?" Blitzer pressed.
Blitzer also threw White House talking points at McCarthy. "The President says 97 percent of all small businesses would be exempt from any tax increase if you passed the legislation the Senate passed, he would sign it into law," he said.
A transcript of the segment, which aired on November 26 on The Situation Room at 4:41 p.m. EST:
WOLF BLITZER: But if you raise rates from, say, 35 percent to 39.6 percent – which is what it was during the Clinton administration for those families earning more than $250,000 a year – those families and those small businesses did quite well during the years of the Clinton administration when the rate was 39.6. Why not go back to that?
Rep. KEVIN MCCARTHY (R-Calif.), House Majority Whip: The economy was stronger then. Remember two years ago when the Democrats controlled all, what did the President say? President Obama, who had Nancy Pelosi as Speaker then, and Reid, said don't raise the rates in a down economy, hurts it. The President now says too he's looking for that revenue.
BLITZER: The economy's a little stronger now than it was two years ago.
MCCARTHY: I don't know if you've been out there – (Chuckles) – in the economy –
MCCARTHY: – a lot of people underemployed, out of employed, you see half of those college students coming out, a lot of them can't find jobs. We need a much stronger econ – we're at our lowest point of new start-ups in 17 years for small business. And that's the greatest growth to economy. So when you look to the future, we're in a weak position.
BLITZER: What about raising it from 35 to 36 or 37 percent? Not all the way up to 39.6 percent?
MCCARTHY: You raise that? So what's that get you? 31 billion for the next year?
BLITZER: Well a billion here and a billion there. After a while you're talking real money.
MCCARTHY: So what you really want to do is sit down and find a place that you can control government spending and raise more revenue. If the goal is to raise more revenue, what is the best way to do that, at the same time protecting the economy? So, if you're able to gain more revenue by closing special loopholes and limiting them and keeping the rate down so you have better job growth, isn't that a better outcome? And that's what we should be talking about.
BLITZER: The President says – and he makes this point repeatedly, the White House put out a whole report on it today – you know what, the 98 percent who make under $250,000 a year, just let them continue to have the same tax rates. Don't make their tax rates go up at the end of the year. Take them out of this negotiation. Renew the tax – make sure they keep that rate that they have right now. Why not do that?
MCCARTHY: Well the goal is to solve the problem. That doesn't solve the problem –
BLITZER: – remove 98 percent of the middle class families. They don't have to worry about it.
MCCARTHY: But you do nothing about the growth of government, that that 98 percent is still going to be worried about the economy we have, the debt that we have. Let's solve this problem once and for all. If you get –
BLITZER: Can you do that in three weeks?
MCCARTHY: Look, I think what we can do in three weeks is set up where we reform some of the government spending, we bring more revenue in, that's what Republicans are putting on the table the President asked for. If the President would now say, he wanted, what, two and a half cuts for every one dollar? Show where those cuts are and then set a framework so you have overall tax reform next year where the committees can work on it, then you're going to get a robust –
BLITZER: So you do a two-part system –
BLITZER: The President says 97 percent of all small businesses would be exempt from any tax increase if you passed the legislation the Senate passed, he would sign it into law.
MCCARTHY: Most accountants will tell you, the majority of small businesses run as an "s" corporation. So what you would do is you would raise the rate over 43 percent, based upon what the other tax coming in with ObamaCare. Well, small business is at its lowest percent in 17 years of new start-ups. Small business creates more jobs than large corporations. So if you look towards the future, we're at a weaker point so you don't want to harm more of small business. So let's sit at the table, find places you close those special loopholes, bring the President the more revenues that he asked for where Republicans have put that on the table now. While keeping economy able to grow.
BLITZER: This new CNN/ORC poll that we just released today, is the GOP doing enough to cooperate with President Obama? 24 percent say yes, 70 percent say no. Politically speaking, it will appear to a lot of Americans you're simply trying to protect the rich.
-- Matt Hadro is a News Analyst at the Media Research Center