• With: Sen. Pat Toomey

    This is a rush transcript from "On the Record," November 21, 2011. This copy may not be in its final form and may be updated.

    SHANNON BREAM, FOX NEWS GUEST HOST: Well, President Obama is pointing to congressional Republicans as the main stumbling block in reaching a deficit reduction agreement. But what really happened behind closed doors? Someone who would know, Senator Patrick Toomey, was a member of the Super Committee. He joins us now live.

    Senator, thank you very much for your time. We know you've been on probably a bit of a roller-coaster the last few days. What happened?

    SEN. PAT TOOMEY, R-PENN.: Well, I'm terribly disappointed. I really am. This was a huge opportunity for us to do something really meaningful, something that would lead to strong economic growth and job creation and begin to put our federal government on a sustainable fiscal path which we're certainly not on now.

    But at the end of the day -- and you touched on this in your earlier segment -- it just wasn't possible to get there. The Democrats absolutely refused to agree with even one dime of spending cuts if there weren't huge tax increases attached to it. The number that preoccupied them was a trillion dollars. A trillion-dollar tax increase, can you imagine, in an economy like this? And it was just the insurmountable obstacle.

    Unfortunately, you know, this shouldn't have been about taxes. What this was supposed to be about was reining in the out-of-control spending that got us here in the first place. Three years of this administration and mostly Democrat-dominated Congress that has just taken spending to unprecedented levels, growing it in absolute terms relative to GDP by any measure. Spending and the corresponding deficits have exploded in recent years.

    And what had meant to be about getting that spending under control unfortunately became the Democrats' search for a trillion dollar tax increase, and we just weren't able to bridge that gap.

    BREAM: And Senator, at one point, you offered something up that would have actually raised a lot of revenue through basically reforming the tax code.

    TOOMEY: Right.

    BREAM: That apparently wasn't enough of a bridge to reach some kind of agreement. But you actually took some heat from some critics who said, you're a Republican, and they counted that as raising taxes. How do you react?

    TOOMEY: Yes. You know, that was a difficult decision for me and my colleagues, but you know, we felt like if both sides were just in their respective foxholes without looking for any opportunity to find common ground, we would surely fail. And so in an effort to break the impasse, what we suggested was this. We said, Well, look, we're facing the biggest tax increase in history in just 14 months. We've got one of the world's most ridiculous and counterproductive tax codes. What if we did something to make this code actually pro-growth, simpler and lower marginal rates, offset the reduction in rates with elimination of loopholes and write-offs and special interest favors.

    This is exactly what every bipartisan commission who's looked at this has strongly recommended. We put it on the table and said, We'll design this in a way that the revenue coming from shrinking the write-offs would be greater than the revenue lost from lowering rates, so there'd be a net quarter of a trillion dollars for deficit reduction.

    I felt that that was so pro-growth and pro-job creation, and by avoiding the tax increase that's right around the corner, I thought it would be worth doing. Shouldn't have to do it, but if that was the price we have to pay to get Democrat support, I was willing to do it.

    And unfortunately the, Democrats said, No, that number doesn't begin with a T. It's not a trillion dollars. So they were never really very interested.

    BREAM: Senator, you mentioned repeatedly the Democrats wanted a trillion-dollar tax hike. They say that primarily would come from people who can most afford it, those who are the highest earners in this country. It was a sticking point, obviously, in all of the negotiations.

    I want to take a look at a poll that came out on Friday from McClatchy Marist. And this is asking people out there how they would feel about trying to solve the deficit problems through raising taxes. This is tax increases for higher-income earners -- would you take that to help work on the deficit? Sixty-seven percent of people said, Yes. So why is it not an option for Republicans?

    TOOMEY: Well, if you actually explained a little bit about the levels of taxes that are coming, the fact that an awful lot of the small business owners, the job creators in America, the entrepreneurs we need to get out of this economy, will soon be facing combined state and local and federal tax rates of 50 percent, when people think that the federal government, together with state and local governments, will be taking half of a person's earnings, they -- they have a -- they really will reconsider whether we need to be going in that direction.

    I don't think they do. And when presented with the options -- you know, we put a deal on the table with the least possibly controversial items, things like a very modest savings of some of the least defensible agricultural subsidies that Democrats and Republicans on the committee said they could accomplish, ending some corporate subsidies, asking banks to pay something closer to a market fee for the guarantees they get from Fannie Mae and Freddie Mac. These are really noncontroversial, innocuous things. We got up to $640 billion worth after the Democrats had rejected our bigger proposal.

    And even that they rejected because there wasn't a huge tax increase for individuals. So I just think that there just wasn't the motivation to reach an agreement on the other side that I had hoped would be there.

    BREAM: What do you think was behind that lack of motivation, if you can speculate?

    TOOMEY: You know, it -- it's hard to say. You know, certainly, some have suggested that, certainly, there are many Democrats have always wanted to dramatically cut defense spending. Well, that's exactly what the sequester would lead to. Many of the Democrats in Washington absolutely are passionate about a huge tax increase. That's where we're heading to.

    And I haven't seen any leadership, certainly not from the White House or from elsewhere in Congress, with very few exceptions, for making the reforms to the big entitlement programs that the president himself has acknowledged are driving this problem. So unfortunately, we just -- we just never had that commitment from the other side.

    BREAM: Senator Toomey, thanks so much for your time tonight. We appreciate it, sir.

    TOOMEY: Thanks for having me.