• This is a partial transcript from "Your World with Neil Cavuto," September 20, 2005, that was edited for clarity.

    NEIL CAVUTO, HOST: Well, forget Hurricane Rita (search). We're still struggling to figure out how we are going to pay for Hurricane Katrina (search). My next guest has an idea. He says eliminate the president's tax cuts right now.

    From the nation's capital, Democratic Congressman Barney Frank of Massachusetts.

    Congressman, welcome.

    REP. BARNEY FRANK, D-MASS.: Thank you.

    CAVUTO: Why get rid of the cuts?

    FRANK: Well, first, that's not the only thing to do. There are spending cuts that we can make.

    The administration announced on Monday a commitment of $104 billion over 15 years to send men back to Mars — to the moon first and then to Mars. I think that's a poor use of resources. I think we should be focusing on scientific instruments in space. Sending men to Mars and moon just to bring them back again, I think there's money we can cut there.

    We continue to spend much more than we should in agricultural subsidies that also get us in trouble in terms of world trade. So, I think you need a combination taxation and spending cuts. As for taxes, the president made certain plans for tax cuts. Since he made those plans, after all, we have had the war in Afghanistan, which I very much supported and is, I think, a very important part of our defense, the war in Iraq, which I thought was unwise and isn't going well, but it's costing a lot of money, then this hurricane.

    I think it is not wise, when you make plans, to then say, we're going to ignore new events. So, I do think a combination of undoing some of the tax cuts, or at least not going further with some of the ones, particularly for wealthy people, for instance, the estate tax (search). I favor saying that, under $5 million, you pay no estate tax. But I don't see why Bill Gates' kids, who are going to inherit Bill Gates' money, not having done anything to earn it, shouldn't have to pay some tax on that.

    CAVUTO: Well, of course, Bill Gates' kids aren't everyone's kids, right?

    FRANK: Beg your pardon?

    CAVUTO: Bill Gates' kids aren't everyone's kids, right?

    FRANK: No, they aren't. But we're talking about people who have more than $5 million.

    CAVUTO: OK.

    FRANK: In other words — that's a big chunk of it.

    The number of people who would pay estate tax — if you limit it over to $5 million — is really quite minuscule, less than 1 percent of the people. And when people are inheriting, not having themselves earned it, millions and tens of millions and billions of dollars, I think it's reasonable to get some revenue here, and especially when we are in this situation where the president has said: Look, I want to go to war in Iraq, and hundreds of billions of dollars.

    We have got to continue Afghanistan. We have Katrina. Yes, we can make some cuts. As I said, I think going to Mars in this context is really a very irresponsible thing to do. The agricultural subsidies continue, I think, to be a mistake. But I don't think you can do it all by that. I think some adjustment in the taxation level for new expenditures...

    (CROSSTALK)

    CAVUTO: So, you're open to some spending cuts, which I give you credit, that you're at least open to some of these other options.

    FRANK: Well, thank you, Neil. I appreciate the credit.

    (LAUGHTER)

    CAVUTO: But, in all seriousness, do you think that the tax cuts that the president engineered made what could have been a serious recession ultimately a shallow one?

    FRANK: No, not the ones I'm talking about.

    Some of the tax cuts were more targeted. Yes, they helped. I don't think the estate tax cut had any effect on that. I don't think, when parents are talking about raising money, making money, I don't think they say: Well, you know what? My kid is going to only inherit 75 percent of the millions and therefore, instead of 100 percent, because he may have to pay 25 percent tax, I don't think I will try to be as make as much money.

    I don't think the estate tax is in any way something that retards economic activity.

    CAVUTO: So that's your pet one, the estate thing?

    FRANK: No. I don't have pets here. That's one of them. There are others.

    I think, when you talk about lowering the rate for incomes over $300,000 and $400,000 — look, when Bill Clinton was president, in '93, we raised the rate on the top level. And that had no negative economic effect. The economy in the '90s went well. I don't think it caused a good economy, but it didn't hurt it.

    I think this economy of ours is so strong that it is not exact, that there's a range of taxation that's appropriate. And I think, when George Bush got Congress to undo some of the upper-income tax cuts, incomes over a couple hundred thousand dollars that Bill Clinton had got Congress to — we had raised it and then it was undone — I don't think that had much economic effect one way or the other.

    So, I think there's a range where you can make some adjustments. I don't think that people are going to say: Well, you know what? I'm going to stop trying to earn money because my tax rate went up 5 percent.

    CAVUTO: All right. Barney Frank, thank you.

    FRANK: You're welcome.

    CAVUTO: Congressman Barney Frank.

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