• This is a rush transcript from "Your World With Neil Cavuto," November 12, 2009. This copy may not be in its final form and may be updated.

    NEIL CAVUTO, HOST: All right, well, the health care rush is on, and the taxes are getting piled on. The debate in the Senate could begin as early as Monday. But today, reports saying that the Senate Majority Leader Harry Reid is now seriously considering hikes on folks making more than 250,000 bucks a year.

    My next guest likes that idea, Ed Rendell is the Democratic governor of Pennsylvania — a very thin governor of Pennsylvania. What is going on with you? Are you losing a lot of weight?

    GOV. ED RENDELL, D-PENN.: I'm trying, Neil. And I have got to start with a shocking admission. I actually agree with you on something, when you said it's premature for us to even consider a new stimulus. We've got to see how the current one rolls out. You're dead on. You're absolutely right.

    And I also think Congressman Cohen is right. I think what we need...

    CAVUTO: Is that the lack of food talking there? No, is that the lack of food talking there? Or what's happening?

    RENDELL: No, no, no. You're dead-on.

    CAVUTO: I told you if you continue coming on my show, you would see the light.

    (LAUGHTER)

    But continue.

    RENDELL: Well, maybe a little bit, a little bit.

    But Congressman Cohen is also right. I don't think we need another stimulus that's going to spend extra money. I think what we should do is what Congressman Cohen proposed, and that's front-load and reauthorize the federal highway transportation bill, commonly known as ISTEA, because that's money we're going to spend eventually anyway. We just front-load it and there's nothing like...

    (CROSSTALK)

    CAVUTO: You know what, Governor? I think it's a moot point. With all due respect, my thin powerful friend, I'm telling you it is a waste of time with these tax hikes going on. I'm wondering if that's the stuff that's going to inhibit, you know, folks from hiring and just make the environment worse, not better.

    RENDELL: Well, remember, though, Neil, 95 percent of small businesses are going to be exempt from those tax hikes, and that's where the real job creation is — those businesses 100 employees and down. And they are exempt, even under the Democratic House plan. They're exempt from any tax...

    (CROSSTALK)

    CAVUTO: Yes, but — but you know, businesses pay those Medicare taxes as well. And when Senator Reid, you know, goes on and looks at seriously doing this or ups the ante so that the sky's the limit, then not only are those individuals who might be few and far between in your eyes are paying it, but the businesses are paying it, too. So they'll think twice about hiring a lot of top workers, I am sure, in that environment. Right?

    RENDELL: Well, of course, doing nothing, Neil, also makes businesses very reluctant to hire new workers because the cost of health care now is just out of control. I have used this statistic before, but you've got to hear it again. Ten years ago in Pennsylvania, a family health plan for an employer cost $5,500. Today, it costs $11,500, and by 2016 over $25,000.

    No business is going to be able to offer health care to its employees without going bust with those type of figures. So we have to do something. That's the central message I want to get through to all of your viewers. We have to do something.

    CAVUTO: Well, even if you do — OK, let's say you do something. If you bear the cost of this on individuals and hiking their taxes, on companies and hiking their taxes, and the other half presumably finding savings, which we've never seen in the past, but Governor, you're right. Hope springs eternal. We just might.

    How is it going to reverse that math?

    RENDELL: Well, first of all, remember hiking taxes on people like myself and I assume you, Neil, we wouldn't even be up to the tax rate that existed under Ronald Reagan. That's basically a rate that you're not paying.

    CAVUTO: That's hardly a bragging point, Governor. You know, that's like telling someone, "Oh, you have a long way to go before you're really screwed."

    RENDELL: No, but what I'm saying is that Ronald Reagan, who is the conservative, you know, idol, the tax rate under Ronald Reagan's presidency was much higher on rich people than it is today. So I think we could all afford to pay a little bit more.

    CAVUTO: Yes, but it also started out much higher, and he was — no, but it also started out much higher and he was going down. We're starting at still a relatively high level and going up.

    (CROSSTALK)

    RENDELL: No, I think we're starting at a level for rich people that's one of the lowest it's been in decades, and we're going up slightly. Look, we...

    (CROSSTALK)

    CAVUTO: Governor, we're not going up slightly. We're going up — you are starving so much it's affecting your mind.

    RENDELL: This tax would be a slight increase.

    CAVUTO: It's affecting your mind. No, no, it's affecting your mind.

    (LAUGHTER)

    CAVUTO: We're going from a top rate of...

    (CROSSTALK)

    RENDELL: No, this tax would be a slight increase.

    CAVUTO: Don't do that. We're going from a top rate of 35 percent to 45 percent with this health thing, and between states — not Pennsylvania, but other states with these surtaxes on top of surtaxes — we're rapidly going back to those old levels.

    And I think, in that environment, Governor...

    (CROSSTALK)

    RENDELL: But those new levels...

    (CROSSTALK)