• This is a rush transcript from "Your World With Neil Cavuto," February 8, 2010. This copy may not be in its final form and may be updated.

    STUART VARNEY, GUEST HOST: Democrats with a new strategy to sell tax hikes. They are trying to convince voters that ditching the Bush tax cuts will help the country dig out from the deficit ditch. Critics say they're trying to rush it through before public opinion turns against the move.

    Former Democratic Congressman Martin Frost says those hikes are needed to cut into the red ink.

    Sir, welcome to the program. Good to see you again.

    MARTIN FROST, FORMER U.S. CONGRESSMAN: Stuart, thank you.

    And I would like to take just a minute about Jack Murtha, if I may.

    I served with him for 26 years. He was a friend of men and women in uniform everywhere.

    VARNEY: OK.

    FROST: His word was good. When he said he would do what was required to get equipment and paying benefits for members of our armed services, he did it. And he will be sorely missed.

    VARNEY: Indeed.

    Congressman, I want to turn to the tax hikes, that is — would be rescinding the Bush tax cuts. You want to do this. You want to impose these tax hikes on higher-income people because you believe that that would then cut the deficit.

    May I just point out that, when President Bush cut those taxes many years ago, it set off 52 straight months of job growth? For the next four years, the unemployment rate averaged 4.7 percent. And each of the next four years, the deficit went down. If you reverse that, impose those tax hikes, are you not making an awfully big risk?

    FROST: Stuart, first of all, you're talking about letting the tax cuts on people earning more than $250,000 expire. They expire this year.

    VARNEY: So, the taxes go up.

    FROST: You're not talking about raising taxes on people...

    (CROSSTALK)

    VARNEY: Yes, you are, because they go back up again. They go up again.

    FROST: Let me be clear. Stuart, you're not talking about raising taxes on people earning less than $250,000.

    (CROSSTALK)

    VARNEY: No, I'm talking about raising taxes on the top one or two percent of income-earners. That is a tax hike.

    FROST: And, Stuart, let me be very clear, that the deficit went up when George Bush was president. It didn't go down. Now, there may have been some additional economic activity...

    (CROSSTALK)

    VARNEY: You can pick your time frame, but, right after the tax cuts, it stimulated activity in the economy. The receipts to the Treasury went up, and the deficit went down in the next four years.

    FROST: Stuart, we had a surplus when George Bush took office.

    VARNEY: Depends on your time frame.

    FROST: And we quickly went into deficit and stayed in deficit. I don't want to argue facts with you, but the deficit did go up when George — consistently when George Bush was president.

    But let's talk about the issue that you have raised. People earning $250,000 are being asked to pay the same rate, 39.6 percent, that they paid before Bush became president. There's nothing wrong with that. And if that will help us bring down the deficit, we ought to do that. And we ought to cut taxes on — we ought to keep the tax cuts in place for everybody else.

    VARNEY: It's a tax hike in a recession. Tax hike in a recession, sir. That's what it is.

    FROST: Well, it's not for the normal person. It's not for the average person — 98 percent of the people in this country won't get a tax hike.

    VARNEY: OK.

    FROST: Those tax cuts that were put in place during George Bush's presidency will stay in effect for those folks. And let the top one percent or two percent help us bring the deficit down a little bit.

    VARNEY: Former Congressman Martin Frost, a pleasure. Thanks for joining us, sir. We appreciate it.

    FROST: Thank you. Thank you, Stuart.

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