• With: Rep. James Clyburn, D-S.C.

    This is a rush transcript from "Your World," January 31, 2012. This copy may not be in its final form and may be updated.

    NEIL CAVUTO, HOST OF “YOUR WORLD”: Well, the Dow just finished its best January on record, at least on a point basis. Percentage-wise, it is the best gain we’ve seen in about 15 years, the Dow climbing more than 3 percent for the month.

    By the way, that would make the fourth straight monthly gain. So all of this hand-wringing notwithstanding, between that and an 8 percent gain in the NASDAQ, a lot of folks are saying the market could be telegraphing good times are ahead.

    But is all of this about to change if the president pushes through tax hikes?

    South Carolina Democratic Congressman James Clyburn isn’t too concerned. He joins me right now.

    Congressman, you do not think these tax hikes or talk of them would kind of upset the apple cart?

    REP. JAMES CLYBURN, D-S.C.: Well, it all depends on which hike you are talking about.

    If you are talking about letting the Bush tax cuts expire, as currently scheduled to do, I don’t think it’s a big deal. If you are talking about 160 million people not allowing those tax cuts to go forward, that is a big deal.

    (CROSSTALK)

    CAVUTO: So, you’re saying for the tax cuts -- or the tax rates that are supposed to expire at the end of this year for the upper income, you would let them expire, not for the others?

    CLYBURN: Yes, sir, absolutely, but not the 160 million who we are trying to get a tax cut for now, because these are the consumers, Neil. And you know that.

    These people, when they save this $1,000 or $2,000 per household, that money gets plowed back into the economy; it allows for jobs to be created. And it makes for a much better flow within our economy. Those people at the high end, we know what happens with that money.

    It goes into their portfolios, and it may not ever get into the economy the way it needs.

    CAVUTO: First of all, Congressman, what they do with their money is their business, right? But leaving that aside...

    (CROSSTALK)

    CLYBURN: I’m not saying -- it is their business.

    (CROSSTALK)

    CAVUTO: I understand, sir, but you see what I mean? Like, there’s a propensity on the part of Democrats -- not all, and maybe not you all the time -- but to look at further raising taxes than ever cutting spending.

    CLYBURN: Well, we did cut spending, $957 billion in the last cut.

    (CROSSTALK)

    CAVUTO: That was barely a rounding error, over the next 10 years, barely a rounding error.

    CLYBURN: Well, it may be, but the fact of the matter is, don’t say we didn’t cut.

    (CROSSTALK)

    CAVUTO: Well, you didn’t, you slowed the growth. You slowed the growth by 900 some odd billion, right? That’s not a cut.

    CLYBURN: That’s been the definition of a cut for as long as I have been in government. This is my 20th year here. And it is always those who are doing it say we are cutting and those who are against it says you are cutting the growth in spending.

    (CROSSTALK)

    CAVUTO: Fair enough.

    (CROSSTALK)

    CAVUTO: But you just heard we had another $1 trillion-plus deficit fourth year running. Do you think it’s time people get serious about big spending cuts before they start talking about any sort of a tax hike?

    CLYBURN: Yes, we should get serious about big spending cuts.

    And we also should get serious about big revenue raisers. We know that our tax code is crying out for reform. Let’s reform the tax code. Let’s make sure that everybody has the same benefit, everybody playing by the same rules so that everybody can be part of this growth going forward.

    CAVUTO: Does that include, sir, the nearly half of all households that pay no income tax right now? Would it be fair that they put some skin in the game?

    CLYBURN: Well, when you don’t not pay any income tax, that means you aren’t making any income.

    (CROSSTALK)

    CAVUTO: That is actually not true. A lot of these people are paying Social Security or Medicare or what have you. But I can understand maybe a few percent not being able to pay anything, and that’s fine, but 46 percent?

    CLYBURN: And that’s why Richard Nixon and the Republicans in the past gave us the earned income tax credit.

    (CROSSTALK)

    CAVUTO: I know, but we’re up to 46 percent not paying any income tax.

    CLYBURN: So what?