• This is a rush transcript from "Your World," October 3, 2012. This copy may not be in its final form and may be updated.

    (BEGIN VIDEO CLIP)

    VICE PRESIDENT BIDEN: This is deadly earnest, man. This is deadly earnest. How they can justify, how they can justify raising taxes on the middle class that's been buried the last four years, how in Lord's name can they justify...

    (END VIDEO CLIP)

    NEIL CAVUTO, HOST OF "YOUR WORLD": Well, it is a gaffe that has now become apparently a Romney ad campaign.

    Ever since the vice president started talking about the middle class getting buried, Republicans have wasted barely a nanosecond capitalizing. The question tonight is whether it becomes a focus of the debate with Mitt Romney using the vice president's words against his boss, the president of the United States.

    Why a Romney economic adviser says that would be a very good idea

    Andy Puzder is next, Andy Puzder right here.

    Andy, what do you think of that? You have the vice president claiming -- maybe it was a Freudian slip or an unintended one -- that the middle class is buried. It doesn't really help the boss' cause.

    ANDREW PUZDER, PRESIDENT & CEO, CKE RESTAURANTS: No, it doesn't. I hope the governor comes out and says you bet they are buried. There's mounting debt, chronic unemployment and incomes are falling. Of course, they are buried. They're in great distress. We need a change. We need a change of policy. We can't have four more years like the four we just had. I think it's a great point for him.

    CAVUTO: What he's also saying there, though, if Mitt Romney had his way, taxes would go up on the middle class. Obviously, Governor Romney says that is not the case, but that this downtrodden middle class would be even more downtrodden. How should, if that comes up, the governor respond to that tonight?

    PUZDER: Well, there's two issues.

    Number one, he's proposing a 20 percent cut in the marginal rates for everyone. You're looking at the middle class. He's also proposing getting rid of capital gains and dividend taxes for the middle class.

    There's no proposal to raise taxes on the middle class. That's just a made-up Democratic myth. It's just not true. But what Governor Romney needs to do in the campaign, I think, is to establish there are really two very distinct visions here. One vision is you don't know what's going to happen in the next four years with the economic policy or with international policy.

    But there are two ways to look at things. One way is the way the president looks at it, which is every solution is government, government, government. It's government-centered. It's government dependency. That's how he will approach problems including tax and the middle class.

    And you have Governor Romney who will approach problems as someone who wants to support the private sector, who believes in economic and individual freedom, wants to release the American spirit and really release the entrepreneurial spirit that could bring the country back.

    Tax revenues will go up if we have growth. We don't need to increase taxes on the middle class. I don't care what the Democrats say; I don't care how many times they say it, repeating it doesn't give it veracity. It's just not true that the governor intends to raise taxes on the middle class. It's just not true.

    CAVUTO: But he is looking at lowering tax rates for everyone 20 percent, but he is giving a little bit more detail to that, as you know, Andy, saying that by one count he might limit overall deductions to $17,000.

    That's between mortgage interest, charity, however way you want to break it down, health-related costs, et cetera -- $17,000 would be let's a given cap, which is quite a bit under what a lot of Americans typically write off when they itemize, and most Americans do.

    So is there a possibility now that that could boomerang on Governor Romney, that a lot of people wake up and say, well, you're lowering my rate, but I will still end up paying more because you're taking away most of my deductions?

    PUZDER: Well, what the governor's committed to -- and obviously, the ultimate tax plan is going to depend upon what we can debate -- what we can get out of Congress.

    But what the governor's promise is that we will lower marginal rates by 20 percent. And that includes on the middle class. We'll eliminate some deductions, but not deductions sufficient to take your taxes up. We're hoping the middle class will have a tax reduction even with the elimination of deductions.

    And putting a cap on deductions actually lends -- gives that more credibility, because it allows you to give the middle class more deductions. I believe the governor also said if you had higher incomes, you might have a lower cap, in other words $17,000 for the middle class.

    CAVUTO: Right. Right. Right.

    PUZDER: It may be a lower number.

    So the idea here is that taxes on the well-to-do and on the successful and on those who are making a lot money will not go down. They won't go up, but they won't come down. Middle class, we're hoping they will stay where they are, or come down. Coming down is a very realistic possibility.

    The important part of this tax plan is you have to remember, when you earn -- let's say you earn $200,000 and you have $20,000 worth of deductions, so now you're paying tax on $180,000. If you paid tax at a 35 percent rate, obviously your rate's going to be below $35 percent because you are not paying on the full $200,000.

    What Governor Romney is saying reduce that rate and then every dollar you earn over the amount that uses up your tax deductions, you will pay the lowest rate on. So, it will encourage people to earn more money. The lower the marginal rate, the cheaper the next -- the less tax you pay on the next dollar you earn, which encourages people to earn more money and encourages growth.

    This is a growth-based tax plan, not an increasing rates to increase revenues plan, which doesn't work.

    CAVUTO: Well, he will have to spell that out, because the numbers, you can read it a lot of ways.

    Andy, it's always a pleasure, my friend.

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