This is a partial transcript from "Hannity & Colmes," August 13, 2004, that has been edited for clarity.

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ALAN COLMES, CO-HOST: And while a new Congressional Budget Office (search) report seems to prove that most people have long believed about the Bush tax cuts, that they benefited the uber-wealthy more than anybody else.

A new Gallup poll also has the president's job approval rating up to 51 percent. No incumbent president with a job approval rating of 50 or higher in the Gallup poll this late in the season has lost re-election.

But who's in the better position?

Joining us now is the co-director of Empower America, Bill Bennett, and the president of Cambridge Survey Research and FOX News contributor Pat Caddell.

Good to see you both.

Pat, good to have you on the show.

Bill, nice to see you again.

All right. Bill, the CBO, it is nonpartisan. And here they are; they came out with these figures. And they show that the wealthiest 20 percent of Americans, an average $182,000 a year, see their share of taxes drop.

The people who are making the most money benefited the most, clearly, and the middle class benefited less than they did from the Bush tax cuts. Is this the way we really want to be going?

BILL BENNETT, EMPOWER AMERICA: First I need to tell you and Michael, and I'm the host of a radio talk show, called "Morning in America."

COLMES: Absolutely.

BENNETT: Just part of the club. Thank you.

Yes, the CBO report suggests that everybody's federal income taxes went down, and a number of people went off the rolls completely. What it suggests is that if you take Social Security and Medicare out, the proportions remained pretty much the same.

But since those taxes are the same, no matter what your income level is, as you drop federal income taxes, of course the proportion is going to be higher for people at the lower end.

COLMES: So the net result of what President Bush has done is to...

BENNETT: Lower everybody's taxes.

COLMES: ... really help those who make money the most in terms of lowering their taxes the most?

BENNETT: Since everybody got a tax cut and some people went off the rolls, the people who were at the top and paid the most saved the most money. That's inevitable.

COLMES: Pat, saved the most money, but the fact is they didn't. They benefited much more than the middle — middle income Americans.

BENNETT: That's because — that's because they're working off a larger base.

PAT CADDELL, FOX NEWS CONTRIBUTOR: You know, the problem is — you know, the problem is, you know, whether you — what you're measuring. It's the same problem always with statistics.

But the fact of the matter is people pay Social Security taxes. You know, the Baby Boom generation has been paying, God, a trillion or more million dollars they paid into Social Security above the needs of the system in order to secure the system. And those taxes have been going on now for 20 years. And there's still money left, because it's being spent to cover deficits by the federal government.

The truth of the matter is, people — you know, if you include all taxes, you know, it's a pretty heavy wallop on the people in the middle and lower, because — partly because, you know, the — the Social Security tax, Medicare taxes are aggressive in nature because of the way they're structured.

COLMES: Bill, I want to move on here.

BENNETT: We agree on that. No, we agree on that. And that's one of the arguments, I think, for changing that Social Security tax.

CADDELL: Well, I never understood why anybody — I never understood why my party has never gotten a hold of it in terms of the tax issue of going back and dealing with the payroll tax and cutting that and really benefiting their constituents.

BENNETT: Right.

CADDELL: You know, they fight the president's tax cut, but we don't fight for the, you know, for the things that are so obvious and imbalanced.

BENNETT: You have...

COLMES: It's an aggressive tax bill, isn't it, that really, you know, as you pointed out, the structure there means that it hurts those who make less money the most?

BENNETT: Sure, absolutely.

CADDELL: Absolutely.

BENNETT: This is the problem. You don't have an ideological debate tonight. Pat Caddell is a very honest and fair-minded man. I try to be myself.

No, it's a terrible tax, and we need to do something about it. One way, of course, to address it is give people some option, which is to invest that money, if they want, in the private sector.

But it's the worst of taxes, because it — it is aggressive, as Pat says, and no matter where you are, you have to pay it.

MICHAEL REAGAN, GUEST CO-HOST: Bill, let me jump in for a minute. Mike Reagan here. It's good to talk to another radio talk show host. So let me ask you a question, Bill.

What we're talking about here is basically the richest group of people. They've lowered their taxes from paying 64.5 percent of the total tax down to 63.5 percent of the total tax. Let's talk percentages.

The other side of the coin that doesn't seem to be brought into the conversation is that John Kerry, his — he wants to raise taxes on people making $200,000 a year or more. Isn't that going to hurt the small business people that are out there, the very people that he says he's trying to help?

BENNETT: Well, I think it is, because of job creation.

By the way, I would support higher taxes on billionaires, but only on billionaires. Forget the millionaires. I think that would be a good idea. I'm kidding.

But sure, I think — I think it will. I think we can show that this has stimulated the economy.

But the most important point is to see that everybody's federal taxes have been lowered. But because of deficits, because of increased spending, which both parties do, and, you know, I join Pat in that as well, you know, all this money doesn't go to pay off anything.

REAGAN: Pat Caddell, let me talk to you.

CADDELL: Yes.

REAGAN: How are you doing, Pat?

CADDELL: Good.

REAGAN: Long time no see.

CADDELL: Good to talk to you, Michael.

REAGAN: Good to talk to you.

John Kerry, he's out there, you know, going on the campaign trail, as many presidential campaigns, promising everything to everybody.

We're talking about taxes. But my goodness gracious, how is he going to pay for all the things that he wants to give to the American people? He wants to give health care. He wants to give all kinds of programs, $1.3 trillion. Where is that going to come from?

CADDELL: Well, you know, this is hardly a difference in campaigns. Everybody does this, including the president. I mean, my God, look at the deficit we've got.

The truth of the matter is, is that, you know, it's the nature of politics. I think people generally take a lot of this with a grain of salt.

It's — the — you know, everybody believes in this country that the tax system has been — you know, has been — hurt them. But it's really not been developed politically, partly because there's no pay off on the deficit.

I thought that Howard Dean (search), actually, from my party had a very interesting point for all you people who thought he was a super-liberal. He was a nut about the deficits. And he really believed in it and could have made it an issue, and I think that we have failed to really develop that. Because that's what people...

REAGAN: Pat...

CADDELL: ... are going to pay down the road. We're going to be paying this off forever, our children and our grandchildren.

REAGAN: Pat, Pat, Pat. We said that back in the 1990s. Republicans went in in 1995, balanced the budget in a few years, with Bill Clinton (search) coming onto their team. So that can be balanced.

But John Kerry is out there wanting to spend even more money. You say balance the budget. You could do it with John Kerry, but John Kerry wants to spend even more money than what is now being spent.

CADDELL: I've never seen a president — I've never seen a campaign in which it adds up where the proposals and the promises add up on the balance — balance out at the end. This is a political campaign, you know?

BENNETT: We're going to gang up — We're going to gang up on you now, guys. Pat and I agree on this, too.

All campaigns promise more than they can deliver. All campaigns are going to spend more — will spend more and actually do spend more when they get into office. And both campaigns hide their extreme wings at their conventions. This is the nature of parties. This is not what the elections is going to be about, I don't think.

CADDELL: No, no.

BENNETT: The election...

REAGAN: So it shouldn't be an issue?

BENNETT: Well, I mean, of course these...

REAGAN: So it shouldn't be an issue?

BENNETT: This is not the central issue.

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