Jack Kemp: McCain Warned of Fannie-Freddie Fallout

This is a rush transcript from "Hannity & Colmes," October 6, 2008. This copy may not be in its final form and may be updated.

SEAN HANNITY, CO-HOST: In front of a group of skeptical and angry congressmen, Richard Fuld, CEO of Lehman Brothers, testified on Capitol Hill earlier today, blaming the bankruptcy of his firm on, quote, "the lack of confidence," but ultimately the demise was his responsibility.

Let's take a look.

(BEGIN VIDEO CLIP)

RICHARD FULD, LEHMAN BROTHERS CEO: But I want to be very clear. I take full responsibility for the decisions that I made and for the actions that I took.

(END VIDEO CLIP)

HANNITY: Meanwhile the Dow fell below 10,000 for the first time since 2004, which has many people out there asking, will this bailout bill actually help the economy?

Joining us now, former vice presidential nominee, somebody I find myself occasionally in agreement with, Jack Kemp is back with us.

ALAN COLMES, CO-HOST: Go get him, Jack.

• Video: Watch Sean and Alan's interview

JACK KEMP, FORMER VP NOMINEE: Thank you, Sean, Alan.

HANNITY: I'm frustrated for Senator McCain. Let me tell you.

KEMP: Left-handed compliment.

HANNITY: No, it was meant to be. I'm frustrated for Senator McCain. He warned what the fallout would be for Fannie and Freddie three years ago.

KEMP: Yes, he did.

HANNITY: Democrats stopped his legislation that he co-sponsored.

KEMP: Yes.

HANNITY: Barack Obama wants $1 trillion in new spending and to raise taxes on everything which will really hurt this economy. Why is that message not getting out or penetrating, do you think, in the electorate?

KEMP: I agree with Dick Morris. John must, tomorrow night, and I believe he will, nail Obama on raising tax rates on capital gains, dividends, business taxes, small business taxes, death taxes.

You don't raise taxes on investment capital when every financial institution in American is seeking to raise capital to form more capital, to help bail out this economy, or not bail it out, because it's growing again, and clearly Barack Obama is defined the economics world — there's no economic theory in the history of mankind that suggests you would raise tax rates so severely, so dramatically in a slow-down of the proportions that we face.

HANNITY: Jack, it's eliminate the Bush tax cuts, raise Social Security tax.

KEMP: Right.

HANNITY: Raise the capital gains tax, raise corporate tax rates, raise his support.

KEMP: And redistribute wealth.

HANNITY: I mean it's — and I don't think I can tell you enough, we added up, it's a trillion dollars in new government spending.

KEMP: You know what I did the other day? I went back and read the John F. Kennedy platform of 1960, and Obama — Barack Obama keeps talking about John F. Kennedy. He's not John F. Kennedy, he's closer to George McGovern and the redistribute the wealth schemes of the early '70s.

HANNITY: I agree with you.

KEMP: But one quick statistic for you and your viewers, Sean and Alan.

HANNITY: Yes.

KEMP: John F. Kennedy in 1960 pledged to cut the income rate taxes by 30 percent, pledged to cut the capital gains tax by 50 percent, pledged to get the American economy growing at 5.7 percent without inflation. That is what we should be running on.

HANNITY: All right. Let me ask you this. There was a famous guy that once was a vice presidential candidate that talked about Jack Kennedy saying a rising tide lifts all boats. You might be familiar with him, because it was you.

KEMP: Yes.

HANNITY: All right, let me ask you this, because I brought this up with Dick Morris.

He's friends with an unrepentant terrorist, sits in Reverend Wright's pews for 20 years, Jack. Twenty years, a guy who hates this country. And I'm just wondering at what point the American people are going to say that his radical associations are air-raiding villages, killing civilians.

Why isn't he being held responsible for these radical views?

KEMP: Well, I think he has to be, and I think it's an issue. But the first three issues facing John McCain and the American people tomorrow night and I think next Wednesday night in New York are the economy, number one, the economy, number two, and having John McCain as commander in chief in this still dangerous world.

COLMES: Hey, Jack, let me — welcome back to the show.

KEMP: Yes, Alan. Thank you.

COLMES: Look, Obama's talking about spending. He may cut some of that down based on what the economy is doing, but he also has offsets of that in terms of cutting in certain places, for example, ending the war in Iraq, so he would in, addition to some of the spending he's talked about, so it wouldn't be a trillion dollars out of pocket, you know, so that's — and you know the tax cuts have to do with the Bush tax cuts on the very wealthy.

So, but they're.

KEMP: Well, wait a minute.

COLMES: Go ahead.

KEMP: Every small businessman and woman in America, every entrepreneur hopes — if they're not already earning a couple hundred thousand dollars hope to some day. So if you make it a barrier at 200 or 250, you put a lid on the ability of people to be successful.

That's not what America is all about.

COLMES: How much cutting is too much cutting?

KEMP: We shouldn't be — wait a minute. Let me make another point.

We're not out to make the rich poor, we want to make the poor rich, as John McCain pointed out three weeks ago. So let's stop this class warfare stuff about the middle class (INAUDIBLE).

The middle class, with all due respect, wants to get — to be in the upper class.

COLMES: Sure.

KEMP: Low-income people.

COLMES: And by the way.

KEMP: ...want to be in the middle class.

COLMES: ...at the time JFK.

KEMP: I don't like static analysis.

COLMES: At the time that JFK — that's a good point about static analysis. But the time that JFK was — reducing the tax rates, we were already headed towards a surplus. We're headed in the opposite direction right now.

KEMP: No, no, no. No, we had a deficit. We had a deficit.

COLMES: We had a deficit but it was closing. The deficit is closing.

KEMP: I'm an expert to this. I can.

COLMES: It wasn't expanding.

KEMP: No, we were in a deficit. The economy was very slow coming out of the Eisenhower years, and the Democratic Party pledged 5.7 percent economic growth without inflation, cut the income tax rates, cut the corporate, cut the cap gains rate, and make America grow again.

COLMES: All right. We have about 40 seconds.

KEMP: My belief is this is John McCain's message tomorrow night and for the rest of the campaign.

COLMES: Should McCain and Palin be talking about Bill Ayers and should they be talking about Jeremiah Wright or are Americans really more concerned, as you say, about the economy, and should she put this other stuff, this guilt by association stuff, aside?

KEMP: Well, those are issues I agree with Dick Morris. It's not just Bill Ayers bombing the capital, it's Bill Ayers extending money on education not for school vouchers or not for school choice or charter schools, but to radicalize students.

COLMES: It doesn't do with Obama's current position.

KEMP: That's ridiculous.

COLMES: All right, Jack, we thank you very much.

KEMP: Thanks.

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