This is a rush transcript from "Your World With Neil Cavuto," February 5, 2010. This copy may not be in its final form and may be updated.

STUART VARNEY, GUEST HOST: Fair and balanced, a Democrat now who says stimulus is working and today's jobless rate proves it.

Michigan Democrat Congresswoman Carolyn Kilpatrick joins us now.

Congresswoman, thank you so much for joining us. We appreciate you being with us.

REP. CAROLYN KILPATRICK D-MICH.: Good to be with you. Thank you for having me.

VARNEY: Now, you got $220 million from the stimulus plan. And that went towards funding to address the negative effects of abandonment and foreclosures in parts of Michigan. So, I guess you could say that the stimulus plan worked for you, right?

KILPATRICK: You know, that's horrible, how you put that, but let me just say the stimulus plan is working. We have got a long way to go.

Much of the money has been obligated. Now much of the money is being spent. We have a lot of work to do here in our country, unemployment, all of that.

(CROSSTALK)

VARNEY: I wasn't being inaccurate.

(CROSSTALK)

KILPATRICK: No, no, no, no, I'm going speak to that.

(CROSSTALK)

VARNEY: You did get $220 million.

KILPATRICK: We got over $220 million for 12 cities in Michigan...

VARNEY: Yes.

KILPATRICK: ... through a HUD grant that would help distressed cities in their land banking, bringing land together, cleaning it, redeveloping it, helping in some foreclosures, helping in demolishing some buildings that need to come down.

That was one of the grants that we got.

VARNEY: OK.

KILPATRICK: We also got, along with other cities across this country, stimulus dollars to keep policemen on the job, to help teachers and their schools, to help build things.

VARNEY: So...

KILPATRICK: There was also an $8,000 tax cut for new homebuyers.

VARNEY: Yes, but...

KILPATRICK: There was also a tax cut for 95 percent of middle America, who got a tax cut last year.

VARNEY: But, in January, a million people dropped out of the work force. We lost another 20,000 jobs, lost over three-and-a-half million since that stimulus plan was passed. It's very difficult to call that a success for the country as a whole.

KILPATRICK: You know, there's a lot of things. And I agree we have got a long way to go. I will be the first to say that.

I'm from Michigan. Chrysler and General Motors went bankrupt, which caused a lot of effect all over this country. So, it's not — can't be just a stimulus. We have got to come together as Democrats and Republicans, as business and laypeople, as mayors and governors, and come together and figure it out together.

I don't think the stimulus package is the panacea for all. There are too many things wrong, health care, housing, education, jobs, two wars. So, we have to consider all of that, as policy-makers, but, certainly, the whole country does, too. The stimulus package is only one thing.

VARNEY: So, you're saying we — so, you're saying we need more government spending; we need another stimulus package, right?

KILPATRICK: No, I think — absolutely not.

VARNEY: No? No more government spending?

KILPATRICK: Absolutely not. No, I don't think we need a — no, we definitely — we have to weigh that. The stimulus package also gave — or right before that $800 billion, we gave $800 billion to the banks. Much of it has been returned. Thirty billion of that now is going to into community development financial institutions...

(CROSSTALK)

VARNEY: But I repeat the question, do we not...

(CROSSTALK)

VARNEY: You want to freeze spending? You don't want another stimulus plan?

(CROSSTALK)

KILPATRICK: Why don't you let me finish? You asked me the question. I just want to respond.

Right now, $800 — $787 billion, to be exact — that went to the banks is being returned. Thirty billion of that, a good portion of that, just this week, Secretary Geithner — and I was with him — announced money to our community development financial institutions, who will lend some of those dollars, millions of dollars, to small business, that will stimulate small business.

I heard your previous speaker. And, certainly, he has a right to do all that. And I share in some of his concerns. We don't know what's going to happen. What I'm telling you is, not just the stimulus package, but we have to get together as private and public, private citizens, public citizens, private government.

VARNEY: Would you consider — our last guest, who you were listening to, said that he would indeed hire people, 75 people, for his small business, if he could be assured that his taxes would come down and he could afford to hire. Would you approve of such a plan to lower taxes for individuals?

KILPATRICK: You know, it's — I'm telling you now, 95 percent of middle America got tax cuts last year.

VARNEY: But he doesn't.

KILPATRICK: Eight thousand dollars, tax credit for homebuyers last year.

VARNEY: He doesn't. But he doesn't.

KILPATRICK: We're looking at other ways.

VARNEY: Yes, but he doesn't. He doesn't get the tax cut. He gets a tax increase. And that's why he's saying he can't put people to work.

(CROSSTALK)

KILPATRICK: I will tell you how he can grow his business. How he can grow his business is that America is put back to work. Seven to eight million people have lost their jobs during this recovery. Those are — today's numbers...

(CROSSTALK)

KILPATRICK: ... less than they were last month.

(CROSSTALK)

KILPATRICK: There's still over 300,000 people unemployed in my district.

(CROSSTALK)

VARNEY: Having listened to our last guest, having listened to our last guest, who says — he runs a business — who says, if you cut my taxes, I will hire people, are you still in favor of raising those taxes on those people?

KILPATRICK: I'm in favor of helping that small business. And I'm not — I don't know what kind of business he has, but he spoke on that. I want to support that young man.

If he says that he can hire more people, that's what this administration, that's what this Congress wants to do.

VARNEY: But he wants taxes cut.

KILPATRICK: You know, and taxes are being cut. You won't let me say that.

VARNEY: Not for the upper-income people, not for upper-income people, or corporations.

KILPATRICK: Well, you're saying upper-income. Bush took care of upper income people, which is why — some of the problem that we have now.

We're trying to give tax cuts to middle-income people today and provide jobs, so that people work and have revenue and buy from his company and others. You have got to have a balance there.

(CROSSTALK)

VARNEY: Those are not small business owners.

(CROSSTALK)

VARNEY: But, look, I asked Christina Romer, would she — now, Christina Romer, I asked her earlier today, will you make the case, will you explain to me how a tax increase on the top one or two percent of income earners, how would that tax increase create jobs?

Could you explain it to me?

KILPATRICK: I can't explain that. That's not my job to explain that. What I'm explaining to you, as we make jobs more available to the American...

(CROSSTALK)

VARNEY: But we're talking jobs and taxes.

KILPATRICK: And we're talking — and the way you get jobs is put people back to work, so they can spend money, so we can recover in our economy.

(CROSSTALK)

KILPATRICK: You're not listening to me.

VARNEY: No, if you increase their taxes, do you not lessen the hiring?

KILPATRICK: We're not increasing taxes, young man. We're not increasing taxes.

VARNEY: On the top one or two percent, you are.

KILPATRICK: We're trying to build a jobs program in America. And when we put people back to work, people will buy again. People will have security in their homes. People will feel good about their health care system and their jobs and their children's education.

Those are the kind of things that we're doing. I support any business owner who wants to stay where they are, because the uncertainty is uncertain, two wars, a $12 trillion deficit.

(CROSSTALK)

VARNEY: I just wish you could make the case, I wish you could explain to me, with respect, ma'am, I wish you could explain to me how a tax increase on the top one or two percentage of income earners, can you tell me how that creates jobs?

(CROSSTALK)

KILPATRICK: I want to talk about the 99 percent. You keep talking about the one percent.

VARNEY: But you look at — every small business owner in this country who makes serious money is looking at a big tax increase.

KILPATRICK: You're kind of dogmatic. I want the other — I want my guy back who is gone, because you won't let me speak, and you keep talking about tax cuts. And this is way bigger than tax increases and tax cuts. It's putting America back to work. It's employing people.

It's helping those small businesses. And there are a lot of targeted tax cuts for them even yet today as we speak. The stimulus package by itself is not one panacea. Much of it has to work together. When we work together, public and private, government and citizens all over this — put people back to work. Let them pay taxes. Let them have tax cuts where they can be. Tax cuts is not the issue. It's unemployment. It's health care. It's all of this. It's two wars.

VARNEY: I did say, ma'am — with respect, I did say that we're not talking tax cuts. I'm talking tax increases.

KILPATRICK: I understand that.

VARNEY: And I was wondering how that would create jobs in America. I'm not sure we're in agreement on that.

But, look, Congresswoman...

KILPATRICK: We're absolutely not in agreement...

VARNEY: No, we're not.

KILPATRICK: ... because what I think that will create jobs are more jobs, and people spending money, helping those businesses, small and large, get the revenue that they need, so their cities, towns, and villages, and states can be healthy again.

VARNEY: OK. OK.

KILPATRICK: We're not yet there. And we're working in the Congress, House and Senate, Republicans and Democrats. Though we may disagree, we all want a strong America. And that's where I stand.

VARNEY: Congresswoman, we appreciate you being with us. I mean it.

Thank you very much, ma'am.

KILPATRICK: Thank you, sir.

VARNEY: Appreciate it.


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