Obama seeking tax hikes on rich for middle class breaks

This is a rush transcript from "The Kelly File," January 19, 2015. This copy may not be in its final form and may be updated.

NEIL CAVUTO, HOST: Well, the president is great at finding ways to raise money.

To the Republican who toppled Eric Cantor on his way to storming Washington on maybe finding just as creative ways to save money.

But, Congressman, that doesn't happen. Why not?

REP. DAVE BRAT, R-VA.: Hey, Neil. Good to be on.

Well, it doesn't happen because, as you just covered, we're in this back- and-forth sound bite politics up here in D.C., instead of doing basic economics. Just have your people go out to the Federal Reserve Web site on capital investment. The United States for the past 30 years is like this, flatter than a pancake, and China's is like this. And everybody knows it.

That's physical capital. And then human capital, innovation and creativity and that thing, our kids are not at the top of the world anymore in math and science scores. Those are the fundamentals that are going to cause economic growth.

So, when it comes to President Obama proposing policies, just ask the reader or listener to grant him everything he wants, to say, look, OK, everything -- do everything you just proposed. Will that solve the problem?

And the answer is no. And so then you come over to the Republican side, and say, hey, if you let the Republicans run the ship here and get tax policies straight to incentivize capital investment, change the monopoly in the public school system, really start doing smart R&D and getting science back in the schools and universities, that can produce an economic revolution. I think we all know that is the case.

So we're asking for that chance.

CAVUTO: Do you think, though, Congressman, he is trying to lure Republicans into a bit of a trap here by saying, look, the increases I'm proposing would affect the top 1 percent, and most of them the top 0.1 percent,so the Congressman is defending the super rich and not looking after the swap I'm doing to give the middle class tax breaks?

What do you say and how do you respond to that?

BRAT: Yes. And I -- like I was saying, I don't even respond to that. His -- his proposals are nowhere in the relevant economic range.


CAVUTO: Well, what do you think Republicans should do, Congressman?

BRAT: I think Republicans should focus on the biggest economic problem we have in the country. Go to the debt clock, it's $18 trillion. Go to the bottom, the unfunded liabilities are $127 trillion.

Those four entitlement programs take up the entire federal budget, the entire federal budget by 2032. I think Republicans ought to focus on that. That is 70 percent of the budget currently that is squeezing out military, education, and everything else. That's why we are all feeling the crimp, and so you -- in economics, you focus first on the biggest issue, and the $127 trillion is by far the biggest issue.

CAVUTO: No doubt, but, Congressman, people who aren't schooled in this stuff or don't follow this stuff, nowhere does the debt approach the top five issues with Americans.

Now, you eloquently articulated what is going on here, but the urgency seems to be lost on a lot of folks. How would you, how would Republicans, how should Republicans bring that in a way that can crystallize this?

BRAT: Yes.

CAVUTO: Because a lot of people talk about it, but it's like walking by the graveyard. Yes, yes, they're -- they're underground, but not me.

BRAT: Right. Right.

Well, you crystallize it by telling the next generation, they are the only group that doesn't have a lobbyist in D.C. The next generation of kids -- I taught for the last 20 years -- they need a lobbyist quick because all of this debt and the unfunded liabilities is coming due on their credit card.

It's an ethical shame, what we're doing to them, and then, secondly, you tell the seniors that when the Democrats threaten the Republicans as shutting down these systems, that's false. These systems, Social Security, Medicare, Medicaid, et cetera, are going to shut down automatically in 2032. They're shut down.

The Republicans are trying to reform and maintain these systems for the elderly and, just as importantly, for the next generation of kids, so that they have these social safety systems in place as they progress like we did.

CAVUTO: All right, Congressman, we will watch very, very closely.

It all begins tomorrow night.

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