Part 2: Obama Talks Taxes, Economy With O'Reilly

This is a rush transcript from "The O'Reilly Factor," September 8, 2008. This copy may not be in its final form and may be updated.

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BILL O'REILLY, HOST: Both Senators Obama and McCain are promising to heal the economy, but they have very different plans. McCain supports tax cuts, the trickle down approach. Obama wants the government to stimulate the economy from the bottom up, and I had some questions about that.


O'REILLY: I want you to react to a couple of stats that I pulled out of here. You are a big tax the rich guy, aren't you?

Click here to watch Part 2 of O'Reilly's one-on-one with Obama.


O'REILLY: I know…

OBAMA: I think you're making too much money, man.

O'REILLY: You and Hillary both, you just want to take my money, and you can have it. I mean, I don't care if I live in a hut. Under President Bush, the federal government derived 20 percent more revenue than under President Clinton. Did you know that?

OBAMA: Well…

O'REILLY: Did you know that?

OBAMA: ...the economy grew, Bill.

O'REILLY: It grew, that's right.

OBAMA: The economy grew, so of course, the…

O'REILLY: Under President Bush, the economy grew 19 percent more than Clinton. See, this is what I'm not getting with you Democrats.

OBAMA: No, no, no. Hold on a second, Bill. Wait, Bill, hold on a second now. I mean, you know the famous saying about there are lies, damn lies, and statistics?


OBAMA: Well, you and I can — we can play a statistics game.

O'REILLY: I know it's bull. I know it is.

OBAMA: So let's be clear on the record, OK? The — during the Bush administration…


OBAMA: ...there was economic growth. Not as fast as during the 1990s, OK, but there was growth during the Bush administration. But what happened was that wages and incomes for ordinary Americans, the guys who watch your show…


OBAMA: …the guys who you advocate for and you speak for on this show…

O'REILLY: Right.

OBAMA: …their wages and incomes did not go up.


OBAMA: They went down.

O'REILLY: Do you know why?

OBAMA: And the reason they went down…


OBAMA: because most of the corporate profits and increased productivity went to the top, not just one percent, but the top one-tenth of a percent.

O'REILLY: Well, let me submit to you that you're wrong.

OBAMA: And part of…

O'REILLY: OK. We've been studying this issue because we want to be fair and balanced and give all sides.

OBAMA: Right.

O'REILLY: T he reason that wages have been depressed — and they're not that much. It's about $400 or $500 for the Bush administration, real wages up, and about $2,000 under the Clinton administration — is because there are 10 million immigrants, new immigrants in the workforce, most of whom are illegal aliens.

OBAMA: Bill…

O'REILLY: Those 10 million…

OBAMA: I totally disagree.

O'REILLY: ...with their salaries.


O'REILLY: ...have brought down — but again, that's statistics. Let's get back to taxing the rich.

OBAMA: So let me just finish making my point.

O'REILLY: All right.

OBAMA: The fact is for people in your income bracket and mine…

O'REILLY: Right.

OBAMA:, we both come from humble beginnings. And we were talking before the show that the fact that only in America could we have this success.

O'REILLY: Absolutely.

OBAMA: And I am not somebody who begrudges that success. I want people…

O'REILLY: But you want 50 percent of my success.

OBAMA: No, I don't. No, I don't.

O'REILLY: That's your tax rate, 50.

OBAMA: What I…

O'REILLY: ...if you get elected…

OBAMA: What I have said is that I would take your marginal rate back to what it was under Bill Clinton.

O'REILLY: Yes, 39.

OBAMA: You go back to 39.

O'REILLY: Right.

OBAMA: You can afford that. That's point No. 1. In exchange, I'm cutting taxes for 95 percent of Americans. 95 percent.

O'REILLY: That's swell, but that's class warfare.

OBAMA: It's not. Ninety-five percent is not class warfare.

O'REILLY: And then — whoa, whoa, whoa.

OBAMA: What I'm saying is that 95 percent of the American people are getting a tax break three times the amount of tax relief under my plan than John McCain's — and that's not my statistic.

O'REILLY: Here's where I got a problem.

OBAMA: That's from independent analysts.

O'REILLY: And it's not all about me, believe me.

OBAMA: Go ahead.

O'REILLY: Twenty percent more revenue coming in under Bush than Clinton, all right? He cuts taxes, people invest more. He cuts the capital gains. The government gets 20 percent more than under Clinton. You want to raise it back up. It doesn't make sense.

Secondly, the payroll tax. Over $250, you are going to hike it to infinity.

OBAMA: I am not.

O'REILLY: What's the cap?

OBAMA: That's not true.

O'REILLY: Whoa, whoa, whoa. What's the cap?

OBAMA: All I've said is that after $250…


OBAMA: ...right, then we could raise the cap. Not…

O'REILLY: We could or we will?

OBAMA: What I have said is that if we've got a set of options to stabilize Social Security, which I think is important, and I think you do, too.

O'REILLY: Right.

OBAMA: Because there are millions of seniors out there who depend on it. And we've got a couple of options. We could raise the retirement age or No. 2, we could cut benefits. Try living on Social Security right now. That's no fun if you're a senior. No. 3, we could just do nothing, in which case in the out years, Social Security will be — let me finish my point, Bill. In the out years, it's going to be essentially a reduction in benefits. We could raise the payroll tax on everybody.

O'REILLY: Don't do that. I don't mind you...

OBAMA: There is no free lunch. So my only point is…

O'REILLY: No, there is a free lunch.

OBAMA: What is the free lunch?

O'REILLY: The free lunch is that you're taking the wealthy in America and the big earners, OK, you're taking money away from them and you're giving it to people who don't. That's called income redistribution. It's a socialist tenant. Come on, you know that. You went to Harvard.

OBAMA: Teddy Roosevelt supported a progressive income tax.

O'REILLY: Not at the level you do.

OBAMA: Bill, I don't like paying taxes. You think I like writing a check? What I believe is that there's certain things we've got to do. And we've got to help people who are having a tough time affording college so they can benefit like we benefited from this great country. People who are have having a tough time; they don't have health care. People who are trying to figure out how they are going to pay the bills. And there are certain things we've got to do. Our infrastructure — look what happened in Beijing. You go to the Olympics and these folks are building, and we've got sewer lines that are crumbling.


OBAMA: And at a certain point, we've got to pay for it.

O'REILLY: You're not across the board-ing it. You're going, I'm taking from the rich. I'm Robin Hood Obama.

OBAMA: Bill…

O'REILLY: And I'm giving to everybody else.

OBAMA: All I'm saying is…

O'REILLY: And then you want to raise corporate taxes.

OBAMA: No, I don't. That's not true.

O'REILLY: You want — you don't want…

OBAMA: All I'm saying is, if we've got something that we've got to pay for — under George Bush, the debt has gone up $4 trillion. Right? So that's a credit card we're taking out on our kids from the Bank of China that they're going to have to pay.

O'REILLY: War on Terror, though, come on.

OBAMA: Well, no, no, no, that's not true. That has to do in part with the Bush tax cuts and no cuts in spending.

O'REILLY: All right. You can't — Bush tax cuts generated more income. The spending is out of control.

OBAMA: The Bush record, the numbers are what they are. $4 trillion. Now we've got a choice. We can keep on just borrowing and dump it on our kids. That's option No. 1.

O'REILLY: You can take it from the wealthy and give it to everybody else.

OBAMA: Or we could have across the board tax hikes, what you just talked about.

O'REILLY: It's not income redistribution.

OBAMA: Well, but the problem is, if I am sitting pretty, and you've got a waitress who is making minimum wage plus tips, and I can afford it if she can't, what's the big deal for me to say I'm going to pay a little bit more?

O'REILLY: Because it inhibits…

OBAMA: That is neighborliness.

O'REILLY: Listen, if you raise the cap gains tax, that's going to inhibit investment. I won't buy as many stocks. And many, many, more people won't, OK, that's…

OBAMA: If we went up…

O'REILLY: It's going to come back to bite you, senator.

OBAMA: If we went up to a prohibitive rate, you're right. But look…

O'REILLY: Thirty percent on — that's Vegas, man. I'm not going with those odds. Fifteen I'll pay. Not 30.

OBAMA: I didn't do to — I didn't say we would go to that.

O'REILLY: You said between 25 and 28.

OBAMA: No, what we said is let's say we go up to 20. I've talked to…

O'REILLY: Twenty is OK, not 25.

OBAMA: Well, you and I agree.

O'REILLY: All right.


O'REILLY: All right. We make economics exciting. Now Tuesday, it's Reverend Wright and the associations. You think that was lively? Wait until you see Tuesday.

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