All-Star Panel: Where is tax battle headed?

This is a rush transcript from "Special Report," July 24, 2012. This copy may not be in its final form and may be updated.


SEN. MITCH MCCONNELL, R – KY, SENATE MINORITY LEADER: Our friends on the other side are practicing what could be best described as Thelma and Louise economics. Let's just march the whole country right off the cliff and see how that works out.

SEN. HARRY REID, D – NV, SENATE MAJORITY LEADER: There's an easy way to make the Senate work more efficiently -- Republicans can drop their record-breaking run of obstruction, gridlock, and delay. Since 2007, Senate Republicans have mounted 84 filibusters against legislation that received more than 50 votes.


BRET BAIER, ANCHOR: Well, the top Republican in the Senate says that Democrats need to fish or cut bait on the president's tax plan to extend the Bush-era tax cuts for one year for all except the top earners, essentially raising taxes on families making above $250,000 a year. The back and forth on the Senate, we're back with the panel. Where is this headed, Pat? Is this just a dance that will take us into the election?

PAT BUCHANAN, SYNDICATED COLUMNIST: It's headed for at a session we were talking about earlier.

BAIER: The lame duck session.

BUCHANAN: I really believe on this one -- I do believe the Republicans got the better of it. What is Barack Obama asking them to do? He's asking them to go against not only their political interests, their philosophical convictions, and their economic beliefs and to raise taxes in the middle of a recession, which is not what Keynes would recommend you do. Otherwise he's saying the whole thing is going over the cliff. This is more like "Rebel Without a Cause" with Buzz and James Dean, the two of them headed for the cliff and the first one is a chicken.

BAIER: Mitch McConnell likes "Thelma and Louise."

BUCHANAN: They both go over there. But this is – but this is exactly it. So I think the Republicans are on a principled ground, they ought to hold their ground. The president ought to do this one year just like President Clinton recommended and then deal with tax reform if he wins in 2000 --


BAIER: Now Mara, do Democrats believe that this is a winning issue for them?

The National Economic Council put out this statement in which they said specifically that taxes are scheduled to go up on the middle class -- 114 million middle class families -- an average of $1,600, and then it lists all the tax cuts that would go away in the first of the year and breaks it down really for each middle class family. So are they saying that this is a winning strategy?

MARA LIASSON, NATIONAL PUBLIC RADIO: I think they're saying it's a winning strategy. I don't think they think it's going to come to that where the middle class tax cuts would go away. What they're saying to Republicans is we want to pass middle class tax cuts, so do you. Let's pass those and then let's argue about the high end tax cuts.


LIASSON: -- well there is no leverage for Republicans in that case, and they know that. Polls show that most people want the middle class tax cuts extended, many, many fewer people want the upper end tax cuts extended.

BAIER: Even though President Obama himself said back in 2010 --

LIASSON: Well, he made a deal with the Republicans to extend all of them.

BAIER: And he also said don't raise taxes at all --

LIASSON: Don't raise in a recession --

BAIER: --in a slow growth time.

LIASSON: But the Republicans did something like this before. They held firm, they called the Democrats' bluff on the debt ceiling, they said we're willing to see the country default unless you make a deal with us.  Democrats are saying, OK, we're willing to see the sequester happen, the tax cuts expire, even though it will give a hit to the economy, not as bad as defaulting, if you don't make a deal with us.

BAIER: So is that Washington is now, a giant game of chicken?

LIASSON: Yes, unfortunately, yes.

BAIER: That's what it is?


CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Having heard about Thelma and Louise and James Dean, I'd say it's more Roadrunner economics. You go over a cliff and don't even know it until eight seconds later.

Look this is all a game. Nothing is going to pass in the Senate now, nothing at all. Each of the parties is maneuvering the other, trying to embarrass it. The Republicans know there are several Democrats who are up for re-election who don't want to go near the president's proposal on taxes. It's going to kill them. You only have two people who caucus with the Democrats, Joe Lieberman and Jim Webb of Virginia, who have said they will oppose the plan, the Democratic proposal, if it goes up on the Hill. But nothing is going to happen. It's all getting kicked into after Election Day.

But again, everybody's panicked over this. If Romney wins, it won't matter. He'll be the one who controls the agenda. If nothing happens before January the 1st when he becomes president, everything will be done retroactively. If Obama wins he's going to have to make a compromise exactly as he did in 2010 and that will happen at the 11th hour.

BAIER: I want to go over, just quickly Pat, this vote. There is going to be a series of votes tomorrow. The Democratic leader in the Senate, Harry Reid wants it to be a simple majority because it's a budget issue, 50 plus one, and that they could pass there. Usually in the Senate it takes 60 votes. Take one more listen to the Senate majority and minority leader today.


REID: They want to vote on theirs, vote on ours, we'll do it with a simple majority. So I hope Republicans don't insist on doing this the hard way. And why are Republicans delaying votes they asked for in the first place?

MCCONNELL: My guess is that Democratic leaders won't allow a vote on the president's plan. And that should tell you everything you need to know about the Democratic approach to the problems we face. They're either out of ideas, not serious about solving the problems we face, or both.


BAIER: Pat, as Charles said there are a number of Democrats in reddish states that don't want to vote on this.

BUCHANAN: Here's the thing -- the Democrats, the Schumer bill, if you will, taking $1 million dollars and above that we raise taxes, I think that will get 51 votes. The Republican bill won't and of course the president's bill won't.

BAIER: Why won't the president's bill? They have enough Democrats.

BUCHANAN: They won't get -- Republicans won't let them it. Republicans will hold out and filibuster that.


LIASSON: -- it's a budget issue. It's a tax and budget issue.

BUCHANAN: They're not going to let this happen. Republicans aren't -- but look, Romney is in the cat bird seat. What he is saying is, elect me and all the tax cuts are extended for one year. Elect Obama, and we don't know. It may be all, it may be some, it may be none. If Romney just hits this issue hard and the Republicans hit it hard, I think it's a winner.

BAIER: This is why people hate Washington Mara.

LIASSON: And they have good reason...they have good reason. It's all a big game of chicken. They can never come together on a plan. Everybody says they want to do tax reform. Why not just start?

BAIER: That is it for the panel. But stay tuned for an example of the importance of pronunciation.

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