Democrats threaten January 1st tax hike on all Americans

This is a rush transcript from "Your World," July 16, 2012. This copy may not be in its final form and may be updated.

NEIL CAVUTO, HOST OF "YOUR WORLD": You know, usually, it's Republicans who get the mainstream media rap for being obstructionists. How's that same media now going to play Democrats bragging about pushing this country to the brink?

We're going to soon find out, because Democratic leaders have just marked their line in the budget sand.


SEN. PATTY MURRAY, D-WASH.: So, if we can't get a good deal, a balanced deal that calls on the wealthy to pay their fair share, then I will absolutely continue this debate into 2013, rather than lock in a long- term deal this year that throws middle class families under the bus.


CAVUTO: All right, so either Republicans commit themselves to raising taxes or Democrats will commit themselves to risking shutting down the government and letting all the Bush tax rates expire.

To Pat Caddell, who says it's a losing game and a bad plan.

But they're going to risk it.


CAVUTO: How do you think it will go?

CADDELL: I think -- well, it depends on how the Republicans play it, because they have been now given -- let me tell you how I would play it, OK, just consistent with kill the Democrats.

There's a division between those who want a million dollars and the president, $250,000, $200,000. And he is forcing the party to choose. If I were a Republicans, I would get up and say -- and this is part of my mantra for the last week -- I would get up and say, first of all, you want a deal? Because they'll never get it. But here's the deal.

We will do something about people who make over $1 million, maybe. But here is the requirement. First, you give us X-amount of cuts in real spending. And, secondly, since you don't want to tax the middle class and we don't, Obama tax, that thing has got to go.

And if you will give us that -- which of course they can't -- but the Democrats would be flummoxed. They would not know what to do. All the Republicans, it's like playing poker. This -- they have just thrown out this bluff. Well, play a better card and then they'll fold.

And it's like -- but, instead, because they are confident the Republicans will always run like they're the French general staff in 1914 or 1940.

CAVUTO: But do they base this sort of machismo, whatever you want to call it, on the -- on the view that Republicans are getting inconsistent on the tax thing?


CAVUTO: What are they doing?

CADDELL: They're looking into polls. And what they're saying is, ah, 67 percent of the people say they want rich people to pay more. OK. Well, that's one of the -- in the same Rasmussen poll, the numbers are, do you think this is a good time to raise taxes? No. Do you think it will hurt you? No. What they're thinking is we can -- as I inartfully said last week about taking certain sports equipment off of players -- they think they have got them on the run. All the Republicans have got to do is play what I said. Just give them -- say, OK, we'll negotiate. Here's what we will do. But we want this and this. Then you tell us why you are going to tax middle-class people...


CAVUTO: OK. Well, let's say that doesn't happen, and we're left with the Democrats saying...

CADDELL: They still have to back off of this.

CAVUTO: I understand.


CAVUTO: Who suffers in the event -- I was in Washington last summer when they were going to through that shutdown strife.

CADDELL: Right. Everybody does.

CAVUTO: And I thought everyone suffered on that.

CADDELL: The person who suffered the most was the president.


CAVUTO: No, actually, it was me because it was so hot there. I was sweating.


CAVUTO: You suffered.

CAVUTO: So I think I suffered more than anyone in this country.


CAVUTO: Go ahead.

CADDELL: But the Republicans in the Congress took a real hit, and from that moment, they were powerless.


CAVUTO: So, what makes you think even in this situation, Democrats...?


CADDELL: Let me tell you why the president. The Democrats are going to suffer, he suffers. You know why?

Because he is the president. His worst numbers in the last two years were not after the 2010 election. It was August. That's why he went on this offensive. People – he's a problem now with what he's doing. Someone said to me today -- it was great line -- he said, it's the transparency, stupid.

And the president has got a problem and the Romney people are calling -- this -- the Republicans need a messaging that's more aggressive.


CAVUTO: Well, should the Republicans respond more aggressively to the Bain attacks or do you feel they are not resonating or are they desperate?


CADDELL: They are doing some damage. It looks desperate.

But let me just say, Romney's got to deal with that, but it also gives him a way to be on the offensive, as he said about Fast and Furious and the leaks.

CAVUTO: Right.

CADDELL: But here's the thing

In 1980 -- I keep going back to the metaphor, folks, of an important election of this -- Jimmy Carter got labeled by The Washington Post and the press as mean. President Obama is teetering. If Romney answers these questions, he's then going to discover that is a problem for a man elected to be transforming and unifying.

He is doing things that are weird. That thing in Virginia where it rained and he gets out there and says Romney's the problem and the Republicans are the problem was -- I mean, that's a shot that was really bizarre.

And the other thing, when -- his interview with, when he said, well, you know what, Washington hasn't changed, I'm disappointed.

You are the head of Washington. This is -- you open yourself to these things.


CADDELL: And to the job czar, there's plenty for Republicans to be on the offensive.

The Democrats are working with false confidence. And they play a card like they did today, the one you're talking about, and it could blow up in their face.

CAVUTO: All right, my friend, always a pleasure. I always learn something, smartest man in politics, bar none, bar none.

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