This is a rush transcript from "Hannity," December 9, 2010. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: And tonight in "Your America," internal dissent exists within the Democratic Party. President Obama's closest allies are disappointed, frustrated and downright angry at the White House over the Bush tax cut compromise. Now, as we mention, House Speaker Nancy Pelosi is calling for major changes to be made to the framework. But sources say that Vice President Joe Biden told members yesterday that no changes can be made to the deal. He said, this was an up or down, take it or leave it proposition. Now, Congressman Rep. Lloyd Doggett of Texas responded to that threat this morning.


REP. LLOYD DOGGETT, D-TEXAS: We listened carefully yesterday to what the vice president had to say about it. He was very articulate and presented it in a very reasonable way. But we've evaluated and said, if it is take it or leave it, we'll leave it.


HANNITY: All right. So, where do we go from here? And what is the likelihood that you taxes will be going up by the end of this month? Joining me to help answer that question is Pennsylvania Congressman Joe Sestak. Congressman, good to see you.

REP. JOE SESTAK, D-PA.: Good to be back, Sean. Thanks.

HANNITY: All right. We don't agree on this, let me ask you this. Let's start with class warfare. Because I kind of resent this. I never got a job congressman from a poor person. You know, when you talk about the rich, you know, that pay on average with state, local taxes and property taxes about 50 percent of their income. Aren't they the job creators? Aren't they the ones that donate to charity? Aren't these the people that pay the taxes?

SESTAK: Well, as you well know, small businesses create 80 percent of all new jobs. And in fact, 98 percent of all small businesses earn less than $250,000, that's why if we had originally in the initial stimulus bill put in about $100 billion of tax credits that create jobs because small businesses of less than 20 people loss half the unemployed, why didn't the Republicans and Democrats say, you like business, we like business and focus. It is not about tax cuts, it is about tax cuts focused at the right job creation place.

HANNITY: But back to my question. Did you ever get a job from a poor person?

SESTAK: I'm not understanding the premise of your question? Let me tell you.

HANNITY: The premise of the question is that, if rich people spend money, and again, they are paying on average about 50 percent of their income. If the rich people -- did you ever get a job in your life from a poor person?

SESTAK: Well, I was in the Navy for 31 years, Sean. But let me answer it this way, during the eight years of the Bush administration, 53 percent of tax cuts did go to the top one-and-a-half percent of the wealthiest. Now, we know and you know that in those eight years, the gross domestic product grew at the slowest rate since World War II. Now, during the Clinton administration, they raised the top tax rate from 36 to 39 and a half percent. Yet, we created 23 million jobs and had the highest growth in GDP in those eight years since -- and created 23 million jobs as compared to zero in the eight years of the Bush administration. So, I don't believe that wealth trickles down.

It doesn't mean that you don't want tax cuts for the wealthy. That's not the issue. The issue is right now, well, listen, I (INAUDIBLE) the president's compromise here. The Democratic caucus doesn't speak for me. I have to represent 700,000 people. Now, let's take the large township in Upper Darby in my district, largest township in Pennsylvania. They are going to have a tax increase of 6.3 percent this year and local taxes because money hasn't been flowing because so many people have lost their jobs.

HANNITY: Congressman, I want those people back to work. Here's the problem.

SESTAK: Yes. But they want to work, make sure we are clear about that. They may be poor but they want to work.

HANNITY: OK. The top 10 percent according to the IRS pay 70 percent of the tax bill, the bottom 50 percent pays 2.9 percent of the tax bill. Here's my take on this. Is all these people that are paying taxes and create jobs and donating money, the job creators, the wealth creators, the taxpayers, the bottom 50 percent paying 2.9 percent, not only do they pay 50 percent of their income in taxes, seems like now you want to take a baseball bat and hit them over the head and tell them, hey, you're not doing enough, Congressman.

SESTAK: Can I -- everybody takes the facts and likes to look at them through the prism they present. Let me give you mine, in the last 20 years, the wealth of the top one percent went up 281 percent. If you earned the exact middle of the middle class, the middle fifth, it went up in 20 years, 25 percent. So, if the wealthy went up almost 300 percent even if they were paying the same tax rate as that first rate, of course they are paying a bit more.

HANNITY: So, give me a number. Give me a percentage at, you know, if you pay 40 percent of your income in taxes, state, local, federal taxes, property taxes, is that too much?

SESTAK: Well, I think the Clinton era, when we created --

HANNITY: No, no.

SESTAK: Create 20 million jobs is the right percentage of the top wealthy.

HANNITY: Give me a percent.

SESTAK: 39.6 percent.

HANNITY: All right. That's federal taxes, that's federal taxes.


SESTAK: So, I have supported the tax to be.

HANNITY: In New York, you pay another 10 percent. In other states, it is six percent. Then you pay property taxes, then you pay sales taxes. So, what percentage of people's income, total tax bill, do you say enough is enough?

SESTAK: Well I don't what the exact percentage is. I will say this, remember, a lot of where the money comes from is supposedly corporations. You know as well as I do that you and I pay more in taxes than most fortune 500 companies because 66 percent of all corporations pays zero U.S. taxes. Zero. Exxon Mobil doesn't pay a cent. And so, the key here is, how do you create jobs? I want to focus on small businesses that create 80 percent of all jobs.

HANNITY: Yes. There's been -- apparently in this meeting that took place yesterday, there was a referral to the president as the "f-ing president." We got Ralph Nader referring to him, I forget exactly what his -- oh, that is a con man meaning President Obama. "We got screwed, we got taken to the cleaners." President Obama's reacting, he's calling Republicans hostage-takers. What do you make of the rhetoric in Washington?

SESTAK: I did not hear that one comment, the first one you said. But I will say, the hair gone up on the back of both the vice president's neck and those who were there. I think they're both -- avenue and both parties better look at themselves. Why didn't they handle this issue prior to the election have courage of the conviction and not worry about electoral prospects. I vote against the German three times. Now, all of a sudden, they've been backed into a corner and we have a compromise, but it is a little bit of a compromise, the principle, but we can hold a gun at the working family's head, we've got to pass this before one January.

HANNITY: All right.

SESTAK: Because it also does help the economy, our GDP will grow as much as four percent if we do this and you'll going to help those people across this nation who are unemployed and those that creates jobs, small businesses.

HANNITY: You are critical of your leadership. You said, "Instead of having my Democratic Party leadership worries about self-preservation, we should have had the courage of our convictions."

SESTAK: Conviction. Correct. Well, I mean, Sean. You remember, I stood up to my own party's establishment from the president on down and ran against it for the primary against Senator Specter. The issue is it isn't about party. John F. Kennedy said it well. Sometimes the party asks too much. And maybe if both parties would start working together and what's broken down here, maybe we could do more principled compromise rather than compromise principles. And if people stopped worrying about their own jobs and worrying about Americans jobs, I think we could be much further down than the road than we are today.

HANNITY: Congressman, I appreciate you coming in.

SESTAK: Always great to be with you, Sean.

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