How do taxes play into Obama re-election strategy?

This is a rush transcript from "Special Report," April 12, 2012. This copy may not be in its final form and may be updated.


PRESIDENT BARACK OBAMA: Let me just say, the folks that we have political arguments with, they're Americans who love their country. You know, Democrats, Republicans, independents, everybody, we all love this country. But there is a fundamental difference in how we think we move this country forward.

VICE PRESIDENT JOE BIDEN: But the one thing the neighborhood I come from, and I suspect all of you, the one thing we don't like being played for is a sucker.


BRET BAIER, ANCHOR: Joe Biden with a different message from President Obama yesterday, The vice president saying Republicans were playing the middle class for suckers today. A Different message from the president, as you take a look again at the latest Fox News polls, the job performance for the president in the latest poll down to 42 percent. There you see disapprove 51 percent. You can see the change from March.

And then financial future, how do you feel about the country's financial future? You can see folks and the concern about the way ahead. Some are scared. That has increased a bit.

And then satisfied with how things are going in the country, this is the big one. This is essentially right track, wrong track -- wrong track, 67 percent now according to the latest Fox News polls. Judge, you see the president, the vice president out on the stump, and they are talking a lot about this "Buffett rule," and we talked about it ad nauseam here, $4 billion is the take on that. What do you make of this?

ANDREW NAPOLITANO, FOX NEWS JUDICIAL ANALYST: Class warfare at its worst. Rather than a president trying to unite the country behind him he is trying to divide the country. It doesn't make sense from the point of view of economics 101. The president is smart enough to know that, meaning the imposition of the tax will actually result in fewer tax dollars going in the treasury because of the effect it will have by removing that money from rich people to invest, which produces more jobs. He must know that. This is very basic economics with which very few people can disagree. But he wants to demonize the rich because Mitt Romney is one of them.

BAIER: Is this playing on -- where do you think this plays, Liz, this strategy? It's not playing on Wall Street, obviously, with folks up there, right?

LIZ CLAMAN, FOX BUSINESS NETWORK ANCHOR: No. But does the rest of America really care about Wall Street right now?

BAIER: Wall Street? No --

CLAMAN: Absolutely not.

BAIER: But where does it play well?

CLAMAN: I would think that it plays with the middle class who perhaps look at their tax percentages and what they are paying, anywhere from 20 to perhaps 39 percent, middle and upper class. And they look at hedge fund managers, and this is a specific point of the tax law that is totally legal. But hedge fund managers and money managers because of the way their income is calculated, they get taxed at a 15 percent rate because their income comes from things like capital gains, selling and buying stocks.

How is that fair? How is that fair is what the president is saying. And when Bret, you and I and the Judge and Steve, I guarantee you we are all above 25 percent. So why isn't it that we wouldn't at least want to close that loophole and figure out how to get everybody at the same level but then also close other loopholes, figure out some fairness? Yes it ends up being a smaller drop in the puddle here, about $40 billion at the end of the day but it's a start, it's just not the thing that I would have picked to really make a cornerstone of a huge speech with lots of cheering people.

BAIER: Steve?

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: To go back to the Judge's point about whether President Obama knows the economics, he does know the economics of it. He gave an answer back in August of 2009 in which he was very specific about the economic impact of raising taxes on the wealthy. This was during a recession. I think it applies during a slow recovery where he said it sucks demand out of the economy and it punishes business. The president made that argue back in August of 2009. So he fully understand what is he is doing here. The question is how does it benefit him politically? I think that is exactly what we're seeing. They think that the fairness argument is the argument that wins for them.

NAPOLITANO: It's reprehensible for him to assault something as basic in this country as who pays what in taxes when he knows his assault is intellectually disingenuous and he's just doing it to stir the pot among his base, which may be unhappy for him - unhappy with him for other things he has done with which they disagree.

CLAMAN: Why is it disingenuous if the fact is that somebody like a fund manager who makes $200 million a year is taxed a 15 percent yet regular folks out there are paying 25 to 30?

NAPOLITANO: It is disingenuous because if you impose the so-called "Buffett rule" the effect on the economy would be such that the return to the treasury would not increase, it would decrease. That's how many people would lose their jobs. Every dollar that the government takes away is a dollar less that Warren Buffett and the rich people have to invest and cause more jobs.

CLAMAN: You're talking trickle-down economics Bret? Is that what...?

BAIER: Which is why President Obama refers to Ronald Reagan, saying it should be the "Reagan rule." And he is tapping into that, the semantics there, Judge?

But I guess there are many people who look at this and say the president has spent 21 times in recent weeks talking about this particular rule and rather than the big picture. The Democrats are saying this is something that's hitting home.

NAPOLITANO: He knows that this will never pass the House of Representatives if there even is going to be a vote on it between now and Election Day. And Axelrod and his pollsters must have told him that this resonates with your base whether it makes economic sense or not.

BAIER: Last word, Liz.

CLAMAN: I just think that, you know, we've got to overhaul the tax code. How many times have you heard that out there? Everybody says it. Nobody does it through both Republican and Democratic presidents. This is a much bigger issue than a smaller slice of it.

BAIER: Judge, Liz, good to have you on board. Steve, you're always here, so, thanks.


BAIER: That's it for panel, but stay tuned to see the evolution of a campaign slogan.

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