This is a rush transcript from "Special Report," February 22, 2012. This copy may not be in its final form and may be updated.


JAY CARNEY, WHITE HOUSE PRESS SECRETARY: There's a fair amount of consensus that simplifying the corporate tax code is a good idea, that broadening the base and lowering the rate is a good idea. The president has put forward a proposal that does that. And we hope that conversation continues and that we can produce a result for the American people and for American businesses that will have -- will create the result of a lower tax rate for American businesses, and that will make them more competitive, a broader base to ensure that this reform doesn't add a dime to the deficit.


BAIER: Well, here is a look at the Obama plan. It's simple, laid out by the treasury secretary today, reduce the corporate tax rate to 28 percent from 35 percent. Manufacturers would be 25 percent. And close loophole. Now, that is a wide range, but part of that is minimum tax on any income earned overseas. Reaction has been quick, critics have been loud. Take a listen.


ALEX BRILL, AMERICAN ENTERPRISE INSTITUTE: This plan has been on the shelf in the Treasury Department for months. That is not a rumor. Secretary Geithner said that himself on the Hill last year. If you have a proposal that you think will strengthen the U.S. economy, you might hold it back for a day or two as you watch the news cycle. But to sit on it for months while the economy continues its anemic growth, while Congress holds hearing after hearing on corporate tax reform, to me that doesn't make any sense at all.


BAIER: Well, it does make sense if you are talking politically ahead of Mitt Romney's release of a plan Friday to the Detroit Economic Club he is talking about it already. His plan would reduce the tax rate to 25 percent. Take a look at the other candidates. Rick Santorum, corporate tax rate to 17.5 percent, zero percent for manufacturers. Newt Gingrich's plan to 12.5 percent, write off all capital investments immediately. And Ron Paul's plan, reduce corporate tax rate to 15 percent, pushing for a flat tax.

Let's talk about this, the politics and the policy, and bring in our panel, Steve Hayes, senior writer for The Weekly Standard, Liz Marlantes, political reporter for the Christian Science Monitor, and Juan Williams, columnist with The Hill. OK, Juan, what do you think?

JUAN WILLIAMS, SENIOR EDITOR, THE HILL: I think there is a very clear ideological divide evident in terms of the reaction to all the plans that are now floating around. We've got the president's plan and Romney's plan coming Thursday in Michigan. What you see is Republicans saying if this is about simplifying the tax code we're all for it. That is what we want to do. We believe in simplification. But when they look at the Obama plan, what do they say? Oh this actually is going to increase the amount of revenue coming from corporate America into the U.S. government. And in that sense, they say this could be just a veil for increase taxation and they don't want any part of it.

BAIER: Liz, a lot of politics in play, obviously.

LIZ MARLANTES, CHRISTIAN SCIENCE MONITOR: A lot of politics, obviously. I would say in response to that sound bite that you played a minute ago, yes, to some extent it's a cynical exercise to release a corporate tax plan on the same day as your likely Republican opponent. On the other hand, tax reform is not going to happen. Everybody knows that. There is absolutely no chance.

BAIER: Up on Capitol Hill.

MARLANTES: It is not going to happen. It is just not going to happen. And we saw this with the debt ceiling debate. The fight over taxes is about as entrenched and about as difficult as anything that Congress could try to do. And so it's simply not going to happen. And so the question is it worth still putting some bullet points, as they were called today, some markers that do at least sketch out a vision and say where you think the country should be going? And I think to that extent, that is what the Obama campaign was doing today. And I think their message --

BAIER: The Obama White House, even though it was part of the campaign.

MARLANTES: I was just going to say, I think they are honing a very clear message. And what they did today, fits in with that message very well. It's all about making the system fairer, getting rid of inequities, getting rid of special breaks for companies that shouldn't be getting them and making people pay the rates that they should be paying.

BAIER: On that point, Steve, the National Chamber of Commerce put out a statement saying they are ready and willing to work with the administration but, quote, "We're disappointed the White House proposal does not adopt a territorial tax system that would put an end to the double taxation of profits earned by U.S. companies overseas...We will be forced to vigorously oppose pay-fors that pit one industry against another or lavish favors on some while punishing others." This gets to the heart of this minimum tax on any income earned overseas.

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: Yeah, and I think that is one of the real points of departure between the Romney plan and the Obama plan. If you look at the number of developed countries that tax the way the Obama administration is proposing, it's a very small number. I think the argument the chamber makes and that you've heard other critics make that this would make the United States less competitive overseas is a good argument. It's a compelling argument. You're talking about companies that are gonna want to do everything they can to shelter their money from being taxed and taxed twice because it's already taxed in those areas.

Jay Carney, though, I though I think I have to disagree with what he said at the beginning of the segment. This doesn't simplify the corporate tax code. He is right. That is what -- there is a general agreement, broad agreement that simplifying the tax code is desirable. This doesn't do that. This punishes groups that for the present industries that the presidents doesn't like, oil and finance, and it gives benefits to or tax breaks to groups that industries that the president likes, like green energy and manufacturing, or that the president will be able to use in his campaign speeches. And that is exactly what this is.

BAIER: So Juan, what about that? Some 40 percent of profits from large firms come from overseas. And 80 percent of the world's purchasing power is outside the U.S. So for the people who say that little provision alone could perhaps slow growth in the U.S.

WILLIAMS: No, the idea is that you are focusing on job creation and encouraging manufacturing in the United States. And so it's intended to spur that kind of growth in the United States.

And it's very clear that when you look at the overall package, I think that, you know, this notion of overall fairness is not lost on anyone. If you look at the reality, we have a statutory tax rate that I believe is the second highest in the world to the Japanese. But in effect, once you throw in the loopholes, the deduction, goodness gracious, companies like GE are infamous for not paying any taxes. And I'm not only talking about GE, you could talk about Boeing, you could talk about Google. It's unbelievable. And the reality is that once you throw in the deductions and the loopholes, then you come down to the average U.S. companies paying just slightly more than half of what their competitors are paying globally. So that is not the issue.

BAIER: In fact, the U.S. had the highest corporate tax rate of any of the 34 industrialized nations. The plan, the proposal would move the U.S. to number 32. Liz, I guess people at home are saying why can't tax reform get done? Why doesn't Washington work so that somehow, some way, it gets done?

MARLANTES: It's so hard --

BAIER: Simpson-Bowles got it done.

MARLANTES: There are a lot of things you can trace to it. I think one of the reasons that the tax issue has become so entrenched actually is the famous Grover Norquist pledge. I really do think that that has played a role on the tax fight on Capitol Hill --


MARLANTES: -- which is that many, many Republicans have pledged not to increase taxes under any circumstances, because you used to have -- the last time tax reform happened is under Reagan. And that was in the days when you had Democrats who wanted to raise taxes and Republicans didn't, but they would find ways to meet a little bit in the middle. And you just don't have that anymore. I mean it just is like this barrier that can't be breached.

BAIER: But isn't there potentially, Steve, hope that some way, somehow through this election process, somebody takes the football and starts running and gets Congress to follow?

HAYES: Well, yeah, one would hope. I mean, I think Republicans, frankly, were late to the tax reform game. I mean, they weren't talking about this in the early stages of the campaign. And remember, it was really Herman Cain's 999 Plan that introduced the subject into the Republican primary. So I think they were late, the proposals were late, and in some cases they haven't been as bold as they could be. But to Liz's point, thank goodness people are listening to Grover Norquist's tax pledge -- or taking Grover Norquist's tax pledge, because if they weren't, taxes, in my view, would be quite a bit higher than they are right now.

BAIER: OK, don't miss Rick Santorum joins Greta tonight "On the Record" immediately after the debate tonight out in Arizona. Next up, should the U.S. arm Syrian rebels? That's also our text to vote question. We'll be right back.

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