Sen. Bayh: Democrats Must Prove They Can Exercise Fiscal Restraint

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This is a rush transcript from "Hannity," July 30, 2010. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: The economy is continuing to bleed jobs and families are struggling to makes ends meet. And despite what we've heard from President Obama on his recovery summer tour, the fact of the matter is is that Americans are uncertain about the future of the economy. And that's why several Democrats are stepping forward and calling for the Congress to extend the Bush tax cuts. Senators Evan Bayh, Kent Conrad and Ben Nelson are all making the argument that raising taxes on families and small business during these tough economic times would be a costly mistake.

And joining me now to help explain his position is Indiana Senator Evan Bayh. Senator, it has been a while, welcome back.

SEN. EVAN BAYH, D-IND.: Good to be back, Sean, thank you.

HANNITY: All right. So, the three of you are saying not a good time to not extend the Bush tax cuts or let the Bush tax cuts to expire. You're going against your party. Are you going to stand strong? Are you going to follow through? Is this a non-negotiable issue?

BAYH: Sean, I think, this in the best interests of our country and for that reason, I also think that it's in the best interests of the Democratic Party. This recovery is much too fragile right now. And I don't think what we want to do is creating more uncertainty as you were pointing or increasing the burdens upon people who are important to making investment decisions, hiring decisions and important to consumer demand.

So, look, the Democratic Party all evidence to the contrary notwithstanding is not a monolith, we do have some differences of opinion and on this issue in particular.

HANNITY: Yes, look, it's going to be interesting because the president obviously wants them to expire, especially for the wealthy. What do you say to democrats who play the class warfare card and say, no we'll just let them expire for, quote, "the wealthiest Americans," those who are making over $200,000 or more which by the way the top ten percent pay over 70 percent of the income taxes in this country. Why would you argue that's a bad idea?

BAYH: People in that top bracket Sean are account for about 30 percent of consumption. Right now, people in the lower brackets are saving, paying down their credit card bills, hang off some of their other debts, so, we don't want to dampen consumer demand on that top bracket because that would cause it to stall out for everybody.

Second thing, many people in that bracket are the ones making the employment decisions, making the investment decisions. We raise their burdens right now, we'll going to get less of the things that we want.

So, my message with regard to class warfare is that is the wrong way to go. We are all in this together. We want more successful people. That's what we want in our society, not penalizing those who have been successful.

HANNITY: What do you make of recent elections, Virginia, Massachusetts, New Jersey, the president now in the polls, 38 percent of independents now support him, that was a big part of his electoral base in 2008. What has happened? Why are the American people seemingly rejecting most of, if not all of the Obama agenda?

BAYH: Well, if you look at those three states, and polling now on the national basis, what really has bothered the independents is the budget deficit and the spending in Washington. And we've got to prove as a party that we can exercise some spending restraint, start getting the deficit down and be for the kind of tax policies that will stimulate investment and grow rather than increase the burdens on business. I think that's the successful formula for the president and the Democratic Party.

HANNITY: You know, Senator, I've known you for a lot of years, you have one of the few senator Democrats willing to come on this program. We've had some spirited debates over the years. I'll be honest, I was a little bit surprised, as the president was moving forward. He promised unemployment wouldn't go above eight percent otherwise we face catastrophe, you know, we are now near ten percent unemployment. His policy obviously didn't work.

Three trillion dollars in new debt that he's accumulated in two years and on top of that, we've got health care that's coming — which is also going to cost the taxpayers money.

I will be frank, I was kind of surprised that somebody like yourself didn't stand up and put the brakes on what was not only not in the best interests of the Democratic Party in the long term, but the country.

Why did you not come out with stronger opposition to these things?

BAYH: Well, Sean, that's a longer conversation than we probably don't have time for on this program. So, you need to ask me back a couple more times. But, let me just say, in fairness to the president he did inherit some pretty tough circumstances. And even back when he took office, conservative economists were saying that we needed something to stimulate the economy to try and keep up, to fill in the absence of consumer demand at that time.

We can argue about the timing on health care. I think, you can make a credible argument that maybe focusing on the economy a little more intently, maybe the energy challenge might have been more timely.

But, you know, we do have 35 million Americans without health insurance, Sean. And so, for me on that, frankly, that was a very close call. It was one of these 51, 49 kind of deals and I thought OK, let's try and do something. The biggest failure on health care and there we can, there are a lot of aspects to that that we can talk about is the thing that really is bothering most of your viewers is the cost of the health care. And that remains to be addressed. And I think most observers candidly would say, there are a few experiments in there but we need to do more in terms of getting the costs down.

HANNITY: All right. Ed Rendell is predicting that in 2012, that Barack Obama will have a primary challenge. A mutual friend of ours, you know, Doug Schoen pretty well, he and Pat Caddell just this week authored a piece in The Wall Street Journal, the title of the article is "Our Divisive President." He says in that article, "Rather than being a unifier, Mr. Obama has divided America on the basis of race, class and partisanship." And he said, "Moreover, his cynical approach to governance has encouraged his alleys to pursue a similar strategy of racially divisive politics on his behalf." That is a pretty severe charge. These are coming from Democrats, not from Republicans, your reaction.

BAYH: Well, as you point out, Doug is dear friend of mine. I've known him for years and years, I think some of the rhetoric in the piece was perhaps a bit harsh.

But I think, look, what we need to do is focus on what's good for the country. And I would say to my fellow Democrats, and I think what is going on here Sean is that, we are a little sensitive to the base of the party. And there are some folks who are very — you know, their rhetoric is overly harsh and they engage in some of that class war and that kind of thing.

And the only way Democrats govern in our country is to make common cause with independents and moderates. That's the only way we rule. So, we need to focus on pragmatic solutions for a problem that will move this country forward.

HANNITY: Are you saying that Democratic Party from your advantage point has moved too far to the left?

BAYH: Well, some elements have. And I think — you see, look how Blanche Lincoln was attacked in Arkansas because she didn't toe the party line 100 percent. And there are some in the party who are pursuing policies that alienate independents, alienates moderates and, you know, that will only go on so long, Sean. And those folks are going to have a chance to express themselves this November and it may not be a very happy evening.

HANNITY: I guess, the most radical element then, and the person you have to point the finger at the most, is the president himself because he's driving the boat, he's driving the agenda.

BAYH: Well, he's ultimately responsible for the decisions. But I would disagree with your characterization there a little bit. I do think that some in the party are excessively sensitive to some of the furthest elements in our party and sometimes rhetorically or occasionally subsequently, that gets us out of center, that's not good substance and that's not good policy.

But look, I think, I honestly think the president is trying to do the right thing, wants to do the right thing. I'm not always sure he's getting the best advice.

HANNITY: All right. Last question, we talked a lot this week about the court decision as it relates to the Arizona immigration law. Is it fair to say that that court ruling that it appears the federal government will not protect American citizens and enforce the law? And now, the state of Arizona isn't allowed to do it as well?

BAYH: Well, that ruling was a mishmash, it struck down part of the law and upheld part of the law. I think, what it points out Sean is that — look, as a former governor, I got a lot of empathy for states that are suffering because the federal government is not doing its job. We need to secure the border and then figure out a long-term solution to this problem, so the states like Arizona aren't left holding the bag.

HANNITY: All right. Evan Bayh, thanks for being with us. Senator, I appreciate it. Thanks for being on board.

BAYH: Always a pleasure.

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