This is a rush transcript from "Your World," November 7, 2017. This copy may not be in its final form and may be updated.

NEIL CAVUTO, HOST: All eyes on Virginia and New Jersey.

Forget about who is going to be governor in those states, today, a look at how what happens tonight could affect all states, why next year's midterm elections are on everybody's mind and why the battle for tax cuts could make or break who rules the nation's capital, maybe affect those races as well.

That might explain the Grand Old Party's grand old rush to get something done, and fast, as a House panel marks up a make-or-break bill ahead of the Senate ready to do the same thing less than 48 hours from now. and, simultaneously, White House officials meeting with Senate Democrats -- you heard me right, Senate Democrats -- in the hope that they can push a bill through.

Why Senate Finance Committee member Rob Portman is hopeful, White House Budget Director Mick Mulvaney is warning, and House Minority Whip Steny Hoyer is fighting mad. They're all here, and only here.

We begin with Blake Burman with the very latest in the drama -- Blake.


It's very clear here in the halls of the Capitol, as House Republicans work to mark up their bill and Senate Republicans will release their tax plan later this week, that there are still a host of issues for Republicans to work through.

For example, earlier today, the Club for Growth, which is an influential Republican group, put out a note saying that they have issues with four different things on the individual side of this House Republican plan.

Here they are, first and foremost, that top tax bracket for millionaires, along with the possibility that those who make in the low million-dollar range could see the top end actually taxed north of 45 percent. They also take issue with the fact that only a portion of pass-through profits for companies would be taxed at 25 percent.

And they do not like that it takes for six years for the death tax to fully go away. Club for Growth is no friend whatsoever to the Democrats. But even Chuck Schumer took notice today. Listen here.


SEN. CHUCK SCHUMER, D-N.Y., MINORITY LEADER: I heard today the Club for Growth came out against it. So, they're getting problems, just like on the health care bill, from the right and from the left.


BURMAN: Overseas, in Asia, meanwhile, President Trump is continuing to keep his eye, it appears on this issue, as he sent out a tweet earlier today, the following -- and I quote here -- he said: "Stock market hit yet another all-time record high. There is great confidence in the moves that my administration is making."

He goes on to write: "Working very hard on tax cuts for the middle class, companies and jobs."

Neil, by the way, you mentioned that meeting over here at the Capitol set to take place this hour. Gary Cohn, the president's top economic adviser, Marc Short, the legislative affairs director, here inside the halls of the Capitol meeting with Senate Democrats potentially to try to get them on board -- Neil.

CAVUTO: All right, buddy, thank you very, very much, Blake Burman.

By the way, the Club for Growth, just to elaborate a little bit, said that this GOP tax bill fails the so-called pro-growth test.

We will be getting into a little bit with our guests today.

Budget Mick Mulvaney telling me earlier on FOX Business that essentially all eyes are on Congress to work these details out.


MICK MULVANEY, WHITE HOUSE BUDGET DIRECTOR: Keep in mind how this works. All right? We laid out, as I mentioned, our two principles. Middle class gets treated like this, corporate taxes get treated like that. And those are our principles. And we sort of left it to the House and then later to the Senate to sort of fill in the details.


CAVUTO: All right, now what if they don't fill in the details the way the White House wants? Is that and could that be a problem?

By the way, going to have more of my chat with the budget director in a moment.

First, to former Reagan economic adviser Art Laffer.

Art, always good to have you.


CAVUTO: You have heard some of these groups, the Club for Growth and others, concerned, some conservatives concerned that these tax cuts are not dramatic enough or moving the needle enough.

Then there are the ones who worry about deficits, that they're compounding those deficits. What do you make of all this?

LAFFER: Well, the Club for Growth is completely correct on the criticisms they made that you listed there. They're just completely correct. We shouldn't have those things in there.

But does that mean the bill is bad? No. I still would vote for the bill if that were it. And I think the corporate tax rate reduction is the real engine of growth.

But, frankly, I think the deficit people are way off-base. If we get that corporate rate down, the deficit will shrink over the next 10 years dramatically as a result of this corporate tax rate reduction.

So, I think that is the way we should go.

CAVUTO: So you think that the tax rate cut alone for companies from 35 to 20 percent is going to more than pay for itself, take care of a lot of the deficit concerns these guys have?

LAFFER: Yes. Yes, of course.

Have you ever seen a strong period that we didn't have better revenues and better growth and better deficits? I mean, look at Kennedy, the go-go 60s. That was a huge surplus because of tax cuts and growth. If you look at Bill Clinton, you had the same. Massive tax cuts, economic growth, and you had surpluses.

Then you look at Obama and W., you look at 1974, slow growth. You had big deficits. It wasn't tax cuts that did it. Tax cuts create growth and growth creates revenues. That is the way it is. That's the way it's always been, because these people...

CAVUTO: But you left out your old buddy Ronald Reagan there. Deficits grew with him, right?

LAFFER: I know. Well, deficits didn't grow with him. The first two years were really high because we phased in the tax cuts and had no growth whatsoever.

But once we started getting that growth, the revenues increased dramatically during that period.

CAVUTO: But what I'm worried about -- and you and I have talked about it. I'm just trying to egg you on, Art.

LAFFER: I know you are. I know you are. I can feel the poke.


CAVUTO: One of the things I have noticed with this is, more revenue comes in to Washington, if you assume that from tax cuts -- and history does bear that out -- whether Republicans or Democrats, they will spend that revenue.

And there seem to be very little opportunity and moments for Republicans to address this, even tepidly trying to get a hand on spending. What did you make of that?

LAFFER: I make it that Republicans are just ashamed of being themselves. And I wish they would get over it and just realize they're a party of growth.

And you cut taxes, and then you cut spending. You do that, and you will have great economy, and that's the way it will go, but...


CAVUTO: Then why did they get these watered-down, where the criticism that they get, whether it's fair or not, is that they were playing on defense and trying to win over Democrats?

They tried to stick to it the rich guys, like yourself, and they tried to say, look, we're not doing this as a giveaway to the rich. They're still being criticized as creating something that is a giveaway to the rich?

LAFFER: What the heck is wrong with the rich? They're the people that employ everyone else.

What was it Phil Gramm said? I have never been hired by a poor man. Or Jack Kemp's was the best, was, you can't love jobs and hate job creators. There's nothing wrong with...

CAVUTO: Then what happened? Why are they on defense with this stuff?

LAFFER: I have no idea.

Because these people don't understand politics. They don't understand. We have got a very rich man as president of the United States. He won the election. And yet these people are terrified of looking at being rich. And I just don't get it, Neil.

There's nothing wrong with John F. Kennedy being rich, Ronald Reagan doing very well, Trump being rich and you have this. There's nothing wrong with being rich. There's something terribly wrong with being poor. We want to make the poor richer.


CAVUTO: What would Ronald Reagan, do you think, think of a lot of these provisos in here, a real rate that balloons to north of 45 percent for some taxpayers and all this other stuff? He wouldn't accept that.


LAFFER: He would gag. No, we cut the highest rate from 50 percent to 28 percent, and we cut the corporate rate from 46 to 34 percent.

And we raised the lowest rate. We went 14 brackets down to two brackets. We got rid of all these deductions, exemptions, exclusions, just the things these guys are putting back in. And we had it and we passed in the Senate 97-3.

Hello? Most of the Democrats today like Schumer voted for it. Harry Reid voted for it. They all voted for it, because they know it was right. Now they're playing nothing but politics. And it's sickening.

CAVUTO: Do you see any bipartisan support here? I will raise this with Steny Hoyer a little bit later. Do you see the type of bipartisan support, even a few Democratic votes?




Well, what I tried to do was, with a number of Democrats that I have talked to, is talking about switching a carbon tax for a personal income tax or for the corporate tax.


LAFFER: And they're just not willing to go that way.

They want to be obstructionists all the way, in the hopes of regaining the Senate and the House and also the presidency. And then what are they going to do? Then they're going to ruin the country again, if they raise their taxes and do their nonsense.

I mean, did you see how much those guys spent in 2008 and 2011 in that period? It was crazy, Neil. And now the Republicans are in and they should just get rid of this stuff and lower rates and go home.

And you and I would be happy, wouldn't we?

CAVUTO: All right, well, you should hear all the horrible things they say about you.

LAFFER: Oh, no.


CAVUTO: Art, thank you very, very much. Always good having you.

LAFFER: Thank you, Neil. It's fun being here.

CAVUTO: The Svengali behind the biggest tax cuts of all time, Art Laffer.

Meanwhile, Ohio Republican Senator Rob Portman, a member of the Finance Committee, now, they're going to release their details presumably on Thursday.

They're the counterpart to the House Ways and Means Committee, the senator from Ohio with us right now.

Senator Portman, is your ultimate plan, when it's released to the public presumably on Thursday, I guess, going to be markedly different than the House Ways and Means plan?

SEN. ROB PORTMAN, R-OHIO: I think the structure will be very much the same.

And it focuses on three things. One is middle-class tax relief, which is needed right now, Neil, particularly with the middle-class squeeze that is out there, higher costs for health care, higher costs for everything, and yet pretty flat wages.

And second is getting this economy moving by providing relief for small businesses, providing a lower corporate rate. I just heard my friend Art Laffer talking. And when Ronald Reagan took the rate down to 34 percent, he did that because it was just below the average in the industrialized countries.

Well, that's what the 20 percent is. And that's very important to do. And then, finally, to level this playing field globally, so we're not losing jobs and investment overseas, and that includes bringing back some of this $2.5 trillion to $3 trillion that is locked up overseas.

So, this is exciting, because it gives us the opportunity to give the economy a shot in the arm. Badly needed.

CAVUTO: You say it's exciting, Senator.

But I talk to a lot of people, if they're excited, they have a funny way of showing it. There's a lot of complaining and whining going on. A lot of people who say, well, I'm not getting a tax cut. Many people say, with mortgage interest capped and...

PORTMAN: Come on.

CAVUTO: No. Well, I'm just telling you what they say.

And in expensive states, like New York, California, Illinois, Massachusetts, where you can't deduct your state and local taxes.

Will that be a provision in the Senate measure as well?

PORTMAN: Well, first of all, I think you will like the Senate bill. It will be very similar to the House bill in structure. And I commend the House for getting this through this week.

CAVUTO: Including no deduction for state and local taxes?

PORTMAN: I think there will be no deduction for state and local taxes. That's something -- should the federal government be subsidizing states for having higher taxes? I don't think so. I think it's better to get the rates down.

CAVUTO: I understand that.

But senators from those states, senators from those states, they're going to go ballistic.

PORTMAN: Well, senators from those states need to look at the entirety of the package, because it also lowers tax rates and it also provides a tax relief, $1.5 trillion in tax relief, to a lot of individuals in their states.

In fact, in every group of taxpayers, they call them quintiles, there will be tax relief.

CAVUTO: Right.

PORTMAN: And it will go all the way up to the top. But guess what? The stop will still pay their share of the taxation, their burden they're paying now. It won't be a tax cut in that sense. But it won't be a tax increase for folks.

And I think, look, it's very clear that we have a broken tax code. Everybody agrees with that. It needs to be simpler, which this is. It needs to be fairer, which this is, particularly more focus on the middle- class tax cuts.

And, finally, the business side is totally broken. Neil, you and I have talked about this so many times. It's just crazy that Congress has allowed this to happen. There's a study out recently showing that 4,700 companies that should be American are now foreign just over the last 13 years because we didn't go to this kind of tax system.

And if we did this, we will save jobs.

CAVUTO: Do you have any provisos in the Senate, Senator, that would require companies that do get a tax holiday to bring this money back from overseas to hire workers, to expand plants and equipment? What if they just pour it into buying stock?

PORTMAN: But that's not necessarily with what we're doing, because we're not doing a holiday.

What we're saying is actually there's a -- what is a called deemed repatriation, meaning they have got to pay to move to the international system. It all pays for itself.

CAVUTO: I understood that. But what if they don't take advantage of that or do what you think they will do to get that?

PORTMAN: Well, then, then, I will just say, going forward then, there's not a holiday. It's permanent repatriation, like our other competitors do.


PORTMAN: So, the other countries say you're taxed where the income is earned. That's what we're going to say.

So you can bring it back without penalty. And, no, I don't think we should say to companies, we'd like you to invest here rather than there. We want them to invest in their business and invest in what they think will create the most efficient use of that capital.

CAVUTO: Will yours be paid for, Senator? The rap against the House plan is, the math doesn't add up. It's not paid for. It will worsen the deficits over the next 10 years.


PORTMAN: Well, I think both of them will have the same approach, which is to say that out of a roughly $44 trillion in taxes we're going to have over the next 10 years, that, yes, there will be a $1.5 trillion tax cut.

But that's based on a very low projection of economic growth, 1.9 percent, which is what CBO says, despite two quarters with 3 percent growth, despite a 25-year average of 2.5 percent growth.

CAVUTO: Right.

PORTMAN: So, if you assume it will be under 2.5, but better than 1.9, about 2.4, you will actually see a reduction in the deficit, because you will see more revenue coming in.


CAVUTO: But you know the rap around the House, sir, is that they have squeezed all of this $5 trillion tax cut into a $1.5 trillion budget framework, and it's not just cutting it, it's not making it happen.

PORTMAN: Well, I think it's a good structure overall, Neil, because it does focus on the pro-growth elements we have talked about, also immediate expensing, which is a huge deal in terms of economic growth.

And I do think we will have more than adequate growth to take care of the relatively smart part, $1.5 trillion out of $44 trillion.

CAVUTO: All right.

PORTMAN: And also we're assuming certain things, like that the current extenders of taxes won't happen.

They always happen. So, that takes about $500 billion out of that alone.


PORTMAN: So, I feel confident about it.

And I think you will like the Senate bill. And I think you will see that, as we go through this process, yes, there will be some partisanship and so on. But when you look at the facts, that this is good for middle-class families. It's also good for small businesses. It's also good to make our international companies competitive.

And that's what we have got to do. If we don't do that, we have abdicated our responsibility.

CAVUTO: All right. And you're confident that will be the case? PORTMAN: I'm confident. And I look forward to talking to you about it when the details come out.

CAVUTO: Same here. Senator, thank you very much for taking the time.

PORTMAN: Yes, Neil. Always great to talk to you.

CAVUTO: All right.

Virginia and New Jersey, the two states that are having gubernatorial elections tonight.

Did any of you catch, though, what was going on in New Jersey, with Chris Christie having a dust-up with a voter just after voting? Only in Jersey.



GOV. CHRIS CHRISTIE, R-N.J.: It's easier -- it's easier to sit here -- it's easier to sit here and complain. It's easier to sit...


UNIDENTIFIED FEMALE: And I don't have the money like you.

CHRISTIE: Oh, really? I'm sure. I'm sure.

Easier to sit here and complain. But you know what? That's the joy of public service. It's serving -- it's serving folks -- it's serving folks - - yes. It's serving folks like you that is really such a unique joy. It really is. You're fabulous.

Any other questions?


CAVUTO: Admit it, you're going to miss him, aren't you?

Welcome back, everybody. I'm Neil Cavuto. You're watching "Your World."

That was Chris Christie after voting in New Jersey today, encountering an angry voter. It happens sometimes. Gone are the days he would be pointing his ice cream cone at people, but eight years just about up.

And, right now, his Republican lieutenant governor is facing an uphill battle to continue Republican leadership in Trenton. That looks problematic, but some very close races, the gubernatorial contest not only in the Garden State, but what is happening in Virginia, where Republicans think they might have a better chance there. No way to tell.

But I know Erin McPike has a pretty good idea. She follows this far closer than I.

Erin, how is it going here? What are ultimately the issues that are deciding this? How much is the president an issue in both of these states, by the way, two states he did lose last year? What do you think?

ERIN MCPIKE, INDEPENDENT JOURNAL REVIEW: Well, look, I don't think that Trump really factors into the New Jersey race at all really.

You could say that he maybe does. But, look, Chris Christie is going out right now as the least popular governor in the entire country. And so I think this is just as much about him in New Jersey. And at this point, I think...

CAVUTO: By the way, polls bear that out. When people ask about -- you're absolutely right about that.

MCPIKE: Right.

CAVUTO: But face it. I mean, this drama with voters, you're going to miss it. I know, just as someone who follows this, but you're going to miss these moments.

MCPIKE: You know, four years ago, on Election Day, I was there in that very parking lot covering Chris Christie's reelection, when he went into vote for himself that day. So, yes, I...

CAVUTO: Mendham, New Jersey. Mendham, New Jersey. You're right.

MCPIKE: We will all miss covering Chris Christie, I'm sure.

And he went in with a bang and he's going out with a bang today, clearly.

But, look, that race I think is pretty much over. The Democrat is very likely going to win in New Jersey. And it will be a huge shocker if the Republican pulls that one out. Obviously...

CAVUTO: Yes, Phil Murphy, by the way, a former Wall Streeter, Goldman Sachs honcho, very, very wealthy, paid his way to play, and obviously is more the typical liberal thing.

But he could have the trifecta, running the legislature and the assembly as well. So, that's where New Jersey possibly could go. How about Virginia?

MCPIKE: You know, Neil, this race is very close.

I think metrics show that Ralph Northam, the Democrat, is likely to pull that out just by a nose. But it wouldn't surprise me at all if Ed Gillespie sneaks an upset.

CAVUTO: Really?

MCPIKE: Just ekes out a small victory, because he's closing stronger than the Democrat is.

And I know -- and Democrats that I talk to are very nervous about this particular race. The thing that I would point out to you is that, in Virginia, the statewide officeholders don't run as a ticket. So, the governor and the lieutenant governor run separately.

And I could very easily see Ed Gillespie eking out a small victory but yet the Democrat in the lieutenant governor's race, this attorney, a 38-year- old guy named Justin Fairfax, who is exciting a lot of Democrats, could win that. And it could be a very interesting split state office slate at the top there in Virginia.

CAVUTO: All right, we will watch very, very closely, fast-moving times.

Erin McPike, thank you very, very much.

All right, what is going to happen, will it mean for you and your money, we're covering all of this on FOX Business beginning at 8:00 p.m. tonight, as long as it takes, including president of the United States speaking from Asia on North Korea, a lot happening concurrently.

No one gets better the intersection of Wall Street with your money and politics. We think that it matters to you. We all pay taxes, a lot more than get involved in the markets. We marry both. We will cover both. And we will be there as late as it takes, because we're told that pizza will be on the company.


CAVUTO: All right.

Plenty of pleasantries back and forth in Japan and South Korea, though China is a crucial player here. And what is the president getting out of China in those talks? What potentially could he get?

After this.


CAVUTO: All right, President Trump is set to deliver another speech on the nuclear threat. He's going to be doing this in Seoul. His next stop will be China.

He will be talking about North Korea, though. A good deal of attention has been paid to his changing tone on this. Again, gone are the comments about Rocket Man and all of this, a lot more supportive talk about how a deal could still be made.

Retired Lieutenant General Jerry Boykin right now on what the president then needs to do with this address tonight.

Sir, very good to have you.

LT. GEN. JERRY BOYKIN (RET.), U.S. ARMY: Thanks, Neil.

CAVUTO: What is your sense of what he will say or, more to the point, what you think he should say?

BOYKIN: Well, I think that he needs to keep stressing that China is in the best position to actually do something about Kim.

Remember, on the 24th of October, China's Communist Party finished their week, 10-day-long meeting that only occurs every five years where they choose the -- not only the next president, which is Xi again, but they discuss foreign policy.

They're in a much better position now to do something about Kim. And I think that is what he ought to be stressing, is that China is the key to this.

CAVUTO: China has already agreed, through the Bank of Japan -- it's the central bank -- and this is really where China exerts a great deal of influence, telling all banks to stop doing business with North Korea, not just sort of one commercial institution, but all banks.

Do you think that the Chinese have honored that, that their word is their bond, and they're doing that?

BOYKIN: Well, I think that they have a history of violating sanctions every time we have imposed sanctions, even though they had agreed they had violated it.

So, I think we have to be -- go into this with a certain amount of skepticism with regards to China. But, also, remember, Trump's policy, you do business with North Korea, you don't do business with us, that applies to China as well.

So, they have some incentives here to make a difference in this situation with Kim.

CAVUTO: They have talked the talk. The criticism, sir, is that they have not really walked it, and that the president will push them to walk it.

But is that complicated now by the fact that the president there is now almost a deity along the status of Mao Tse-Tung, that makes it very, very difficult to do so? What do you think?

BOYKIN: Well, I don't know that I buy that logic entirely, because the last thing that China needs or wants is war on the Korean Peninsula.

And, remember, North Korea is a buffer between China and really the West, certainly South Korea, Japan, and the Americans.

But I think that they don't want war there. They don't want refugees coming across their border. And I have heard analysts say they don't care.

Yes, they do care. It's a huge problem for them. And, economically, China has got some real serious issues. So I think they have every reason to want to resolve this short of war.

CAVUTO: So, let me ask you, General, when you hear the president refer to North Korean leader as Rocket Man or whatever, something that he's chosen not to do of late while he's in Asia, what do you think of that?

BOYKIN: Well, it's not a term that I would have used.

But, look, this is Donald Trump. He's unconventional. He's a different kind of guy. He has the Chinese, as well as the North Koreans, so confused about who he is, what he is, how far he can be pushed.

And, on balance, I think that it's actually a positive. It's not what I would have said. It's not what most politicians would have said. But he's not a politician. And that's exactly why they don't know what to think of him. They don't know what he will do next.

CAVUTO: Yes, there is that.

General Jerry Boykin, thank you very much, sir. Very good seeing you.

BOYKIN: Thank you, Neil.

CAVUTO: All right, as we were speaking, we're getting sad confirmation of some news in the baseball world.

Authorities are concerned -- confirming now that Major League Baseball pitcher Roy Halladay has died in a small plane crash in the Gulf of Mexico just off the coast of Florida.

The sheriff's office marine unit, responding to a downed plane, found Halladay's body. No survivors were found.

Of course, he retired in 2013 after 12 seasons with the Toronto Blue Jays, followed by four with the Philadelphia Phillies. He was the only victim, so presumably the only one on that plane. Sounds almost like a Thurman Munson type of a situation.

We will have more after this.


CAVUTO: All right, it "Your World" quiz time.

Budget Director Mick Mulvaney, House Minority Whip Steny Hoyer, one of these people loves the tax cut, the other hates it. Who is who?

We're back in 60 seconds.


CAVUTO: All right, maybe not that much of a tax cut?

There's a new study of the Republican tax plan says that many in the middle class could ultimately pay more, not less.

Well, the Office of the Management and Budget Director, Mick Mulvaney, telling me earlier on FOX Business, which, if you don't get, you should demand, that he's not too concerned.


MICK MULVANEY, WHITE HOUSE BUDGET DIRECTOR: If that turns out to be the case, if we really believe it, if our numbers show the same thing, that taxes are going up in the middle class, we're not going to sign it.

So that's an easy answer for us to give here at the White House.

Our principles remain the same. We want lower taxes in the middle class, we want it simpler and fairer in the middle class, and we want that low corporate tax rate.


CAVUTO: So you would even say, Director, that if it passed the House and the Senate, and there were people who could make a case that it's going to raise taxes on some in the middle class, the president wouldn't and shouldn't sign it?


Your caveat there was if some people say. Let's be perfectly clear. Some people are always going to say that.

CAVUTO: Well, let's say it's the Joint Economic Committee that says that.

MULVANEY: No, I think if our numbers show it.


MULVANEY: If numbers that we believe in and we look at.

We're not going to sign something that we think raises taxes on the middle class, period, end of story.

CAVUTO: Do you know whether some of these things that have come up, then, sir, including this bubble rate of 45.6 percent The Wall Street Journal made a big deal about for those between $1.2 million, $1.6 million -- I know this can get overly picked apart.


CAVUTO: Do you know if he was surprised by that and might say, you know, wait a minute, I have a problem with that?

MULVANEY: Surprise is not the right word.

CAVUTO: Stunned? Chagrined? Disappointed?



Yes, but this is going per plan. Keep in mind how this works. All right? We laid out, as I mentioned, our two principles. Middle class gets treated like this, corporate taxes get treated like that. And those are our principles. And we sort of left it to the House and then later to the Senate to sort of fill in the details.

We work with them. We work with them every single day. And we're operating with them. But we didn't get into the details. We didn't write the legislation. That's Congress' deal. They wanted that authority. They have got that authority constitutionally.

So, we will sit back and see what they come up with. We're helping them where we can. We're pushing them where we can.

And I'm not going to sort of give an opinion on what the final bill is going to look like, because we're a long way from being finished here.

CAVUTO: No, you're right about that.

I know the Senate Finance Committee will separately come up with its own plan and they will reconcile those differences. Do you know at this point, Director, whether there will be a dramatic difference between what the House Ways and Means has come up with?

MULVANEY: I actually -- I get the gut, Neil, that there's not going to be dramatic differences.

That's why that framework that we put out about eight weeks ago was so critical, because that was, was a list of major principles that everybody agreed on. That was the House Republican leadership, Senate Republican leadership, and the White House.

And the fact that we were able to hammer out those big issues before that legislative process started really is what gives me that confidence to say, look, there's going to be some disagreements between the House and the Senate, but not on the big stuff.

The BAT, for example, is gone. The corporate rate is now 20 percent. Those big -- those big set pieces are established. And you are going to have disagreements on the smaller stuff, but, again, I think the basic principles are set.

CAVUTO: People have gone back and forth on this and the timing of votes and everything else.

And I think you were quoted as recently saying, sir -- I hope I got it right -- that you were not confident at this point that there would be Democratic votes there, despite all the overtures Republicans made to Democrats to make this less of a rich tax cut.

They still argue it's a benefit to the rich.


CAVUTO: So, do you think that your colleagues, at least your old friends in the House, did a lot to win over and impress Democrats for nothing?

MULVANEY: I'm not sure that -- that quote that you just gave for me sounds like it was partially correct, because what I think I said a couple times is then followed up to say, but if they know it is going to pass, some of them, in fact, many of them may end up voting for it.

I have spent more time talking about that in the Senate than in the House, but I think the same principle applies. The Democrats are simply not in a place politically in this environment to give us the votes necessary to get it across the finish line.

But if we can convince them that it's going to pass anyway without their support, I think there's actually a bunch of Democrats who think this is good policy, especially in the Senate.

So, I have not given up on...

CAVUTO: So, that's more of a Senate issue, just to be clear, sir, than it is a House issue?


CAVUTO: I got you.

MULVANEY: Again, I think, we look at it because the margins are tighter in the Senate than they are in the House.


Are you surprised? You were -- probably still are -- a big deficit hawk in your days in the House. Everything was fair game for you to go after. And the rap against this tax cut, as you know, and given some of the rules that are in place here going back to the '70s and the Byrd rule and all of that, and making the numbers add up and balance out, that it limits what you can do on tax cuts, period.

And, in the end, everyone seems to be disappointed. Those who wanted big tax cuts, they're disappointed. People who wanted control over the deficit, like John McCain, they get disappointed. Was it worth it?

MULVANEY: Oh, it's absolutely worth it, because I still am a big deficit hawk.

In fact, that's why I'm spending so much time on this tax bill and encouraging Congress to pass it, because the deficit equation is pretty simple, Neil. It's revenues minus expenses. And when your expenses are bigger than revenues, you end up with a deficit.

That's a two-variable equation.


CAVUTO: But you will still have the deficit with one, right, at a minimum, $1.5 trillion more, right?

MULVANEY: Well, we talk -- I don't think that million -- that $1.5 trillion number is right.


MULVANEY: In fact, I think even Senator Corker, another big deficit hawk, will tell you that that $1.5 trillion now is just -- it's a smoke and mirrors number.

But the bottom line here is that there's two moving pieces, spending and revenues. We have tried very hard in this administration to draw attention to spending.

The House and the Senate, in their wisdom, chose not to take most of our spending reductions. So, that leaves us on the revenue side. We need to grow the economy, make you richer, make the middle class richer, make the poor richer, so that the government also gets richer and drives up those revenues.

So, that's why I'm doing it, because -- that's why I'm so focused on taxes, because I need the growth to help reduce the deficit.

CAVUTO: The timetable they have, as you know, is to try to get this out of the House by Thanksgiving, out of the Senate and signed by the president by Christmas. Still doable?


In fact, I think I heard that Senator McConnell was threatening to bring the senators back the Saturday after Thanksgiving.

I will buy your turkey if that happens. But, in all seriousness, I do think we're still on schedule. Go back a couple of weeks to where the House accented the Senate version of the budget without any amendments, that actually saved us between 10 and 12 days, depending on how you want to count.

So, that helped a lot. So, yes, I think we're still on schedule for the House to vote before Thanksgiving, the Senate to vote shortly after that.

So, both houses pass their separate bills before December, that allows the conference committees to start working out those differences before Christmas.

CAVUTO: Maybe they don't need a lobby to whine on their behalf or cry on their behalf, but, you know, the top 1 percent, the very rich, they are ticked off, and they feel that they have been very loyal supporters of the president, his policies and Republicans in general.

And they feel they got the shaft on this thing. What do you say?

MULVANEY: Oh, I guess it depends.

Here's what I tell folks, is that when I go on your network, folks accuse me of raising taxes on the rich or us as our proposal. I go on any other network -- in fact, just about any other network -- and they accuse of cutting taxes dramatically on the rich.


MULVANEY: It sounds like we're right in the center.


MULVANEY: And I think, in fairness and more seriously now, you can't really give an opinion on a specific impact on a specific taxpayer until you see a final version of the bill.


MULVANEY: But what is important for the president -- again, I hate to repeat myself, but that's the business we're in -- the president's fundamental principles here were middle class pays less, and it's simpler for them and fair, and corporations get down to that 20 percent rate.

CAVUTO: All right.

MULVANEY: That's what we focus on. The rest of stuff is up to the House and the Senate.


CAVUTO: All right, we shall see, Mick Mulvaney, the budget director.

Meanwhile, if Wall Street had any worries about the back and forth, funny way of showing it. Stop me if you have heard this, fourth time in a row, a record for the DrMDNM_ow.

More after this.


CAVUTO: All right, welcome back, everyone.

You just heard that White House Budget Director Mick Mulvaney says the president will not sign a bill that raises taxes on the middle class. Many in his own party that's what a lot of this bill looks like. Some are going to see their taxes go up.

House Minority Whip Steny Hoyer joins us right now, of course, Democrat from Maryland, big honcho in the Democratic Party, as you all know.


CAVUTO: Congressman, very good to have you. Thank you for taking the time.

REP. STENY HOYER, D-MD., MINORITY WHIP: Neil, good to be with you. Thanks.

CAVUTO: What do you make of that, that Mick Mulvaney says, if this does raise taxes on the middle class, it's not going to happen, the president won't sign it?

What do you think?

HOYER: I think it's, based upon the bill, fake news.

Clearly, the analysis of the bill shows that some 41 million Americans are going to get a tax hike, of which 24 million are so-called middle-class Americans, middle-income Americans.

So, I don't know what Mulvaney is talking about.

CAVUTO: Well, I think what he's talking about, sir, just to be clear, is that, in five years, a lot of these credits expire. And once those credits expire, then, all of a sudden, if they're not replaced, then, yes, at that time, you're paying high taxes. What do you think?

HOYER: Well, he may be talking about that, but the law that we're going to pass will provide for that.

And so I think the analysis going to be, look, Mr. Mulvaney, what you're saying isn't true, unless you change the bill.

Now, if they change the bill, if they change the projections, or if someone legislation is passed in the future on which they're relying, maybe they can try to sell that argument.

But that's not the bill as -- that's being considered today. And, very frankly, it blows a hole in the debt. President Trump said he was going to balance the budget. Two months after he was in the presidency said, oh, well, I can't do that, and defense is more important to me.

And, frankly, one of the reasons we have this big debt, there's something that is more important to everybody, every region, every voter.

CAVUTO: And both parties, right, because Democrats talking about the debt and deficits, just as Republicans prior, both parties spend like drunken sailors, right?

HOYER: Neil, as you know, the budget was balanced four years in a row under Bill Clinton, four years in a row, the only president who can say that in the times that I have been in Congress.

CAVUTO: And what happened the last eight years prior to that?

HOYER: You mean...

CAVUTO: In Obama's years.

HOYER: Prior to Trump?

Eighty-eight percent increase in the debt, under George Bush, 87 percent increase.

CAVUTO: No, my only point is, I'm not casting political aspersions at either party, sir.

HOYER: Right.

CAVUTO: I just find that every party talks a good game on deficits and accumulated debt and all of that.

HOYER: I agree with that.

CAVUTO: And I'm just wondering where the middle ground might be found.

For example, on this tax cut, do you subscribe to the belief that Republicans are saying, tax cuts will stimulate revenues and growth, and that will go a long way to paying this? You're in that camp that says, no, not in this case, right?

HOYER: I'm not a dynamic score person.

And the reason, Neil, I'm not is, I think dynamic score is a gamble. Do I think tax cuts or tax increases, for that matter, have an impact on spending and taxes? I do.

CAVUTO: Right.

HOYER: So, I don't think dynamic scoring is without a rationale.

What I think it is, is, however, a gamble and has not worked out. Alan Greenspan in '01 and '03 said, these tax cuts will pay for themselves. Five years later, he came back and testified before the Ways and Means Committee: No, I was wrong, they don't pay for themselves.

And the conservative Tax Foundation, as you probably know, Neil, has estimated that the increase in the debt under this bill -- this is the conservative think tank -- $989 billion.

CAVUTO: No, no, you're quite right about that.


CAVUTO: What I'm curious about, though, sir, is where we go from here, because what I do notice, regardless of what you think of this Republican plan -- and there are a lot of warts in it, to your point...

HOYER: Right.

CAVUTO: ... is that we're still going to have about half the people in this country and a number growing paying no federal income tax at all.

Now, some for very valid reasons. They still pay payroll taxes and all the like. I'm not minimizing that.

HOYER: Right.

CAVUTO: But there are fewer and fewer Americans carrying the burden for this.

And I'm wondering whether there's room for a plan that includes everybody, everybody paying something, something into this.

HOYER: Yes, I tend to agree with that, Neil, as you may know.

And, very frankly, you say, where do we go from here? Where we ought to go from here is where we went under Ronald Reagan and Tip O'Neill and Rostenkowski and Bob Packwood, the Republican Senate Finance chair.

We ought to go to a place where, in a bipartisan way, we can agree on a number of things. Number one, I wouldn't be for using dynamic scoring. If you get a bonus, in other words, if, in fact, it has a positive result, then you have a bonus. Then you have extra money that you can apply to bringing down the debt, investing in Social Security, health care, the national security.

But you have got a bonus. The problem is, if you're not right, and you lose, then you put a bigger hole in the debt.

But we ought to come together in a bipartisan way. For instance, President Obama three years ago said we needed to bring down the corporate tax. So, essentially, we have agreement that we ought to bring down the corporate tax.

There will be difference of agreement where you bring it down to, et cetera, et cetera, how that works.

CAVUTO: Right.

HOYER: So, I think there's some basic...

CAVUTO: Remember, but John Boehner later said, the former speaker -- of course, he's had some choice things to say since.


CAVUTO: But he said that the president broke an agreement that was part of a budget-making deal and all.

So I guess what I'm asking you...

HOYER: Neil, can I -- because you brought it up...


CAVUTO: Go ahead. Go ahead.

HOYER: Let me say that I was in a meeting with the president on the Thursday night, Harry Reid, Dick Durbin, Nancy Pelosi and myself.

CAVUTO: Right.

HOYER: I was majority leader then.

We talked to the president. And he said, what do you think about this deal? We didn't think it was a big enough deal, but we said -- big enough deal in terms of paying down the debt. But, if, in fact, this is what we can agree on, we will take the deal and we will sell it to our members.

CAVUTO: All right.

HOYER: What, frankly, happened is, John Boehner came back to the Freedom Caucus and others. They wouldn't buy any tax increase, no revenues, as you know. But Bowles-Simpson -- Bowles-Simpson...


CAVUTO: All right.

That was then a missed opportunity then. But maybe -- hope springs eternal -- they can do something now, right?

HOYER: It was. Let's hope.

CAVUTO: All right.

HOYER: I certainly would be willing to sit down and discuss that and work towards that end.


Steny Hoyer, I'm sorry to jump on you there. Thank you very, very much.


CAVUTO: The House minority whip reliving some interesting moments in history as well.

Thank you, Steny Hoyer.

HOYER: Thank you.

CAVUTO: All right.

All right, hours before the polls close in Virginia, and a big race there that could decide how things are going next year?

After this.


CAVUTO: All right.

On the race in Virginia, we have got Peter Doocy in Richmond with the latest on that one, it and New Jersey, of course, voting for governors tonight.

How does it look there, Peter?

PETER DOOCY, FOX NEWS CORRESPONDENT: Neil, outside, it looks pretty bad. It's been pouring rain for the last five hours or so of Election Day here in Virginia, at least in the northern parts of the state that we have been driving through.

Will it affect turnout? Too soon to tell. Polls are still open for another two hours and 10 minutes or so.

But the most recent update that we have from Fairfax County in the northern of the state, which is critical for Democrats if they want to win, is that they're reporting a 30.6 percent turnout, not counting absentee ballots, which there have been a record number of in this race.

And they're begging people on social media not to stay home just because of the rain.

As of right now, the Democrat, Lieutenant Governor Ralph Northam, does lead in recent surveys. They're trying to defend this governorship, Democrats are, currently held by Terry McAuliffe.

But Ed Gillespie, the Republican, told me today he thinks he's going to win tonight. He thinks this race has gotten a lot more competitive recently after he trailed by double digits a few weeks ago.

And his campaign is getting a late boost tonight by somebody who has been called on to help yet, President Trump. The Republican Party of Virginia is behind a call going out on the candidate's behalf featuring President Trump's voice explaining that Ed Gillespie can help make America great again.

Something else Gillespie staffers I have spoken to think is making a big difference in this race, backlash from that ad that Northam backers at the Latino Victory Fund aired that showed a truck with a Gillespie bumper sticker chasing down minorities children and trying to run them over.

There were strong, measurable negative feelings about that ad. Now Gillespie's staff is waiting to see if it made enough of a difference to help their guy pull off a big upset here in Virginia tonight -- Neil.

CAVUTO: Peter Doocy, thank you very, very much.

Interesting footnote, as Peter pointed out, with the president. He's golfed 15 times in the state of Virginia since he was elected, not one event with Mr. Gillespie. But, again, this distant relationship might have been just the perfect balance that could help Gillespie. Too early to say.

We will have a better idea later tonight.

More after this.


CAVUTO: All right, two hours until polls close in Virginia, three hours in New Jersey.

Then, at 8:00, I'm going to have special coverage to take you through the results in both states, how they could impact your bottom line beginning at 8:00 p.m., as I said, as on FBN.

We're there as long as it takes, also covering the president's speech from Asia on what he's going to do about North Korea.

If it matters to you and your money, we thought, unlike some other business networks, we wouldn't be in the middle of tupperware commercials. You're worth more than tupperware.

See you tonight.

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