STUART VARNEY, GUEST HOST: At the stroke of midnight on New Year's Eve, the ball may drop, but your taxes could really pop. A $500 billion tax bomb is, indeed, ticking. And House Speaker Boehner is hoping to diffuse it before it's too late.
What are the chances of that happening? Pretty good if my next guest gets his way.
Republican Eric Cantor is the House majority leader. And he joins me here in New York.
Sir, welcome to the program.
REP. ERIC CANTOR, R-VA. HOUSE MAJORITY LEADER: Stuart, it's good to be here.
VARNEY: Do you think you can get a deal to defuse this "Taxmageddon,' as its being called? Do you think you can get a deal before the election?
CANTOR: Well, we're going to try every way we can to make sure taxes don't go up on anybody, don't go up on working families, don't go up on small businesses. We've got to make sure we're doing everything we can, instead, to grow jobs and get this economy back on track.
VARNEY: So doesn't a lot depend on the election result? If you have got a clean sweep on either side, you get a deal?
CANTOR: There's no question. My sense is that if we win the election, if Mitt Romney becomes our next president, we will be able to stave off a tax increase.
And I think, right now, we've got to put that certainty into play, because small businesses are having too difficult of a time. Investors are worried about will happen with their taxes.
VARNEY: If -- on January the 1st, if nothing is done, let me see if I've got this right. The payroll tax goes up. That's the Social Security tax. Federal income tax rates go up, tax on dividends, interest. What else? What am I missing? Estate taxes all go up. That adds up to I think over $500 billion for the coming calendar year.
CANTOR: Right, marginal rates, all of it.
And, in fact, over a 10-year period, its $4 trillion hit. And you can imagine if our economy at $15 trillion GDP, you are having a $500 billion hit in one year, its huge. We don't want that to happen. We want our economy to grow. And so that's why we're saying this election, really, is much about the fact that if people do not want their taxes going up, they've got to vote to make sure that they don't. And that is a vote for Mitt Romney.
VARNEY: But you favor tax reform. And by tax reform, I think you mean lower tax rates across the board, but a lot fewer deductions and loopholes. That is tax reform. And that's what you favor?
CANTOR: That is correct.
And, in fact, we in the House have put forward a budget that actually lays out the kind of tax reform we want. We want to bring rates down. We want to make sure they are lowered for everyone that we broaden the base that we get rid of the loopholes, and we start allowing people, when they go and make their money; they know what to expect that they can keep.
The problem is right now, it's too complicated. We want to have a growing economy. We are for pro-growth tax reform.
VARNEY: Is Governor Romney firmly on board with all the proposals you just laid out?
I was with him last night for several hours. And he's told person after person of his commitment to clean up the tax code, to lower the rates, so that we can be about competitiveness again in this country. We have got to make sure that -- in our corporate rates, we're the worst in terms of competitiveness. We have the highest corporate tax rate in the industrialized world.
We want to go out and be the best again. We want to make sure that our businesses can grow; our families can get back to work.
VARNEY: I want to go back to President Obama's attack on Governor Romney's work at Bain Capital. He's run a series of negative ads going after the governor for what happened when he was at Bain or alleged to have happened.
Today, we get Representative James Clyburn making a comment about what Governor Romney is alleged to have done to American companies. Listen with me for a moment and I'll get your comment.
(BEGIN VIDEO CLIP)
REP. JAMES CLYBURN, D-S.C.: There's something about raping companies and leaving them in debt and setting up Swiss bank accounts and corporate businesses in the Grand Caymans. I have a real serious problem with that.
(END VIDEO CLIP)
VARNEY: Now, the White House has said that the use of the word rape is inappropriate. And I'm sure you agree with that, sir.
These comments, again, are not helpful. They're not constructive. In fact, I would say they need to be fact-checked as well. You know, I think that where the White House is and obviously my friend and colleague Mr. Clyburn, in terms of wanting to castigate small and large business, I think it reflects a lack of understanding again of what America's about.
America is about business. We are about a country that is premised on the fact that ordinary people can go into business and do extraordinary things. And to denigrate success in business, to denigrate the launching of new business or the turnaround of existing businesses I think just absolutely reflects a disconnect with what America's about.
VARNEY: But why -- why would Representative Clyburn and the president do this? Why would they attack capitalism? As you said, America is a free enterprise country, always has been. That is the American tradition.
But it's -- capitalism seems to be attacked by the president, and some people in the House.
CANTOR: I think it actually reflects, Stuart, the very clear line that's being drawn for this election.
It is about what kind of country do we want to be in America, and whether we want to be the country of small businesses, whether we want to be a country of opportunity, where people can come here and chase their dreams in a way that they cannot do anywhere else and be successful, and turn that success into opportunity for other people.
VARNEY: Have we passed the tipping point, the tipping point being where half the people who work do not pay federal income taxes, half the people in the country take something from the government provided by the other half? We look increasingly like Europe, don't we, with the social model.
And in political terms, haven't we passed the tipping point, where that's what people want in America?
CANTOR: This election will tell -- will give the answer to that question. I don't believe we have.
I think we're nearing that point. And I think what's on the line right now is the answer to the question of whether we are going to still be the marvel of the economic world, whether we're still in America going to be the best competitor. We've got to get our tax system straight so that we don't have a situation where nearly half the folks are not paying federal income taxes.
It's not fair. And we want to help everyone succeed. And the way you do that is to empower people through opportunity. That is the way America's always done so. You look at the Statue of Liberty out in New York Harbor. That's what we stand for, freedom, economic freedom, individual freedom. That's how we have built this country. And I believe that is how we will continue to compete in the future.
VARNEY: Believe me, Congressman; I'm very happy in America, OK?
One last real fast question. I saw a headline back in April. The House passes a 20 percent small business tax cut to stimulate jobs. What happened?
CANTOR: Well, the Senate has refused to take it up, Stuart, like so many of the other bills that we pass in the House.
But we're going to continue to help small businesses. That bill was designed to help small business men and women keep more of their money, put it back in the business, create more jobs. We're going to have a series of bills come forward, Stuart, over the next several months that speak to small businesses and the red tape that's in the way.
It's too hard to be a small business person right now. We've got to turn that around.
VARNEY: All right, Congressman Eric Cantor, we thank you very much for joining us, sir. Appreciate it.
CANTOR: Thank you, Stuart.