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CNN "CNN Newsroom" - Transcript


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Congressman Jeb Hensarling tells me next.


BALDWIN: Joining me from the debate site in Danville, Kentucky, we are happy to have Congressman Jeb Hensarling, Republican of Texas. He speaks for the Romney campaign.

Congressman, welcome. Good to see you again here.


REP. JEB HENSARLING (R), TEXAS: Thanks. Appreciate it.

BALDWIN: I know you have worked closely with Paul Ryan on debt and deficit matters. Have you ever found yourself debating him, you know, taking opposite sides on something, let's say, and if so, was he a tough debater?

HENSARLING: Oh, wow. You have me scratching my head on that one.

It's -- it would be a pretty odd day that Paul Ryan and I would disagree on anything. I mean, what I know about Paul, he knows his budget better than just about anybody. He has got a plan along with Governor Romney for economic growth. And although Vice President Biden is a veteran of 18 different presidential and vice presidential debates, he may score well on style, but he's got the Obama record to defend and so it not going to be an easy evening for him on substance.

And I think people are going to be very impressed with Paul Ryan. I mean, here's a guy from the heartland of America. He knows the values and challenges of middle-income families. And he's got a plan, along with Governor Romney, to put America back to work and to quit spending money we don't have so our children can have better opportunities than we have had.

BALDWIN: Let me jump in.

HENSARLING: So, I'm looking forward to tonight.

BALDWIN: Let me jump in, Congressman, because on that plan, the question then is, does Paul Ryan need to be more specific tonight in his answers than he was 11 days ago, when he was asked by an interviewer to explain Mitt Romney's tax plan and he said, well, I don't really have time to do that.

Does he have -- can he do better than that? HENSARLING: There will be plenty of time.

Here's the tax plan, fairer, flatter, simpler, more competitive tax code. We broaden the base by getting rid a lot of these special interest deductions, exclusions. By one estimate, a third of the tax code is what is known as tax expenditures.

BALDWIN: So, why couldn't Paul Ryan explain that -- why couldn't he explain that 11 days ago?


HENSARLING: Well, my guess is he could if he had had time.

But we did this in '03. It was done in the Reagan administration. It was done under President Kennedy, under JFK. And guess what? When you follow this recipe, you get more jobs, more economic growth and more tax revenue that actually helps fight the deficit.

And that's in contrast to what the president is offering us, which is another tax increase on small businesses, almost a million small businesses, which Ernst & Young said will cost us 700,000 jobs. So it's going to be a real choice election when it comes to the economy, not to mention the debt, not to mention foreign policy.

BALDWIN: OK. So, Congressman, let's just stay on point with your guy, because one thing we do know is that Romney and Ryan say that they will reduce income taxes. The number is 20 percent they have been giving across the board, 20 percent.

But we have this graphic. And so, you know, if you look at recent history, the Reagan tax cuts, the Bush II tax cuts, both coincided with massive growth of the national debt. The debt rose nearly 200 percent under Reagan, nearly doubled under Bush, at least partly because the Reagan and Bush...


BALDWIN: Hang on, hang on, sir.


BALDWIN: Let me finish, with all due respect, at least partly because the Reagan and Bush tax cuts reduced government revenues.

You are a debt and deficit hawk, Congressman Hensarling. Do you worry talking -- looking ahead, do you worry about the debt under Romney might explode again similarly?

HENSARLING: Well, number one, the deficit is the symptom. Spending is the disease.

I mean, since World War II, revenues have averaged about 18.5 percent of the economy. Spending is at 20 percent. And now due to the president's policies, we have revenue that's actually gone down due to less economic growth, but it's spending that's skyrocketing.

He has it up to almost 25 percent of the economy and it's on automatic pilot to go to 40 percent. That means middle-income families will suffer.


HENSARLING: It is a spending-driven problem. The deficit again is the symptom. Spending is the disease. You have to take care of it on the spending side.

And once again, Brooke, if you go look at IRS data, you will see that revenues actually increased when we brought down rates because we had more economic activity.

BALDWIN: But, Congressman, why would...


HENSARLING: So I don't buy into your proposition.

BALDWIN: Why would the trickle-down theory work this time, when it's produced record debt two times before?

HENSARLING: Because we haven't controlled spending.

The key is controlling spending. Again, I don't know how many times I can repeat it. Look at the data. You may have a theory, but look at the data, and the data is we received more revenues, more revenues from economic growth. You're saying we received less. We didn't.

Spending is skyrocketing. You can't have programs that are growing at 6 percent, 7 percent, 8 percent a year, Medicare, Medicaid, Social Security, federal retirement, which are all going broke, and the president isn't doing anything about it, and then have economic growth at a languishing 1.3 percent.

The math doesn't work. Our challenge is on the spending side. And so I don't think the American people believe they're undertaxed. I think they believe that Washington spends too much. And I don't know any economist in America who thinks we're going to create more jobs by increasing taxes on small business. I don't know anybody who believes that their unemployed sister-in-law is going to get a job if they raise taxes on their employer.

It just -- it defies common sense, much less economic science and history.

BALDWIN: Congressman, let me just move along. I want to ask about Romney and how he seems...


BALDWIN: Laugh if you will, but I want to move along, because this is such an important point that I know a lot of Americans want an answer to, because he seems to be moving towards center. Right?

He's moderating some of his positions. We saw recently that made the headlines yesterday what he said about abortion, for example, on health care reform, parts of which he's embracing, on Wall Street reform, foreign policy, where just yesterday he was emphasizing diplomacy with regard to Syria.

Are you hearing worries among the Republican base that he might be going wobbly in this effort to reach voters in the middle?

HENSARLING: Oh, I think -- listen, Republicans are very excited at the presentation that Governor Romney had in the last debate. It was the first opportunity for many Americans to see him unfiltered, with all due respect, by the media, unfiltered by the negative campaign ads.


BALDWIN: But, Congressman, I'm not asking how he did in the last debate. I'm asking, on all these topics in which he's moving to the middle, and I'm just curious what Republicans are saying about that.


HENSARLING: Republicans are very excited about Governor Romney, very excited.

And if anybody has gone a little wobbly, you know, you look at the president, who said essentially all is well, we have got -- you know, we're more secure nation, and now we have our foreign policy that's literally going up in flames in front of us on our television screens.

That's what -- you know, that's what the American people are wondering about.

BALDWIN: Congressman Jeb Hensarling, thank you so much for joining me from Danville, Kentucky. Appreciate it.


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