CNBC "Power Lunch" - Transcript

Interview

CNBC "Power Lunch" -Transcript

MR. HARWOOD: Thanks, Sue and Bill.

I'm joined here by Nancy Pelosi, the speaker of the House. Welcome, Madame Speaker. Thanks for joining us.

SPEAKER PELOSI: My pleasure to be here, John. Thank you.

MR. HARWOOD: Let me start by asking about the issue of taxes. Where you stand in politics depends on where you sit, and a lot of people sitting where we're sitting right now in New York look at the Democratic agenda, there's consensus that upper-income tax rates are going to go up, the Bush tax cuts for the upper-income are going to go up when they expire, step back and think that's crazy. Why would you mess with an economy that the stock market's doing well, we've been growing for 49 months in a row? What's your answer to that?

SPEAKER PELOSI: Well, first of all, there's been no decision in that regard. It has been a position that Democrats have taken, that we want to have more fairness and more simplification of our tax code. But we have sought first to look at where we could make cuts in spending and eliminating waste, fraud and abuse before we go to the issue of taxes. The principle that we've operated under is tight fiscal discipline: no new deficit spending, pay as you go. We think that's good for the economy.

If at some time we have a priority that needs to be funded that is a priority for the American people, we may look to where that would be funded. But so far, 80 percent of our initiatives, whether it is 9/11 commission recommendations; our package for student loans, the biggest package since 1944; whether you're talking about whatever the issue has been that we have passed legislation, 80 percent of that has been paid for by shifting priorities and no new taxes.

The largest tax that we have is the cigarette tax on the SCHIP, the Student Children -- State Children's Health Insurance Program. But by and large it's all been shifting priorities, no new taxes.

MR. HARWOOD: Given the veto threat that the president has put out on any tax increase in this Congress, are we likely to see before this Congress is done any increase either those over 200,000 (dollars), those over 500,000 (dollars)? People have talked about a surtax, perhaps to pay for protecting middle-class taxpayers from the AMT. Is any of that going to happen, or are we just going to talk and fight and veto?

SPEAKER PELOSI: Are you talking about in this session or in this entire Congress?

MR. HARWOOD: In this Congress.

SPEAKER PELOSI: In this Congress.

MR. HARWOOD: In this entire Congress.

SPEAKER PELOSI: Well, we are going to take a general look at taxation and see what we need to do. But again, tight fiscal discipline, realignment of priorities, and we would hope to work with the president on that because if he would abandon some of his spending priorities which are not good investments for the future, we could fund our innovation agenda, which is our commitment to competitiveness to keep America number one, paid for under the legislation which he signed, which we passed in July. We could pay for our investments in innovation that recognize innovation begins in the classroom, and that nothing brings more to the Treasury or grows the economy more than educating the American people. So let's start with what our agenda is, how it grows the economy, how it, again, with the fiscal discipline, is good for the economy, and then look at these.

Now, on the Alternative Minimum Tax, there will be a fix on that, at least to patch in the short-term. That, again, will have to be subjected to fiscal discipline and --

MR. HARWOOD: Paid for by those over 500,000 (dollars)?

SPEAKER PELOSI: Well, we'll see where it has to be, but we'll look at a number of different places as to do it. But it is a tax break for the middle-class, and that is what we are about.

MR. HARWOOD: Let me ask you about the issue of private equity taxation. Your counterpart in the Senate, Harry Reid, has indicated he's not going to have enough time to pass legislation that would tax carried interest, what is called carried interest on hedge-fund managers, at ordinary income rates. Are you in the House going to move forward with that legislation even though the Senate's not likely to ask on it, or are you going to drop it as well?

SPEAKER PELOSI: Well, I had a different view of what Harry Reid said. I know he said what you've described, but if it becomes an issue that is part of fiscal discipline, that we may have to revisit how some of the Alternative Minimum Tax break for the middle-class is paid for and the rest. So if there is a reason to revisit it, it will be.

MR. HARWOOD: So it's not dead yet?

SPEAKER PELOSI: Let me just say this: I think I understand the sophistication of the issue, but I also know that if it is ordinary income, it should be taxed as ordinary income. If it is a capital gains, it should be treated as capital gains, and not all carried interest falls into the category of capital gains.

MR. HARWOOD: Let me ask you about a very hot issue right now, the SCHIP health care bill. You've got your override vote on Thursday. Republicans tell me, and some Democrats as well, that you're far from having enough votes to override the president. Is this just political theater we're going through, and then you'll have a negotiation afterwards? Or is there any reason to think that you could flip the 14 or 15 members you would need to get to 290?

SPEAKER PELOSI: Well, I would hope so. We have an initiative throughout the country of governors, Republican and Democrat alike, appealing to their members of Congress to override the president's veto. Every organization you can name, from AARP and AMA to YWCA and everything alphabetical in between, the Catholic Hospital Association -- anybody who cares or has anything to do with children's health is appealing to members of Congress to make this change, so -- override the president's veto. So I would hope that we could do that, but we will not rest until those 10 million children are covered.

Now, think of it this way. For 40 days in Iraq, we could cover 10 million children in America for one year -- 40 days, 10 million children in America for one year. I mean, it's just -- that's when we talk about realigning the priorities.

MR. HARWOOD: You mention Iraq. Let me ask you to step back and reflect on this year so far.

Tremendous amount of hope accompanied your ascension to the speakership. Remember that day when you were sworn in with all those children around you? A lot of people that there was going to be change on Iraq and maybe a change in the tone in Washington, but we really haven't seen it. The war's gone on, and the two parties are really at knife's edge as they have been for the last several years. How would you grade the amount of change that you've been able to bring to the House?

SPEAKER PELOSI: I think we've brought a great deal of change in our new direction for the Congress -- and may I say, starting with our first bill, 9/11 commission recommendations, H.R. 1, with voting also to give the biggest increase in benefits to our veterans in the 77- year history of the Veterans Administration. Whether it was raising the minimum wage, passing our innovation agenda, passing an increase in the package for student loans, assistance in student loans for college education, the biggest package since the GI Bill in 1944; whether it was our energy bill, which is not yet signed into law -- most of the rest is, all paid for and all with overwhelming bipartisan majorities in the Congress.

So while there are some disagreements, we didn't go there to say we're not ever going to disagree. We have come together to meet the needs of the American people in a fiscally sound, highly ethical way with broad bipartisan majorities, most of it signed by the president of the United States.

In terms of the war --

MR. HARWOOD: Madame Speaker, I am told that we have got to leave it there. We're out of time.

SPEAKER PELOSI: Oh, all right. I'll leave it there.

MR. HARWOOD: Thank you so much joining us.

SPEAKER PELOSI: It's my pleasure.

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