CNN "American Morning" - Transcript

Interview

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CHETRY: 39 minutes past the hour. Welcome back to the most news in the morning.

President Obama says that he needs Republicans to support his plan to extend the Bush tax cuts for Americans making less than 250,000 a year. He's accused the GOP of holding the middle class hostage to get tax cuts extended for the wealthiest income earners as well. But there is real resistance. And it's not from the GOP. It's coming from his own party.

Here's a look at the 31 House Democrats who are breaking ranks, signing a letter demanding that the Bush tax cuts be extended for everyone. Michigan Congressman Gary Peters is one of them.

He joins us live from Capitol Hill this morning. Thanks for being with us, congressman.

REP. GARY PETERS (D), MICHIGAN: Great to be with you

CHETRY: So I know it's a tough time. There's a lot of decision to be made. One of them has to do with this tax cut issue. Why did you decide to sign on to this letter, as well as 30 of your other Democratic colleagues saying, you know what we need to extend them for everybody at this point?

PETERS: Well, I think it's important to also clarify that the letter says it's a temporary extension for everybody. We all believe that the middle class tax cuts for people $250,000 or less should be extended. And that should be done permanently, but given the still fragile state of the company, although we've seen eight months of positive job growth, it's still fairly fragile.

We believe there should be at least a short-term extension of all tax cuts looking the a year or two. Hopefully, it's going to be a compromise position, between what we've seen, kind of entrenched positions on both sides. I think it's important that we make sure that we have tax cuts for middle class Americans from $250,000 or less. But that goes forward but we certainly believe that we could have a short term extension of the other tax cuts until we see signs that the economy is definitely getting much healthier. We're seeing signs now. It needs to go further. CHETRY: Is it one year? Is it two years, when you talk about temporarily extending it for everybody, what would be the years?

PETERS: Well, we're looking at one to two years. We also believe that it needs to be paid for. That whenever you're talking about any of these kinds of tax cuts, we need to pay for it. We do have paid for identified in the letter. But it would be a short term extension, one to two years.

CHETRY: So bottom line, is it an election year move. I mean, nobody wants to be in a campaign ad from their opponent saying, hey, I voted to raise taxes.

PETERS: Well, I think this is just good sound policy, as the economy is slowly recovering, this is not the time to be raising taxes on anybody. And I think you'll find an agreement from most economists and that makes sense not to do that. Folks in the higher income brackets account for a large percentage of consumer spending.

70 percent of the economy is consumer spending. Right now, demand is still very soft on the consumer side. We want to make sure consumers are still out there spending, creating demand. Also from the investment side, and there are parts of the tax cuts that are important, that I believe for capital gains, and dividends, dividend rates shouldn't be going up. And this is a discussion that needs to be a part of an overall deficit reduction strategy that needs to be laid out over the next year.

We've got a deficit reduction commission that's going to be coming back later this year with a plan in order to reduce the deficit. Revenue may be part of it. This should be part of that discussion in a very comprehensive way next year. That is the best way to receive it.

CHETRY: I just want to ask you about this, because some of the polling show that a lot of people think that it's a good idea, more than 50 percent in some of the latest polling say it's a good idea to let taxes expire for the wealthiest income earners. So if I'm sitting at home right now, you know, I'm struggling to make ends meet, struggling to put my kids through college.

What is your rational if you're speaking to me, to say it's a good idea to extend tax cuts for everyone, including the wealthiest income earners?

PETERS: Right. Well, first off, let's make it absolutely that definitely we need to have tax cuts for middle-class Americans, middle-income Americans. We cannot hold that hostage. That has to happen and it has to happen very quickly. But in order to help families, we also have to make sure this economy is growing.

We've had eight months of positive job growth. We need to continue that. We need to create jobs and when we're still in this fragile environment, it's best, in my belief and other colleagues of mine, it's best not to raise any taxes until we start getting on a much sounder footing in the economy. That's going to help everybody in the economy.

But let me be perfectly clear, we definitely have to make sure we extend those tax cuts for folks making 250 or less.

CHETRY: Right.

PETERS: And I just hope Congress -

CHETRY: And that's the worry right now.

PETERS: Right now, we've got gridlock here in Congress. We've got sides digging their heels in. I think it is wrong. I think what the American people really want to see is Congress coming together, and having a compromise, making sure we're helping middle class Americans and also making sure that we're helping the economy. This should not be about partisan politics on both sides.

CHETRY: I'm sorry to talk over you. I just want to make sure people understand, if something is not introduced, if legislation is not introduced, if there is not some agreement, the bottom line is it's the equivalent of a tax hike, right? Because these Bush cuts are set to expire, so that means they're about to expire for the middle class as well if you guys don't take action?

PETERS: That's right. That's why we need to take action because the rates will go up if we do not take action. That's why we cannot let partisan gridlock politics prevent that from happening for middle class Americans. I think that's why it's important to stake out some compromised positions that we can do what's important for the economy, but most importantly, do what's good for middle class Americans and that's to make sure that these tax rates continues in the future and are not raised.

CHETRY: So you've got any indication from House Speaker Pelosi that she's going to listen to you, guys, that some introduction of legislation talking about an expansion of these tax cuts for everybody will happen?

PETERS: Well, right now, what I'm hearing from both sides, both sides aren't really willing to negotiate one way or the other. And that has me very nervous that we won't do anything by the year-end. We're going to have gridlock politics. That is very frustrating. We can't let partisan politics on both sides stymie what is very important to middle class Americans. And that's to make sure that they don't see their taxes go up.

That's why I think it's very important for us to stake out some middle position, to try to be a centrist here, find some sort of common ground where we can bring both sides together in order to solve a problem to make sure middle class Americans get the tax cut that they deserve, but also, make sure that the economy continues to get healthier every single month as we've seen in the last eight months. But it has to continue going forward.

So I think we are staking out that middle position and hoping we don't have gridlock and we can accomplish something that's so important for the American people.

CHETRY: We'll see if your party leaders are listening to you.

Congressman Gary Peters, thanks so much for joining us this morning.

PETERS: Thank you.

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