'Special Report' Panel Discuses Whether Obama's Tax Plan Is Socialism in Disguise; Whatever Happened to Bipartisanship?

This is a rush transcript of "Special Report With Brit Hume" from October 23, 2008. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

GOV. SARAH PALIN, (R-AK) VICE PRESIDENTIAL CANDIDATE: Obama stated finally, plainly, he's calling it "spreading the wealth." Joe Biden calls higher taxes "patriotic."

But Joe the plumber, Joe the plumber speaking for other Americans out there so worried about our economic future, he said to him it sounded like socialism.

SEN. BARACK OBAMA, (D) PRESIDENTIAL CANDIDATE: Was John McCain a socialist back in 2000 when he opposed the Bush tax cuts for the wealthiest Americans. Because all I'm trying to do is reverse those so that we can give relief to people who really need help.

(END VIDEO CLIP)

BRIT HUME, HOST: That's the debate of the recent days, started by the question asked of Obama by the famous Joe the plumber. What about it? Has Obama's assertion that he wants to use the tax increases on certain people to spread the wealth around, is that raised legitimate questions about whether he has a socialist or socialistic policy?

For answers we turn to Fred Barnes, Executive Editor of The Weekly Standard, Mara Liasson, National Political Correspondent of National Public Radio, and the syndicated columnist Charles Krauthammer, FOX News contributors all.

Mara, what do you think?

MARA LIASSON, NATIONAL POLITICAL CORRESPONDENT, NATIONAL PUBLIC RADIO: I think it will clearly raise a question for some people, but I think the socialist tag is not helping John McCain make a lot of inroads, because we haven't seen them, at least so far, in the polls.

I think that by its very nature, the tax system is redistributive. Otherwise we'd have a flat tax. The tax system, because it's progressive, tends to spread the wealth around a little bit.

Now, Obama might want to do it more, and Democrats want to do it a lot more than Republicans.

HUME: Then in Obama's plan we have one wrinkle, which is he wants to use the income generated in part to give money to people who don't pay any income taxes.

LIASSON: There is no doubt about that.

HUME: And that is in the nature of a kind of a subsidy, and that's sort of a direct transfer of a payment. It comes out of one pocket and goes to another taxpayer.

LIASSON: There is no doubt about that.

However, those people who pay no income tax and would get a refundable tax credit under his plan, feel they do pay taxes because they pay payroll taxes. They don't feel that they pay no taxes. But that is clearly the argument John McCain is making, and it's something that he has been hammering away every day.

I just don't know if the socialist charge has any traction to it anymore. It sounds a little archaic to me. I think there is no doubt that Barack Obama wants to be more redistributive in tax policies than John McCain.

FRED BARNES, EXECUTIVE EDITOR, THE WEEKLY STANDARD: Indeed he does. He really does.

And Obama was wrong in saying what he is doing is the same thing that McCain was doing in 2000 when he opposed the Bush tax cuts for the wealthy, or in 2001 when it first came up, because McCain wasn't saying we have to send a lot of money who aren't paying taxes, get money from the people who are paying taxes and give it to people who aren't.

That's not what McCain was trying to do then at all. That is what Obama is doing now. It is redistributing the wealth. Socialism happens to be for government to own the means of production.

LIASSON: We're doing that, too!

BARNES: No, we're not. I don't think we're doing that except in one case. Now, we're not doing that with banks at all, really.

I mean, look, does anybody think that the intent of the Bush administration, or whatever the next administration is, that they want to take over the banks, and keep the banks, and then the government will own these banks, and then the government will be doing the lending? No.

They're trying to help out the banks so they can start their lending again. They want the banks to do it.

The thing that comes closest to socialism is taking over AIG, the insurance company, because, in effect, the federal government owns 80 percent of that company. But does anybody think that the federal government really wants to hold on to AIG, the insurance company? No, they want to get rid of it as soon as they can.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Since the word "socialism" has reared its ugly head, let's dispose of it.

Joe the plumber is a great guy, but I will take my political philosophy from Fred Barnes rather than Joe the plumber. Socialism actually is when the government takes over means of production, or Lenin called the commanding heights of the economy.

And we saw it action not Soviet Union but in Britain after the Second World War where labor took over the mines, the railroads, and other of the sinews of the economy. It proved a disaster. Thatcher had to undo it. It is being undone around the world, and redone now on a temporary basis because of the financial crisis.

But as Fred indicated, that is all temporary. It's not intended to retake commanding heights. That's socialism.

Now, obviously what Obama is talking about is what we have had for a long time, progressive taxation. Now, he wants to raise the marginal income tax rate from about 36 percent today to about 39.5. It is a little higher because he wants to eliminate a lot of deductions that the other income people have, so perhaps it's in the 40's.

But let's remember, under Eisenhower, the marginal income tax rate was 91 percent.

HUME: The top rate. The highest rate.

KRAUTHAMMER: The top rate. So what we are talking about here is what used to be once 91 percent under Kennedy in the '70's (sic). It's now in the 30's, so it will be in the high 30's or perhaps in the mid-40's.

HUME: You mean it came down to the 70's under Kennedy?

KRAUTHAMMER: Under Kennedy, down into the 30's over the last decade and a half. Bush brought it from about 39 to 36, and Obama wants to kick it back up to about 40 or perhaps a little higher.

Now, that's, you know — the American political system —

HUME: Does it make any difference that it's for the purpose of passing a lot of the money directly to other citizens rather than for the purpose of financing government?

KRAUTHAMMER: How you use the money once the income has come in is a different issue. We're talking about high rates of taxation.

HUME: But they are not socialism itself.

LIASSON: They are not socialism itself. Liberal democracies generally have them. It is not only Sweden, it's America under Eisenhower.

HUME: So it doesn't smack from each according to his ability, to each according to his need, Charles?

KRAUTHAMMER: No. This is not Supreme Soviet, it's not Sweden, and it isn't even Eisenhower's America.

The America's political fights are fought between the 40-yard line.

HUME: So you're for it?

KRAUTHAMMER: I'm for the 50 yard line. Obama will push it all the way up to the 40 or may to the 38 or 37. But no one is getting a touchdown here, I can assure you.

HUME: All right.

After a highly partisan campaign, what about bipartisanship? Does anybody care about it anymore? We'll talk about it next.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN, (R) PRESIDENTIAL CANDIDATE: When it comes time to reach across the aisle and work with members of both parties to get things done for the American people, my opponent can't name a single occasion in which he fought against his party's leadership to get something done for the country.

OBAMA: I support charter schools and pay for performance for teachers. It doesn't make me popular with the teachers union. I support clean coal technology. It doesn't make me popular with environmentalists.

So I have a history of reaching across the aisle.

(END VIDEO CLIP)

HUME: Well, it was a big deal earlier in the campaign for Barack Obama. In fact, one of the phrases attached to him by his admirers was that he was "post-partisan." And he talked a lot about reaching across the aisle and ending the poisonous atmosphere in Washington.

Talk of that has subsided. Those examples you heard him cite are about the only ones he does cite, and, of course, they are not about reaching across the aisle. They are about allegedly offending interest groups within his own party.

The question I have is, is this idea of bipartisanship simply gone away in this campaign?

KRAUTHAMMER: It certainly has in Obama's case.

When he was running against the other Democrats in the first half of the year, between let's say Iowa and Berlin, and he had to distinguish himself from others with whom he had no real difference in substance, he was the transcendent uniter, the guy who was on the magic carpet tour soaring above ordinary politics.

It worked, and at the time he was going to be a man who would transcend race and region and class and party. That was all part of his appeal.

All of a sudden, as you say, it's disappeared. Why? Two reasons. A, it's a McCain issue. He knows in fighting against McCain, McCain has the real stuff. He's lived it. He has done it. All of these examples Obama brought up are trivial and insubstantial.

Generally speaking, in Illinois and in the Senate, he has been a party man. So why raise an issue that is actually McCain's strength?

Secondly, he doesn't need bipartisanship. There is a wave breaking here, and the Congress will be heavily Democratic. It's conceivable that there is 60 Democrats or almost. He is not going to need any Republicans, so he can be as partisan as he wants.

So it is not an issue he needs, and it's not an issue he's strong on.

LIASSON: I think this issue is so interesting because Barack Obama has a post-partisan aura or a post-partisan persona, but he doesn't have a post-partisan or bipartisan record.

Right now I think Democrats used to extol people, people who were usually Republican who reached across the aisle, but right now they're in a very partisan mood. Look at how readily they accepted Obama's throwing over the public's funding for a campaign. You didn't hear a whimper out of Democrats for that. He has busted all the records.

HUME: Private money, yes. If it were a Republican with all this prize —

LIASSON: And he's raising big money from big donors, you know. About a quarter of his money comes from under $200.

NPR has a poll that's coming out tomorrow morning that asks a very interesting question. They said would you rather have a Republican president be a check on the Democratic congress or Democratic president.

Republican president won by quite a big margin. But when we asked the question again, would you rather have Barack Obama working with a Democratic Congress or John McCain as a check on it, of course, Obama edged out McCain by a very small margin.

So people are still in the mood for this. But I just think that that is not what this campaign is being waged on. There's no doubt that McCain has this all over Obama, but it doesn't seem to be what's moving voters.

BARNES: Look, Obama was not only the most liberal senator in 2007, he was the fourth most partisan. In other words, the average senator I think he votes with his party about 84 percent, something like that, and he was at 96 percent voting with Democrats.

He raised this thing. He has no record of being bipartisan at all in any serious way, but it sounded good for a while. And now he has dropped it I think for the reason Charles said. Democrats think they will be able to ram everything through. They don't need Republicans.

HUME: I understand that. That seems to scare the public to some extent, as Mara cited.

So should McCain make more of an issue of that, of Obama as a guy who will give in to the Congress, and the Congress will give in to him?

BARNES: I think that's a good issue. But we never see much strategic voting. In other words, people who might like Obama, but when they hear it would be one party rule in Washington, they will vote for McCain. You know, people usually vote for the candidate they like.

LIASSON: And that works when a president is trying to get a Congress of his own party.

I think this might be a little bit different. It is not so easy throwing over your beloved local congressman.

KRAUTHAMMER: People like divided government in the abstract, but in the booth, I don't think it makes a dime's worth of difference.

HUME: So you think it would be useless for him to raise it?

KRAUTHAMMER: It's worth raising because what has he got?

BARNES: It's worth linking Obama to Nancy Pelosi and Harry Reid because they're unpopular.

HUME: That's it for the panel.

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