CNN's Costello Lectures GOP to 'Act Like Big Boys and Girls'

CAROL COSTELLO: Okay. So what happens? Because I think Lindsey Graham came out and said, hey, I'm sure of it. We're going off the fiscal cliff. 

STEPHEN MOORE, Wall Street Journal: You know, if you'd asked me a week or two ago, I would have said there's no way that this isn't going to get resolved. I've been watching for 25 years. But these two sides are further apart today than they were a few weeks ago. So, I'm not sure they're closing the gap. I suppose that a few days before Christmas they'll probably come to their senses and reach an agreement. But there is a still a big divide and it really is over that issue about whether we should be raising tax rates on wealthy people or anyone. And that really is going to be, I think, the final negotiating item is how much taxes should go up, if at all.

COSTELLO: See, I don't think that is a negotiating item. I think the President has been clear that tax rates are going to go up on the wealthiest Americans, period. That's kind of off the table.

MOORE: Well, look, I think what Republicans are saying, look, there's no doubt about it in my mind and I think a lot of Republicans if you raise those taxes on businesses and investors, it's going to hurt the economy and this isn't the best time to be doing any injury to businesses and investors when we don't have enough jobs in this country. 

But you may be right that the President will insist on those tax rates going up and Republicans have said, look, instead of raising the tax rates, why don't we close loopholes in the tax system, make the tax system more efficient and stop picking winners and losers. And I think that's kind of the latest offer the Republicans have put on the table. They're not opposed to a tax increase. They're basically saying let's do it the right way in a way that doesn't hurt the economy. 

COSTELLO: Yeah, but, Stephen, you could close every loophole that's out there and that wouldn't make up for our deficit.

MOORE: No, but the President's plan of raising taxes on the rich – let's assume even he has his way. Let's say that the Republicans go along with his plan. That at best raises about $70 billion a year. So, that leaves us with a trillion dollar deficit. So, this puts the President I think in a little bit of a hole. You know, if the Republicans give his way, what's plan B? What do we do next to deal with this enormous deficit? 

The President and Tim Geithner this weekend basically said we've got plans to cut entitlements by $400 billion or $500 billion. That's over 10 years. That's only 4 or 5 percent of the problem. So, we have a much bigger hole than I think anybody in Washington right now is willing to, you know, agree that this is such a problem. 

COSTELLO: Okay. Let me ask you this. Republicans are angry that the President laid out this plan that they say he knew would just inflame things because there's no real specifics there – 

MOORE: That's true. 

COSTELLO: -- about cutting entitlements in any meaningful way. So, why don't Republicans act like big boys and girls and present their own plan about how they specifically want to cut entitlements? Why don't they just – isn't that how you negotiate? 

MOORE: Yes, but, of course, they've done that. That's the most curious thing to me, is when Tim Geithner said the Republicans should come forward with a plan.

You know this. Over the last two or three years in the House of Representatives, controlled by Republicans, they have passed what's called the Ryan Budget for three years in a row. It has very substantial entitlement cuts. You've reported on this on CNN. In fact, all the left-wing groups had all these ads saying that the Republicans want to throw granny over the cliff. 

So it's pretty clear. Republicans have been very specific about how they want to reform entitlements. The problem is there's no plan by the President. He's been in office for four years and we haven't seen a spending reduction. 

COSTELLO: But it is the dawn of a new day. And I hear you about the Ryan thing. And I do. I hear you. 

MOORE: Right.

COSTELLO: But it is the dawn of a new day. Negotiations have started anew. Isn't it time to lay out new, fresh plans instead of saying, oh, yeah, check back before the election like our plan then, we're still for that? That's not a way to negotiate, is it?

MOORE: Well, look, I mean, I'm not exactly sure what you want the Republicans to do. They've said here's our plan for something like $3 or $4 trillion in cuts in these programs over the next 10 years. What the President could do is say, okay, I'll take this one and this one and this one, but I can't live with these other ones. But so far the President hasn't really come up with any reductions in entitlements.

And look, we could disagree -- you and I may disagree about whether taxes have to be raised. But I think the thing that you and I would agree is we've got to be adults and grown-ups -- to borrow your phrase -- about how we're going to deal with these entitlement programs. 

The biggest factor in driving this debt over the next 20 years, as you know, is guess what, there's 75 million baby boomers that are now paying taxes and are productive, that are going to be retiring and collecting these benefits. The math just doesn't add up without cuts to some of these programs in Social Security and Medicare. 

COSTELLO: I think you're right. There needs to be this balanced approach and everything should be on the table. I do agree with you there. Stephen Moore – 

MOORE: But not tax increases that hurt the economy. That's my only point. You thought we had an agreement there, didn't you?

COSTELLO: I did. We were close.