ROMNEY: You bet. Well, President, you're -- Mr. President, you're absolutely right, which is that, with regards to 97 percent of the businesses are not -- not taxed at the 35 percent tax rate, they're taxed at a lower rate. But those businesses that are in the last 3 percent of businesses happen to employ half -- half of all the people who work in small business. Those are the businesses that employ one-quarter of all the workers in America. And your plan is to take their tax rate from 35 percent to 40 percent.
Now, and -- and I've talked to a guy who has a very small business. He's in the electronics business in -- in St. Louis. He has four employees. He said he and his son calculated how much they pay in taxes, federal income tax, federal payroll tax, state income tax, state sales tax, state property tax, gasoline tax. It added up to well over 50 percent of what they earned. And your plan is to take the tax rate on successful small businesses from 35 percent to 40 percent. The National Federation of Independent Businesses has said that will cost 700,000 jobs.
I don't want to cost jobs. My priority is jobs. And so what I do is I bring down the tax rates, lower deductions and exemptions, the same idea behind Bowles-Simpson, by the way, get the rates down, lower deductions and exemptions, to create more jobs, because there's nothing better for getting us to a balanced budget than having more people working, earning more money, paying more taxes. That's by far the most effective and efficient way to get this budget balanced.
OBAMA: Jim, I -- you may want to move onto another topic, but I -- I would just say this to the American people. If you believe that we can cut taxes by $5 trillion and add $2 trillion in additional spending that the military is not asking for, $7 trillion -- just to give you a sense, over 10 years, that's more than our entire defense budget -- and you think that by closing loopholes and deductions for the well-to-do, somehow you will not end up picking up the tab, then Governor Romney's plan may work for you.
But I think math, common sense, and our history shows us that's not a recipe for job growth. Look, we've tried this. We've tried both approaches. The approach that Governor Romney's talking about is the same sales pitch that was made in 2001 and 2003, and we ended up with the slowest job growth in 50 years, we ended up moving from surplus to deficits, and it all culminated in the worst financial crisis since the Great Depression.
OBAMA: Bill Clinton tried the approach that I'm talking about. We created 23 million new jobs. We went from deficit to surplus. And businesses did very well. So, in some ways, we've got some data on which approach is more likely to create jobs and opportunity for Americans and I believe that the economy works best when middle-class families are getting tax breaks so that they've got some money in their pockets, and those of us who have done extraordinarily well because of this magnificent country that we live in, that we can afford to do a little bit more to make sure we're not blowing up the deficit.
ROMNEY: Jim, the president began this segment, so I think I get the last word.
LEHRER: Well, you're going to get the first word in the next segment.
ROMNEY: All right. Well, but he gets the first word of that segment. I get the last word (inaudible) I hope. Let me just make this comment.
ROMNEY: I think first of all, let me -- let me repeat -- let me repeat what I said. I'm not in favor of a $5 trillion tax cut. That's not my plan. My plan is not to put in place any tax cut that will add to the deficit. That's point one.
So you may keep referring to it as a $5 trillion tax cut, but that's not my plan.
Number two, let's look at history. My plan is not like anything that's been tried before. My plan is to bring down rates, but also bring down deductions and exemptions and credits at the same time so the revenue stays in, but that we bring down rates to get more people working.
My priority is putting people back to work in America. They're suffering in this country. And we talk about evidence. Look at the evidence of the last four years. It's absolutely extraordinary. We've got 23 million people out of work or stopped looking for work in this country. It's just -- it's -- we've got -- when the president took office, 32 million people on food stamps; 47 million on food stamps today; economic growth this year slower than last year, and last year slower than the year before.
Going forward with the status quo is not going to cut it for the American people who are struggling today.