Cramer Calls Fiscal Cliff Taxes 'Draconian'

NEW YORK (TheStreet -- What follows is the transcript of a video interview of Jim Cramer by TheStreet's Debra Borchardt. The transcript has been edited for length and clarity.

TheStreet: This market seems to be stalling because of fiscal cliff fears.

Jim Cramer: Yeah, I think that ... it's all about your level of optimism, you're more optimistic than I am.

I'm hoping that they'll do a deal before the December holidays.

Cramer: I sit here and think, oh, is the Petraeus thing going to delay things. I even mentioned that this morning and they laughed, but Petraeus is a big issue in America.

It takes the focus off the cliff.

Cramer: It does. But I want them to really feel that the clock is ticking (on the fiscal cliff) and the reason why this is so important has become two-fold now. One is that the tax increases are really incredible, but the second is that the Americans don't seem to know it yet. So you're spending.

At Home Depot (HD), the spending was up. Coors (TAP), the spending was up. Dicks (DKS), the spending is up. Harley Davidson (HOG), spending is up.

Taxes will hit people, but it won't hit them until 2014.

Cramer: Some of these are immediate. There's...six hundred billion in tax hikes that start January 1 and that's real. And we also have Obamacare taxes. Let's put it this way: We're radically under-taxed versus where we will be if we just go over the cliff, if it's not phased in or something, and obviously we don't know what the capital gains tax is going to be. People say it's not going to go up very much. Based on what? What do we know about what Washington is going to do?

I heard over and over again that Visa (V) wouldn't get hit by it, and Visa got hit in the previous go-round and it was a good opportunity to buy. Dividends. Do they really get taxed as ordinary income? And then you also raise the ordinary income rate, because then if you're in a dividend stock for your taxable account, that's not that good.

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