Cramer Calls Fiscal Cliff Taxes 'Draconian'

Tickers in this article: HD V CSCO
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.

So you sound like you're fifty-fifty. You're not sure they're going to get a deal.

Cramer: Yeah, fifty-fifty is right. I mean I'm very concerned, because when you have people blindsided by new tax increases, I think that they're going to pull in their horns, and this is very draconian; draconian for the defense companies, too, so I come back and say it's wishful thinking if you think this is going to be solved and solved in a way that isn't painful for the consumer.

I don't want people to misinterpret me. What I'm saying is that the market is going to go down until we get a deal, or trade sideways, and I posed that on Real Money this morning, would Cisco (CSCO) , have a pin-action effect, and I said well, one, Cisco is trying to destroy everybody, but two, no more than Home Depot did.