FOX "Your World" - Transcript

Interview

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MR. CAVUTO: Stocks up as the economy keeps looking up. Orders for big-ticket items, those are big factory items that cover everything from refrigerators to airplanes, surging last month. New home sales up nearly 5 percent, mortgage refinancings soaring more than 40 percent just last week. Proof we don't need the nearly $4 trillion budget the president's pushing on Capitol Hill today? Republican Senator Lindsey Graham says yes. He sits on the Budget Committee.

Senator, you might have got some ammo here, huh?

SEN. GRAHAM: Yeah. Well, number one, this budget is going to kill the economy over time. It triples the national debt. In 2019 under the president's budget, we will spend $805 billion to service the interest on the national debt, more than the Defense Department's entire budget. So this is an economic disaster awaiting this country if we pass this budget.

MR. CAVUTO: Now, the administration is going to turn around, Senator, and say, some of these signs of improvement are the direct result of our spending, so we've got to spend more. What do you say?

SEN. GRAHAM: Well, I say that home sales going up is probably a sign of better credit. And there are some good deals out there. But 5 percent, given how much home sales are off, is something to be happy about but not to overly celebrate. There are some good deals out there, but we've got to make credit available to the average American to get the economy going. And if you want to create jobs, cut the taxes of people who are hiring folks. The spending we're engaging in is going to bite us in the butt down the road, and it's going to create inflation. We're just throwing money at every conceivable aspect of the economy. And if you just cut taxes and lowered interest rates and sort of, you know, spent wisely, it would be better than what we're doing.

MR. CAVUTO: You know, I spoke to a remarkable young man -- I call him a young man because he's a lot younger than me -- Daniel Hannan, a leading opposition figure in Parliament.

SEN. GRAHAM: Yeah, I heard him, I heard him.

MR. CAVUTO: Many argue he could be the next prime minister there. But one of the things he said is it's very tough for government officials sometimes to acknowledge that they shouldn't do anything, and that in the middle of a crisis it takes maybe some courage to say, stand down. I'm paraphrasing there, but what do you make of that, that we, with the best of intentions, are making a bad situation worse?

SEN. GRAHAM: Well, I think those of us that voted for TARP I did it in spite of public support because we believed what Paulson and others were saying about the imminent collapse of banks, and the Great Depression was an example of where people refused to act when they could. But his point is well-taken about this. You don't spend your way out of a recession. They tried that for about 10 years in the '30s and went nowhere. So what we need to do is keep our tax rates low so the job creators will have a chance to create jobs and create consumer demand by having smart government programs that stimulate the economy and get inventories down. But no, you can't spend your way out of the economy but you can't sit on the sidelines either and ignore what I thought was a very bad moment in American economic history.

MR. CAVUTO: All right. Senator Graham, always good seeing you. Thank you very much.

SEN. GRAHAM: Thank you.

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