â€œA lot of the libertarian ideals that Ron Paul is talking aboutâ€¦should not be alien to any Republican,â€ Sen. Jim DeMint said during an interview at reasonâ€™s Washington, D.C., offices in late January. Encouraging words from a South Carolina Republican who has earned a reputation as one of his partyâ€™s strongest voices for fiscal conservatism during his six years in the House of Representatives and six years in the Senate.

Yet right after the 2010 midterm elections brought a wave of DeMint-backed Tea Party freshmen to Capitol Hill, the Palmetto Stateâ€™s junior senator proclaimed that â€œyou canâ€™t be a fiscal conservative and not be a social conservative,â€ a comment that was widely viewed as a slap at libertarians. DeMint, a reliable defender of the PATRIOT Act and the wars in Iraq and Afghanistan, is an avowed opponent of what he calls the â€œdestructive forces of secularism.â€ He is a staunch pro-lifer, has favored a constitutional ban on flag burning, and is on the record saying that gays shouldnâ€™t be allowed to teach in public schools.

But DeMintâ€™s new book, Now or Never: Saving America From Economic Collapse (Center Street), is an urgent warning about fiscal, not social, issues. To write the foreword, DeMint picked Ron Paulâ€™s son, Sen. Rand Paul (R-Ky.)â€"a man who bridges the gap between his fatherâ€™s more ideologically libertarian stance and the mainstream GOP. Now or Never calls for a new coalition in favor of radical budget cutsâ€"including reductions in military spendingâ€"aimed at avoiding irreversible economic decline.

After backing Mitt Romney in 2008, DeMint has declined to endorse a presidential candidate so far this political season. reasonâ€™s Nick Gillespie and Matt Welch interviewed him on the afternoon of the Florida primary. For a video version of the conversation, go to reason.tv.

reason: Your new book, Now or Never: Saving America From Economic Collapse, has a foreword by Rand Paul, one of the new senators you helped get elected through your activism with the Tea Party and your push for limited government. The first sentence of your book is â€œThis is insane.â€ What is insane?

Jim DeMint: This could be our last chance to turn things around. And I know politicians: They cry wolf when thereâ€™s no wolf; we talk about crises all the time. But when the debt is bigger than your economy and the plan is to keep borrowing another trillion dollars more every year, thereâ€™s not that much money in the world to borrow; weâ€™re going to have to print it. It means the value of our dollar is likely to go down. Interest rates will go up. We canâ€™t pretend that this [problem will go away], like Greece did or like Europe is doing. Itâ€™s a very real problem.

The other problem is political. Almost half of Americans are getting something from government, and the other half are paying for it. And weâ€™re on a track where 60 percent are getting something from government and 40 percent are paying for it. You canâ€™t sustain a democracy with that mix.

reason: Because the 60 percent is going to be voting a bigger and bigger share of the 40 percentâ€™s money?

DeMint: Itâ€™s hard to win elections when youâ€™re talking about limited government if the constituents want more from government. You see that phenomenon on display in Greece. When the country is going down in flames, there are still people in the street, demonstrating for more government benefits. Weâ€™ve got to understand weâ€™re in trouble, that we donâ€™t have much time.

We are at a tipping point politically. Those folks who are normally not interested in politicsâ€"theyâ€™re working and paying taxes, raising familiesâ€"weâ€™ve got to engage them in the political process this year. We can turn things around. One of the main points of the book is that we forgot what makes America exceptional. Weâ€™re a bottom-up country, very individualistic. Every other country was top-down, where a king, or dictator, or general can shape things from the top. But we were different and we were successful, because we began at the individual level.

reason: In the book you talk a lot about how this is the Republicansâ€™ fault as well as the Democratsâ€™ fault.

DeMint: Sure.

(Interview continues below video.)

reason: Since 1950 weâ€™ve had many more years where the government ran a deficit than a surplus. The federal government has only grown in size and scope, as have state governments and local governments. What was the turning point? And what is the Republicansâ€™ responsibility in the current mess?

DeMint: The difference in opinion in Washingtonâ€"you can throw out the political labels of Republican and Democratâ€"itâ€™s the difference between centralization of power versus decentralization of power. Itâ€™s the difference of individual decision making versus collectivism. All the policies now that are coming from the president and the Democratic Party, itâ€™s always central control. Whether itâ€™s health care, education, the Dodd-Frank bill. Republicans have been guilty of that. Weâ€™ve fallen for that with No Child Left Behind and Medicare Part D. And every time we have a compromise, itâ€™s more government, more spending, and more debt. At some point we have to say, â€œNot only do we need to stop spending more than weâ€™re bringing in, we need to understand what made this country exceptional.â€

Businesses figured this out about 20 years ago when Japan was handing us our lunch with their total quality movement. [Statistician and management guru] W. Edward Deming and others understood pushing decision making to the bottom, to individuals coming up with ways to cut costs and improve quality. Thatâ€™s what works, and thatâ€™s what made our country great. But weâ€™ve forgotten that.

We have to turn it around this year. I donâ€™t think we can make it more than another year or two. The only thing propping us up now is the fact that the euro is doing so badly.

reason: So what do we cut right now?

DeMint: First we have to decide that we need to balance our budget. The reason our debates donâ€™t go anywhere is that the president has said that balancing the budget is â€œextreme.â€ A debate with him about where to cut is useless, because he doesnâ€™t really believe we need to. He would like to tax the rich some more, even though the wealthy in our country pay a greater proportion of the national taxes than in any other country in the world. I donâ€™t know how much more he wants to take from them. The issue is: Do we agree that we need to stop spending more than weâ€™re bringing in?

But we can cut spending. Education should be devolved to the states. We havenâ€™t improved it; weâ€™ve hurt it. The Commerce Department does very little to support commerce. A lot of the [Environmental Protection Agency] functions can be devolved to the states. Transportation: We take 18 cents out of every gallon of gasoline sold and bring it up here; states fight to get it back. We could bring 3 cents up here to deal with federal roads. Let states decide, and we would have better infrastructure, spend less money, and states could make those decisions.

reason: What about entitlements and defense spending? Because thatâ€™s where the real money is. What do we do with entitlements?

DeMint: We donâ€™t need to cut the benefits of those who are already on Social Security and Medicare. They paid for it their whole life. Weâ€™ve made them promises. But [for] younger workers, give them options. First of all, a lot of people who have alternative savings for retirement would probably take a buyout at retirement from Social Security. I would take half of what Iâ€™m supposed to get actuarially. And if you were offered a retirement where you could get a $125,000 lump sum now or over the next 20 to 25 years maybe get $250,000, most people would say, â€œI ainâ€™t gonna be there,â€ and take the lump sum and run. We could save a lot of money. But we could also give younger workers a 401(k)â€"style Social Security plan. That would save us money at the federal level but give younger workers real equity so that theyâ€™re not dependent when they retire.

I think health care has got to be individually owned. Weâ€™ve got to have our own insurance to go from job to job and into retirement. You know, [Wisconsin Republican Rep.] Paul Ryanâ€™s mentioned the idea of hey, keep your private insurance and let Medicare pay part of it for you. Most of us would pay more than we would have to pay for Medicare, in order to keep real insurance, because by the time I get to retirement, itâ€™s going to be hard to find a doctor who wants to see a Medicare patient.

reason: The defense budget is 20 percent of all government spending and has increased about 100 percent since 2000. How much of the defense budget can be cut without hurting American preparedness or the ability to protect American lives?

DeMint: Iâ€™m not sure what that number is. But I do know thereâ€™s waste in Pentagon spending. Weâ€™ve identified waste not only in the Pentagon but all across the board. Iâ€™ve got a whole chapter on waste that [Oklahoma Republican Sen.] Tom Coburn opens for me. We can find a lot of that. But we have to have a vision for what we want our military to do. And thatâ€™s why in the last couple of weeks, Iâ€™ve said I want whoever our nominee is in the Republican Party to listen to some of the things Rep. Ron Paul [R-Texas] is saying.

reason: But you havenâ€™t endorsed Ron Paul.

DeMint: No, I havenâ€™t.

reason: None of the front-runners are really talking about cutting government spending.

DeMint: Well, yeah. You hear Romney talk about â€œcut, cap, and balance.â€ Heâ€™s picked up that plan. And really all of them, I think, believe that we have to balance the budget. Ron Paul has talked about a trillion-dollar cut.

reason: But just talking about balancing the budget is an easy thing to do.

DeMint: Well, there are a lot of obvious things. Not just the waste. We do need to rethink the money we spend on military and defense. I think Ron Paul does make a good distinction: Thereâ€™s a difference between spending on military and spending for defense.

The primary function of the federal government is to defend our country. We need to make sure that we have the technology, the intelligence, the equipment to defend America from a lot of new threats. And if that is not doable with bases all over the world, we need to rethink how spread out we actually are. We have to demand that our allies actually pay a greater proportion of their defense. Weâ€™re still in Germany; we were there after World War II. Weâ€™re in South Korea. Weâ€™re in a lot of places. We may need to be in some of those places for deployment and protection. But I think itâ€™s fair to say letâ€™s rethink that and make sure weâ€™re spending money in the right places.

And frankly, some of our spending is politically driven because a particular defense system or ship is built in a certain congressional district or state. The moneyâ€™s allocated not necessarily because our generals want it but because someone in Congress wants it. Those are the kinds of things we need to change. But the first priority of our federal government is to defend our people, and we need to make sure we do that well.

reason: You didnâ€™t endorse a candidate for president this time. You endorsed Mitt Romney last time. Why the change?

DeMint: The big reason Iâ€™m not involved with the presidential race is I want to elect conservative senators through the Senateâ€™s Conservative Fund, and one of the things Iâ€™ve found is the people who sent us $30, $40, $50 to elect Rand Paul, theyâ€™re very divided on who they think the president should be. Every time I say something nice about any one of them, 80 percent of the people who are trying to help me are mad at me.

reason: You were instrumental in getting people like Sen. Mike Lee [R-Utah] and Sen. Rand Paul, who were big budget cutters, into the Senate. Youâ€™re one of the conduits for the Tea Party. Is the Tea Party still relevant? Does it still have the same power that it displayed in the 2010 elections?

DeMint: No one wants to go to a rally or a protest, given what the Occupy movement is doing. Itâ€™s kind of a bad stain on citizen activism.

Theyâ€™re still there, and no one can speak for them. Theyâ€™re not any one group. I donâ€™t like it when folks say Iâ€™m Senator Tea Party. I didnâ€™t start the Tea Party, but they came along and they were espousing the same concerns I had. This is a very divergent group of Americans. I find libertarians, conservatives, independents, people whoâ€™ve never been involved with politics, some recovering liberalsâ€"theyâ€™re just concerned mostly about the spending and the debt and the growing, intrusive government. Thatâ€™s uniting people. They donâ€™t agree on the social issues, they donâ€™t agree on the military and all of those things, but they know our country is in trouble, and thatâ€™s why theyâ€™re so potent. They are the united aspect of what the Republican Party needs to embrace right now.

Theyâ€™re still there. They put down their signs, but all over the country theyâ€™re organizing. Theyâ€™ve gotten a little more sophisticated, but they are thousands of different groups.â€¦It was interesting all last year. Everything that went on in Congress, they blamed on the Tea Party. The Tea Party is not here [in Congress]. Theyâ€™re out doing their own thing. Thereâ€™s not one thing we did last year the Tea Party wouldâ€™ve supported, because it was bad legislation, bad deals, and we spent more money.

reason: After the 2010 election you claimed that â€œyou canâ€™t be a fiscal conservative unless youâ€™re also a social conservative.â€ Have you changed your thinking on that?

DeMint: I should have clarified that. That doesnâ€™t mean that to be a fiscal conservative you have to agree on all the social issues, but our biggest fiscal issue is dysfunction in our culture and the deteriorating culture. The growth of dependency. Unwed births are correlated with poverty, juvenile delinquency, drug use, [dropping out of high school]. And the unwed birth rate has basically been promoted and paid for by federal policies. Weâ€™ve gone from below 10 percent, when welfare was started, to now over 40 percent, 70 percent for African Americans.

reason: But whatâ€™s killing the budget is entitlements, right? Medicare Part D, not unwed mothers.

DeMint: No, itâ€™s dependency on government. If we only took welfare spending back to 2008 levels, we could save over $2 trillion. The number of people on food stamps is extraordinary; youâ€™ve got one in seven Americans on food stamps now. Itâ€™s hard to maintain a vibrant culture when so many people are taking from government and so few are paying into it.

reason: And you see that dependency as the motivating force here? You talk about a deteriorating culture, but I look at the last 20 years and I see an America thatâ€™s more tolerant, thatâ€™s more innovative.

DeMint: Iâ€™m not trying to make it a moral issue, but it is very much a fiscal issue. High school dropoutsâ€"the highest correlation with high school dropouts is coming from a broken familyâ€"will cost America about $250,000 over a lifetime. So itâ€™s a fiscal issue. Iâ€™m not saying we need to make it a moral issue or not be tolerant, but federal policies should be encouraging productivity and folks staying in school.

reason: But federal policy should not have anything to do with education, right?

DeMint: Well, federal policy does have to do with it now. What Iâ€™m saying is that if federal policy with the welfare programs encouraged self-development, independence, if education was more locally driven, where people could adapt it to the needs of the folks there.â€¦

reason: You say you believe in a social safety net thatâ€™s provided by the government.

DeMint: No. I would prefer it be done at the state and local level, and I think you could have a whole lot more volunteer organizations, mutual aid, drag the churches back into itâ€"they want to do it, but theyâ€™ve been displaced. To try to do that from the federal level has failed, and itâ€™s hurt our culture. I donâ€™t think itâ€™s helped people. Povertyâ€™s worse than when we started. More people are in poverty.

reason: More people are technically in poverty as itâ€™s defined by the government, but itâ€™s clear that if youâ€™re in a poor family now, youâ€™re better off materially than you were, say, being in a middle-class family in 1970. Youâ€™ve got a car, youâ€™ve got a house, youâ€™ve got air conditioning, televisions, access to education, access to medicine. So it becomes difficult, doesnâ€™t it, to just say, weâ€™ve got more poverty now?

DeMint: We do define it differently, and a lot of our programs like school lunchâ€"youâ€™ve got in some cases over half the students getting free lunch now; people are starting to expect these things, but these are unsustainable. If we could afford them, itâ€™s one thing. If people were moving out of poverty, then they could say itâ€™s working. But the point Iâ€™m trying to make in Now or Never [is that] itâ€™s not working. In fact, you could make a good case weâ€™re hurting people in some cases by trapping them in a situation thatâ€™s hard to get out of. And we need to transition away from that. Iâ€™m not saying throw people out in the street. But we can do a better job helping people; we can save money at the federal level.

The bottom line is this: We canâ€™t afford to do what weâ€™re doing now, and we need to look at how to change that, and we need to get more people moving from government dependency into work and productivity. Thatâ€™s going to help us grow our way out of this problem.

reason: reason is a libertarian magazine. Generally speaking, our readers and the people who work here are interested in a small, limited government that doesnâ€™t spend a lot, doesnâ€™t borrow money so that our kids and grandkids are paying for what we enjoy now, things like that. But then there are the social issues. For instance, youâ€™re very pro-life; you have supported an antiâ€"flag burning amendment; you support school prayer. A lot of issues that, whether or not they actually affect people on a day-to-day level, are markers of a different sort of world. Why should libertarians vote Republican, especially given that the last time the Republican Party had the White House and the Congress, they didnâ€™t restrain government or limit government whatsoever. Whatâ€™s the pitch now?

DeMint: I think the new debate in the Republican Party needs to be between conservatives and libertarians. We have a common foundation of individual liberty and constitutionally limited government, and we can rationally debate some of the things we disagree on. I donâ€™t think the government should impose my morals or anyone elseâ€™s on someone else, but at the same time I donâ€™t want the government purging morals and religious values from our society. We can find a balance there. It really gets back to decentralization. The tolerance is going to come from decentralization and letting people make their own decisions, but we have to be able to put up with societal stigma of things we donâ€™t like.

reason: And that could be in terms of say, health care reform, allowing Catholic hospitals to opt out of certain must-carry provisions that would provide birth control, abortion, or whatever.

DeMint: Yeah. Thatâ€™s not imposing a moral belief, but itâ€™s allowing people to practice a moral belief. Thereâ€™s a lot of common ground with libertarians, and I can sit down with Ron Paul or [Fox News commentator Andrew] Napolitano and find a lot of common ground. We may not come to the same conclusions, but on the social issues I generally agree that I donâ€™t want the government to push my religion or morals.

reason: Are there Democrats who are also pulling in this direction? Iâ€™m thinking of people like Sen. Joe Manchin (W. Va.) whoâ€™s pretty good on spending. Do you find any hope across the aisle for people who are also interested in reducing the size and scope of government?

DeMint: In private, folks like Joe will talk in a way that they agree with us. The problem is, their political constituency all pushes for the centralization of power. For him to vote for something, for instance, that pushes education back to the statesâ€"the unions donâ€™t like that because they can control things from the federal level. It becomes more difficult as it moves into some right-to-work states. Itâ€™s difficult to get elected as a Democrat to the United States Senate if youâ€™re not pretty well sold out to the labor bosses and the environmentalists. Republicans, despite what they say, donâ€™t have a constituency like that. I mean, the pro-life groups will support Democrats if theyâ€™re pro-life; the NRA will support the Democrats if theyâ€™re pro-gun. Wall Street gives three or four times more to Democrats, and so does Warren Buffett and other billionaires.

So our constituency is pretty much individuals who want to be left alone and be successful, or small businesses, but even corporate America is pretty much for the concentration of power that leads to crony capitalism. Sometimes they can increase their market share by a government action easier than a better product, so thatâ€™s why I think weâ€™re at a tipping point: Organized politics is pretty much [oriented] toward bigger government.

reason: Self-identified Republican registration has gone down, even in what should be a highly favorable environment for the Republican Party. If you look at the exit polls of the first couple of primary states, self-identified Republican membership is also down, but Ron Paul is pulling in a lot of independents. Are you worried that the Ron Paul bloc is not going to be a Republican bloc?

DeMint: Iâ€™m real worried. As a matter of fact, Iâ€™ve done a number of interviews on this book [where Iâ€™ve] said if Republicans donâ€™t embrace a lot of the libertarian ideals that Ron Paul is talking about, like monetary policy, individual liberty, constitutionally limited governmentâ€"these things should not be alien to any Republican. It no longer makes sense for Republicans to have the debate between moderates and conservatives. Because the moderate wants to spend more money, just not quite as much as the Democrats. And when youâ€™re this much in debt, I canâ€™t tolerate that debate.

Weâ€™ve got to figure out how to trim back and devolve the role of government. If weâ€™re going to have a Republican Party that can be the majority party, itâ€™s going to have to be very inclusive of libertarians and a lot of the things theyâ€™re talking about. Weâ€™ve got to rethink a lot of the things weâ€™re doing.

It doesnâ€™t threaten me to sit down and talk to someone whoâ€™s got a different view on the drug war or the military. If I know they believe in limited government, decentralization of power, individual liberty; weâ€™re on the same page. Thatâ€™s one of the things I talk about in the book: If you have a shared goal, you can debate and compromise and still move in the right direction, but the problem we have right now in Washington is the Democrats have a different goal. Theyâ€™re the party of dependency because dependent voters are dependable votes for them.

We need to embrace the rest of America, and thatâ€™s what was so good about the Tea Party. If you went to them, these were not Republicansâ€"they didnâ€™t like any political party. They were libertarians and conservatives and independents and people of all kinds of political stripes, a lot of people who didnâ€™t have anything to do with politics, but they were united around this idea of limited government, less spending and debt, and thatâ€™s the opportunity for Republicans. If we miss that and we end up with a third party, then the Democrats will be the majority party, and I donâ€™t know what will turn our country around.