Lou Dobbs Tonight - March 25, 2009

DOBBS: A congressional battle has been joined over the president's budget now. Joining me is Senator Judd Gregg, Senator Gregg, Mr. Obama's designee for commerce secretary. Senator Gregg withdrew his name last month, citing differences over policies. Senator, it is great to have you with us. You have said this budget is basically going to lead to the bankruptcy of the nation, correct?

SEN. JUDD GREGG (R), NEW HAMPSHIRE: Well, it could. Because of the fact that it puts on the books a massive amount of debt. It doubles our national debt in five years, triples it in 10 years. And as far as the eye can see, essentially, it is running deficits of over $1 trillion a year. And you just can't afford that. We get up to -- it's a technical term, but we get up to a public debt ratio to GDP of 80 percent, which is about twice what most people think is sustainable. And if we maintain that level, which is projected in the president's budget, you basically -- you're running a banana republic is what it comes down to. You can't afford to pay those debts.

DOBBS: Let's share with our viewers -- because this is critically -- the frustrating thing about the budget is that it is a blueprint, a fiscal blueprint, but it is also a social and political document, of course.

GREGG: Very much so.

DOBBS: But if we could put up this full screen, please, to show precisely what Senator Gregg just said. This is the cumulative debt that will result over time from these deficits, reaching $9.3 trillion by 2019. And as you suggest, the current budget at $4.4 trillion. This kind of money, Senator, can Congress -- the chairman of the Budget Committee, I mean, he is saying to this president, a member of his party, he's saying to the president, don't do this, this is crazy. Yet there seems to be no hesitation whatsoever on the part of the administration.

GREGG: Well, I think the president's made it very clear that he intends to take the government very aggressively to the left here, basically expanding its size dramatically, extending its burden dramatically, expanding the tax burden, not for the purpose of reducing the deficit. Ironically, when Bill Clinton increased taxes, he used it to reduce the deficit, but the Obama proposal basically increases taxes in order to grow the size of the government. And it grows it so fast that it basically outpaces our ability to pay for it, in my opinion. And that's why we've got this looming issue, which is going to be very difficult for our children to deal with, which is they're going to have a debt that far exceeds their capacity to pay it.

DOBBS: The president has again said that he will reduce the deficit by half during the -- this first term as president. I...

GREGG: Well, that's true, but it's a little -- it's not really -- it's not a real victory, because basically what he's doing is he's taking a debt -- and it's going up to $1.3 trillion. He's reducing it to $700 billion. So you're basically taking four steps backwards and two steps forward. So that means you're still going backwards, and that's the problem here.

DOBBS: And there seems to be another problem as well, Senator. And that would be the percentage of growth in our economy. This is the president, who, until two weeks ago, was talking with the direst of language about our economy, talking about catastrophe, disaster and depression. And he projects -- and his Office of Management and Budget project the GDP to be growing at over 3 percent by next year, that he also projects a 4 percent GDP growth rate in the year following. If those are realistic numbers, hallelujah for all of us, but they seem extraordinarily optimistic.

GREGG: Well, they are the sunny side of a rosy scenario. Let's hope he's right. But even if he is right, even if they hit those numbers, they're still going to be running deficits, according to the CBO, that will range in the trillion-dollar range. I mean, you just can't -- the reason you can't close this down is because he's expanding the size of the government so quickly, the spending of the government so quickly.

He openly admits, if you listen to his press conference last night, that he intends to increase spending in a variety of areas because he thinks government spending creates prosperity. Well, I happen to take the view that government spending doesn't really create prosperity unless it's restrained and affordable. And the problem -- that's the difference of opinion here. We don't happen to think, people of my party, that you can spend this type of money, run up this type of debt, increase taxes this way, and expect the prosperity to follow. In fact, what follows probably is stagnation, and a lot of pressure on our children to have a big debt that they probably can't afford to pay.

DOBBS: Senator Gregg, when you put it in partisan terms like that, though, is your credibility diminished? Because under the Bush administration and the Republican Congress, when your party was in charge, I mean, admittedly there was a war and is a war in Afghanistan and Iraq, but the spending and the size of the government rose extraordinarily during the eight years of the Bush administration.

GREGG: And you're absolutely right, Lou. And I voted against almost all of it. But as a very practical matter, we were not good shepherds, we were not good stewards on the spending side of the ledger as a party when we had control of the government. But that doesn't mean that should be compounded this way. Because if you take all the debt run up in this country between George Washington and George W. Bush, all of it, President Obama is suggesting doubling that in five years and tripling it in 10 years. So even though we probably weren't very good stewards -- we weren't -- on the spending side of the ledger, what you're seeing here is an explosion in the size of the government as we have a presidency which really wants to move very aggressively in increasing the size of the government.

DOBBS: Senator Judd Gregg, we appreciate you being with us.

GREGG: Thank you, Lou.