This is a rush transcript from "On the Record," September 10, 2012. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: Senator Lindsey Graham says our commander-in-chief is not looking out for our troops. Now, why is he saying that? The White House just blew off a key deadline, the Obama administration failing to report on how it would cut $109 billion in defense and domestic spending. Senator Graham says our military and national security are at risk. We spoke with the senator a short time ago.

(BEGIN VIDEOTAPE)

VAN SUSTEREN: Senator, nice to see you, sir.

SEN. LINDSEY GRAHAM, R-S.C.: Thank you for having me.

VAN SUSTEREN: Sir, how angry or frustrated, whatever term you want to use, should the American people be that we are fighting about this sequestration, it's unresolved, and this has been lingering since the budget act of about 13 months ago?

GRAHAM: Every American who believes that our national security is the most important thing we should deal with in Washington first and foremost, every American who appreciates the service of those in uniform during the last decade should be furious that we've put the finest military at risk at the time we need it the most.

VAN SUSTEREN: I did not see any seriousness of purpose on behalf of many people in government on this. If you go back to last August, the deal was is that the super-committee was supposed to make a decision by November. If they couldn't, sequestration kicked in.

There was nothing -- they couldn't reach a decision in November. There was nothing to prevent them from doing something December, January, February, March, April, May, June, July. August, the president signed the Transparency Act in which he was supposed to provide by the 6th of September information about sequestration. He blew off that deadline. I don't see -- I don't see any effort of anyone to take this seriously!

GRAHAM: You know, the commander-in-chief's first responsibility is look out for those in uniform who fight the wars. He's not looking out for them. To let sequestration go forward is a great, huge blow to the men and women in uniform, to our intelligence services.

Where do you think all this information we get about Iran and China and Russia and the Taliban comes from? Where do you think these drone programs come from? They come from the intel side. The intelligence community gets hurt through sequestration.

And make sure your viewers understand what we're talking about. The super-committee's failure to find $1.2 trillion in savings over a decade had a penalty clause called sequestration. If the super-committee fails, we're going to take half of the $1.2 trillion out of the Defense Department as a penalty. We've already cut $400 billion out of the Defense Department. That's a trillion. Leon Panetta says we're shooting ourselves in the head.

VAN SUSTEREN: But even the sequestration, the American people were gamed because when that deal was cut last August, that it had to be done by November...

GRAHAM: Right.

VAN SUSTEREN: ... and nothing's been done since -- when does that sequestration occur?

GRAHAM: January.

VAN SUSTEREN: It occurs a month after the election, when everybody up on Capitol Hill...

GRAHAM: That's right.

VAN SUSTEREN: ... and the president -- they've got complete cover because the American people -- American people are getting gamed totally on that! Nothing's being done, and now the American people are gamed on top of it!

GRAHAM: And here's the problem. If you're in the military, you have to start planning for this. The report we haven't gotten I think is coming Friday. Congress demanded that the administration -- what will be the effect on the military and the intelligence community if we do sequestration?

If you take $600 billion out over the next decade on top of what we've already done, you'll have the smallest Navy since 1915, 232 ships. You'll have the smallest Army since 1940. You'll have the smallest Air Force in history. It will devastate our defense industries who make these weapons that give us an advantage. And it starts in January.

So I'm working with Senator McCain, Carl Levin, a Democrat, Kelly Ayotte -- a handful of us are trying to put a proposal together to delay sequestration.

VAN SUSTEREN: I -- but see, I -- I -- you know, maybe I'm much too literal, but when the president signed the Transparency Act...

GRAHAM: Right.

VAN SUSTEREN: ... in August, he put his name on it. He said, You know what? This is when I'm going to provide this information, September 6th. I'm signing my name.

GRAHAM: Right.

VAN SUSTEREN: It goes by, and it's just nothing! It's meaningless to anybody! And maybe I'm too literal and...

GRAHAM: No...

(CROSSTALK)

VAN SUSTEREN: ... but you know...

GRAHAM: I think it's coming Friday.

VAN SUSTEREN: Yes, but -- but the point is, like, it's always gaming! It's always after the election. It's always coming after the deadline! It's always something! No one keeps his word!

GRAHAM: How about this? You got the House and the Senate back after five weeks.

VAN SUSTEREN: For eight days, the House!

GRAHAM: For eight days.

VAN SUSTEREN: For eight days only!

GRAHAM: No, you have made a very good case for the fact that if sequestration is allowed to go forward, it will throw the whole Defense industry and our military into chaos. If anybody...

VAN SUSTEREN: Because -- because -- because no one's doing his job! That's the simple reason!