• With: Senate Minority Leader Mitch McConnel

    This is a rush transcript from "On the Record," June 23, 2011. This copy may not be in its final form and may be updated.

    GRETA VAN SUSTEREN, FOX NEWS HOST: Bipartisan budget talks implode on Capitol Hill and the two top Republican negotiators walk away from negotiations with Vice President Biden. Now, the divide between the Republicans and Democrats appears very deep and neither side has indicated a willingness to budge and earlier today Senate Minority Leader Mitch McConnell went on the record.

    (VIDEO CLIP)

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

    MITCH MCCONNELL, SENATE MINORITY LEADER: Good to be here.

    VAN SUSTEREN: The word is is that the vice president's bipartisan budget talks collapsed.

    MCCONNELL: Yes, unfortunately, the administration made it clear, including the president one more time yesterday to all of us that they really want to raise taxes and Senate Democrats actually want to use the opportunity to raise the debt ceiling to spend some more. So, here you have, at a moment when we're supposed to be addressing deficit and debt, the Democrats saying to us we want to raise taxes and raise spending. That's not the way to get an agreement to cut spending and debt.

    VAN SUSTEREN: Well, seems like there is a deep line in the sand and what's sort of intriguing is the fact that the president's press secretary, Jay Carney, said on Air Force One that a lot had been accomplished, this had been progress. That doesn't sound that way to me.

    MCCONNELL: Well, some had been accomplished but then they started saying to do even t hat we have to have to have a significant tax increase. Look, Greta, we know that wouldn't pass. Let me give you an example. Last December when the Democrats still had 59 Senators and a 40 seat majority in the house and a President in the White House, this President, they tried to raise taxes and the Senate couldn't get a single Republican vote and couldn't get five Democrats.

    They could not pass the kind of tax increase that the President now says he wants when they owned the government, when they had a huge majority in the Senate and House and he was in the White House. We know that won't pass so we'd like to talk about it, something that could actually lead to a result and this could be an important opportunity for the country, for the two sides to come together and do something really significant that would impress the markets and impress the American people but you do that when you have a spending and debt problem by reducing spending and debt.

    VAN SUSTEREN: Is the president engaged at all in this?

    MCCONNELL: In a back channel sort of way, yes. I mean, he's the one who's been sort of basically saying we can't do anything really dramatic, anything really big, even though his own trustees of Social Security and Medicare say that they're in trouble and need to be addressed now, the president's saying to us we won't address the entitlement programs without raising programs. So, yes, I don't think the president gets a pass. We need to hear from him publically. What is his plan? Come on out and tell the public the same thing they've been telling us behind closed doors. We won't address the issue of spending and debt unless we have more spending and more taxes.

    VAN SUSTEREN: Is raising taxes a deal breaker from your standpoint?

    MCCONNELL: Absolutely.

    VAN SUSTEREN: Ok, so that's a deal -- is it a deal breaker for them as well?

    MCCONNELL: They -- they can't pass it. Look, I just said, at the risk of repeating myself, they tried raising taxes last December when they owned the government, they had the House, they had a big majority in the Senate, they had the White -- they -- they couldn't pass it then. Clearly, it cannot pass, so why not talk about it?

    VAN SUSTEREN: Why -- why, so, why-- I don't mean to make you speak for the Democrats, but, do you have any explanation, if it won't pass, the tax increase, why is that a line in the sand for them?

    MCCONNELL: I'm perplexed. I am completely perplexed. I know they know it can't pass. They couldn't pass it when they owned the government, why they're -- it -- it leads you to believe that they don't really want to address spending and debt. I mean, that's the only conclusion one can draw.

    VAN SUSTEREN: So, what happens when August 2, 3, rolls around and we hit that debt ceiling because the debt ceiling, you know, is tied to whether we have a budget deal or not. What do you predict?

    MCCONNELL: Well, fortunately, we still have time for the folks on the other side to sober up and get real here about what can actually pass in the Congress and address the problem. It's not too late for us to still come together but we have reached an impasse and I think it's important for the public to know that.

    VAN SUSTEREN: Well, it sometimes seems in Washington that you sort of have to hit the skids in discussions before anything sort of turns around. People finally resolve something.

    MCCONNELL: I hope that's what happens here. I hope -- I hope the other side understands that this kind of demand for more taxes and more spending on a project that was designed to reduce spending and debt is something the public is not going to stand for and they cannot get passed through this Congress.

    VAN SUSTEREN: Now, what's the worst case scenario -- worst case scenario?

    MCCONNELL: Oh, I'm not going to discuss that. I still view this as an important opportunity for both sides to come together and do something really important. Look, we've got a $14 trillion debt. It's as big as our economy. We look a lot like Greece and that doesn't take into account there were $50 trillion in unfunded liabilities, $50 trillion. Standard and Poor's, the ratings agency, Moody's is saying you need to do something about spending and debt. I -- I know the President knows that. He needs to come to his senses here and understand what can pass and what can't pass.

    VAN SUSTEREN: A number of Republican Senators also want a balanced budget amendment as part of any vote. Does that create particular problems for you as you try to corral your party?

    MCCONNELL: No, actually, that's a very good idea. We're going to do that anyway regardless of how the debt ceiling issue discussions play out. All 47 Republican Senators are in favor of a balanced budget, a Constitutional amendment to require a balanced budget. With just 20 Democrats in the Senate that Constitutional amendment could pass. We will be on the floor on that subject the week of July the 18th.

    VAN SUSTEREN: So is that looped into this budget deal, in the negotiation with the White House or is that something that's separate.

    MCCONNELL: Well, we're going to go forward on that either way. Every single Republican is in favor of it in the Senate. We're hoping to pick up 20 Democrats to pass it and send it out to the states for ratification. So, wholly aside from the discussions that are going on in connection with the debt ceiling, we are going to go forward on the Constitutional amendment to require a balanced budget.

    VAN SUSTEREN: No matter which way you fall in the system an important topic to the American people, isn't it?

    MCCONNELL: It's a very important topic, second only to unemployment, and we think it's related to unemployment. Look, the administration increased our debt --our spending 35% in the last two years. They thought government spending would fix the economy. I think we know the answer to that. Government spending is not going to fix the economy.

    VAN SUSTEREN: Senator, thank you Sir.

    MCCONNELL: Thank you.

    (END VIDEO CLIP)