• This is a rush transcript from "Your World With Neil Cavuto," February 23, 2009. This copy may not be in its final form and may be updated.

    NEIL CAVUTO, HOST: Well, as the president today was talking about fiscal responsibility and these energy issues, GOP leaders were taking things one step further. They're actually calling for a federal spending freeze.

    RNC Chairman Michael Steele joins me right now.

    Michael, you guys are just saying just stop the spending increases period, right? Explain.

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    MICHAEL STEELE, CHAIRMAN, REPUBLICAN NATIONAL COMMITTEE: Yes. I think that's the general idea. I mean, we have watched over a trillion dollars worth of cash flow into this economy, into the system. The market response to that has been obvious. It's not — it's not pulling the triggers that need to be pulled. And now we're talking about new spending.

    I listened to a significant portion of the president's summit just now, and, again, you're not talking about keeping things steady so that small-business owners can get back in the game, so they can make that investment and take those risks. And the way you begin to do that, I think the appropriate signals to send is the state — the state and the federal government will spend no more money. Let us just go with what we got, let it sink in and move forward.

    But, you know, this new spend is just an amazing amount of cash, and the inflationary effect, the deflationary effect, all of those things are going to come to head at some point, Neil.

    CAVUTO: So, Michael, what do you say when the Democrats and the president, in particular, slaps back at Republicans and say, "It's mighty rich of Republicans to talk about spending when they spent like crazy and built some of the huge deficits we have right now, and now they're lecturing us on essentially doing the same"?

    STEELE: We know of what we speak, Neil. We're in a 12-step recovery program right now for that very thing. We spent like crazy, and we brought ourselves to this point, expanding the size of the federal bureaucracy some 40 percent, spending money that the taxpayers did not have, and then at the end, putting in place a bailout mechanism that was just outright boneheaded.

    So we know — we know the dangers. We know the bad side of this. So what we're trying to do now is to say, look, let's look, let's take a step back, let's get a reality check here. Look at what we've infused into the marketplace, see what it's doing or not doing, and then make some next steps.

    (CROSSTALK)

    CAVUTO: So then what would you do, Michael — I'm sorry...

    STEELE: Go ahead. Sure.

    CAVUTO: For those Republican senators, Collins, Snowe and Specter, who voted for the stimulus plan in the Senate, what retribution will you exact?

    STEELE: I won't — look, my retribution is the retribution of the voters in their — in their — in their states. They're going to have to go through a primary in which they're going to have to explain to those Republican voters in that primary their vote.

    CAVUTO: I know that, but will you, as RNC head, recommend no RNC funds being provided to help them?

    STEELE: That is something I will talk to the state parties about, and we'll follow their lead. You know, this is...

    CAVUTO: So you're — in other words, are you are open to that, Michael?

    STEELE: Oh, yes, I'm always open to everything, baby, absolutely.

    CAVUTO: So by being open to that, baby, does that mean you would consider punishing them for that vote?

    STEELE: My responsibility is to follow the lead of the state parties, to get their advice, what their — what their intent is. Those senators are going to have to account to those voters there. And we'll work with the state party and we'll follow their lead.

    It's just like anything. When the state party says, "We're going to endorse a candidate and support that candidate," the RNC Is behind them. When the state party says, "We have a problem with that candidate," so does the RNC.

    CAVUTO: All right. But as things stand now, as far as any spending initiatives the administration might be planning, you're telling Republicans no, no, no?

    STEELE: Yes. I'm saying — I'm agreeing with Congressman Boehner and the minority leader in the Senate that we should take a step away from all the spending, put a freeze in place, and let's go from there.

    CAVUTO: Michael Steele, always fun, thank you very much.

    STEELE: Thank you, sir.

    CAVUTO: All right, the Republican National Committee chairman, Michael Steele, in Washington.

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