• With: Rep. Mike Pence, R-Ind.

    CHRIS COTTER, GUEST HOST: Forget the heat wave blanketing the nation outside. The temperature is being turned up inside as well.

    Welcome, everyone. I am Chris Cotter, in for Neil Cavuto. And this is "Your World."

    And we are live at the White House, debt talks just getting under way, and the anger just getting started. House Speaker John Boehner blasting the president for digging in on tax hikes, as opposition to raising the debt limit digs in even deeper.

    Tea Partiers launching an urgent petition to block any increase, as a new poll finds Americans are more worried about raising it than not.

    Indiana Republican Congressman Mike Pence says the people have it right.

    Congressman Pence, you don’t believe that the sky will begin to fall come August 2 if we do not raise the debt ceiling?

    REP. MIKE PENCE, R-IND.: Look, Chris, we have an obligation to defend the full faith and credit of the United States of America, but we also have an obligation to restore the confidence of the American people in our ability to manage our fiscal health and to end this era of borrowing and spending that’s putting an enormous burden on our children and grandchildren.

    We can do both. House Republicans believe that the pathway forward is to cut spending now more than a dollar for any increase in the debt ceiling. It means putting statutory caps on the books. And I believe that any increase in the debt ceiling should be contingent on sending a balanced budget amendment to the states.

    So those are the conditions. I know that’s being communicated to the White House at this very hour. And we’re hoping the president will start to listen.

    COTTER: You even said it yourself. We are at impasse, though, right now, are we not?

    PENCE: Yes.

    COTTER: Do you see any give and take in negotiation from either side here moving forward?

    PENCE: Well, you know, it really is frustrating. I said on the House floor today that we’ve reached an impasse, as the president and his administration have insisted on adding tax increases to a debate over the debt ceiling.

    And I think -- I think what Speaker John Boehner said today, I’m sure what’s being delivered is, first and foremost, the American people know this is the president’s problem more than anyone else’s. The president is the chief executive of our government. He has an obligation to make sure that the government pays its bills.

    And also quite frankly we’re in this mess because of the runaway spending and the failed economic policies of the Obama administration. So, it is now incumbent on the president to stop essentially talking down to the Congress, dictating what his terms will be for the debt ceiling.

    He needs to own up to this. He needs to recognize it is his responsibility to find out what we need on Capitol Hill to agree to a debt ceiling increase, and that very simply is to cut spending now, to cap spending in the law, and send a balanced budget amendment to the states.

    COTTER: Have you seen any of the latest policies -- latest proposals, rather? I know that Senator McConnell came back with sort of a fallback plan, where the president could raise the debt ceiling incrementally, moving out subject to approval by the Congress. Have you seen this plan? Is that something that’s new and interesting and might be able to work?

    PENCE: Well, I just heard a little bit about it in the last couple of hours...

    COTTER: Yes, it just came out.

    PENCE: ... as an incremental plan that, again, would be -- would require the administration, from what I understand, Chris, to put out a list of budget cuts to offset any increase in the debt ceiling.

    Yes, we’ve got to stop digging this hole. The American people know that we have to maintain the full faith and credit of the United States of America. But at $14 trillion national debt and counting, the American people want us to stop piling red ink on our children and grandchildren.

    And so, at minimum, it seems to me what Senator McConnell is talking about is -- is you could authorize a short-term increase in the debt ceiling, but demand that the White House come out with a deal.

    My bottom line is we need to see the leadership from the leader of this government. We need to see this president step up and put out a plan that will essentially draw the Congress forward. It is his responsibility to lead this government.

    And as he said five years ago when he was a senator, whenever there is a debt crisis, whenever we face a moment where we have to raise the debt ceiling, he said then, of the Bush administration, that it is -- it is a debt crisis, but it is also a failure of leadership.

    And what we need to see now is for the president to recognize this is his problem, it’s his responsibility. He needs to come to the Congress and say, what do you need for us to figure out how we can do this together in the best interests of the American people?

    COTTER: Do you feel like -- and I think I could ask this to Democrats, Republicans, since both sides are really dug in -- do you feel like you are putting your political legacy and certainly your political future on the fact that, banking on the fact that, come August 2 or August 4 or August 11, whatever the date may be, we aren’t going to run into a disaster, we aren’t going to run into a problem where interest rates are moving rapidly higher and the full faith and confidence in the U.S. government is tested?

    Do you believe you are putting your political legacy on the line?

    PENCE: Well, to me, it’s not -- and I think this is true of most House Republicans – it’s not a matter of politics or putting our political legacy on the line.

    We’re putting the well-being of future generations of Americans on the line. If we don’t change this path toward fiscal insolvency, we’re going to go 10 years done the road kicking the can and we’re going to wake up and face the same problems that Greece is facing and Portugal is facing and Ireland are facing.

    We need to take a step back now, seize this moment to introduce real fiscal discipline and real reform.

    COTTER: Do you think...

    PENCE: That’s cut spending dollar for dollar, cap spending in the law.

    COTTER: Yes.

    PENCE: And then it’s time for a balanced budget amendment to be sent to the states for ratification.

    COTTER: Do you think the American people see it the way you see it? Because the president earlier today -- and this isn’t the first time it’s happened -- said, look, we will get to the point where, hey, maybe on August 2, Social Security checks won’t be mailed out, where he’s sort of trying to tug at certain parts of the American people to say you’re going to pay for it right away if we don’t do something by August 2.

    PENCE: Well, I think in -- I think the American people are better informed about Washington, D.C., than at any time in my or your lifetime.

    And so, a lot of these old tactics -- look, we’ve got a couple of trillion dollars coming in yet into the federal government. The president would have the ability to provide for the common defense, to provide for all of our entitlements and pay the national debt with the $2.2 trillion that we’ve got coming in.

    This is the same old, tired game in Washington, D.C. and I think the American people see right through it. The people I’m talking to as I travel across the state of Indiana virtually on a daily basis these days, Chris, are -- are -- are alarmed about this mountain range of debt, which is a result of the borrowing, the spending, the bailouts, and the takeovers of this administration and the last Congress, and they’re a result of the failed economic policies of this administration.

    That’s why we’re saying the president owns this problem. He needs to stop trying to dictate terms, like higher taxes to the Congress. He needs to come to the Congress and say, what do you all need on behalf of the American people for us to honor the full faith and credit of the United States, but restore confidence in our commitment of fiscal responsibility and reform?