• With: Sen. Tom Coburn, R-Okla.

    This is a rush transcript from "Your World," October 4, 2011. This copy may not be in its final form and may be updated.

    NEIL CAVUTO, HOST OF, “YOUR WORLD”: In the meantime, the economy struggling, so don’t start cutting? That message from the Federal Reserve chief today, not the message my next guest wants to hear, Oklahoma Republican Senator Tom Coburn. He’s pushing for $9 trillion in cuts over the next decade. The gist of what the Central Bank chief was saying, as you know, Senator, was, if you go too crazy on this, particularly now, you might regret it, if you go too far -- I’m paraphrasing -- but be careful what you do.

    What do you say to that?

    SEN. TOM COBURN, R-OKLA.: Well, I think he doesn’t know about all the federal government programs that don’t accomplish anything now that we get no return for in the federal government’s $350 billion worth of waste every year.

    I would tell you that would have a positive effect on the economy, not small. That’s $3.5 trillion over 10 years that we could easily do, and nobody would ever miss that. I was at a dinner with Alan Greenspan a week before last and he said the last thing you want to do is raise taxes, because it would be far more negative on the economy than cutting spending.

    So his advice is cut spending, don’t raise taxes. So I think there’s a little bit of a divergent view there. And he also didn’t say not cut. He said you just need to make sure you have got a good, solid plan so that you get it done by a time certain. And I agree that you would start out slower, but to continue to waste $350 billion a year in the federal government that’s pure waste or fraud or duplication, that’s not going to have anything but a positive effect if we eliminate that.

    CAVUTO: All right. Well, his arguments notwithstanding, and some of your Democrat critics’ argument notwithstanding, we’re talking about $9 trillion that you want to see over 10 years.

    I think the most aggressive plan being debated on the Hill now even by the super committee is another couple of trillion tops. What would you do now that they’re not doing?

    COBURN: Oh, gosh. I think that’s a great question.

    First of all, what is the problem? And the problem, Neil, is there’s no way we get out of this unless we address the depth of the problem over the long term. And we all know short-term interest rates and even long- term interest rates are going to be low for the next year, year-and-a-half. But after that, when they start creeping up -- and if you look at the numbers, the only way our country recovers fully is that if we make these difficult choices, so that we can fund the debt that we have today, and not add another $15 trillion over the next 15 years.

    For every 1 percent rise that we’re going to see starting about a year-and-a-half from now in the -- in the interest rates that our government pays, it will be $160 billion a year. So what Congress did in August, plus what they’re going to do with the super committee, is not going to even cover 2 percent rise in the long-term interest costs.

    And we’re at -- we’re at about a third of what our historical interest costs are now. So we know that’s going to go up. We’re not going to have low-interest rates, 1.5 percent 10-year bonds two years from now. That’s not going to happen.

    CAVUTO: So, you’re saying cut while the cutting’s good, even though you’re not doing it dramatically right up front, because, invariably, the low borrowing costs we have been enjoying, near zero, aren’t going to last and all this gets much more expensive anyway, right?

    COBURN: Right.

    And if we continue to add at the pace we’re adding now, you know, Congress in August, they told the American people that they cut spending. They didn’t cut any spending. The discretionary budget’s still going to rise almost a trillion dollars over the next 10 years.

    What they did was typical Washington-speak. We’re going to decrease the rate of growth that we had planned, rather than actually cut spending. And when we have $350 billion that I can document, I can sit down with anybody in America and show you where you could cut $350 billion, and nobody would know it, when we have that, to allow discretionary spending to continue to rise I think is criminal.

    CAVUTO: All right. Senator, thank you very, very much.

    COBURN: You’re welcome.

    CAVUTO: Good seeing you again.

    COBURN: Good seeing you.

    CAVUTO: Ranking minority member on the Senate Finance Committee, Tom Coburn of Oklahoma, in Washington, thank you, sir.

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