• With: Sen. Rand Paul, R-Ky.

    This is a rush transcript from "Your World," October 20, 2011. This copy may not be in its final form and may be updated.

    NEIL CAVUTO, HOST OF “YOUR WORLD”: All right, to hear defense spending supporters put it, that spending helped bring one Moammar Gadhafi down. So is this any time to be, well, looking at the defense budget and bringing it down?

    Republican Senator Rand Paul says, in the big picture, the big scheme of things, it should be included; all programs in Washington should be included when it comes to shaving those costs.

    The senator joins me right now.

    Senator, good to have you.

    SEN. RAND PAUL, R-KY.: Good to be with you, Neil.

    CAVUTO: You heard pretty much at the outset that argument, that our aggressive terror posture, anti-terror posture, our spending, our resources, energy, time in the area helped bring yet another despot down. What do you make of that? PAUL: Well, I think we have to look everywhere across the budget, both military, as well as domestic spending. And ultimately it is the compromise that will have around here.

    Republicans will have to admit that every dollar spent in the military is not sacred. And Democrats will have to admit that every dollar spent in domestic welfare is not sacred. And we will have to look everywhere within the budget for cuts.

    CAVUTO: Do you think it goes too far? In other words, if the super committee, Senator, cannot agree on cuts, these sequestration, these automatic cuts kick in. I think they are approaching a half-a-trillion for defense over the next 10 years.

    I have talked to many of your colleagues who say that is way, way, way over-the-top. What do you say?

    PAUL: Well, first of all, I don’t think we will get to sequestration. They will make the cuts, but the cuts are not real, because they are cuts in proposed increases over 10 years.

    But $50 billion a year or $500 billion over 10 years really is a fairly small amount when you think about it. We have doubled the military budget in the last 10 years. All of these budgets will have to be looked at. It is better to look at them now in an organized fashion...

    CAVUTO: So you are not in the camp that says a half...

    PAUL: ... rather than to do it in a chaotic fashion.

    CAVUTO: I’m sorry -- but a half-trillion more over 10 years, you don’t think is cutting to the bone?

    PAUL: Well, really, we are talking about cuts in proposed increases.

    CAVUTO: You’re exactly right.

    PAUL: So, when you actually shake out the -- if you shake out the numbers of $500 billion, maybe probably proposing to increase military spending more than $500 billion.

    So, really, you probably are not even back to a freeze. And I would have to look at the numbers, but I can tell you that the $2 trillion in cuts that they are looking at to avoid cuts in the military, those $2 trillion are cuts in proposed increases.

    (CROSSTALK) CAVUTO: You are exactly right. And it is worth repeating, Senator, that what we are looking at over the next 10 years is not cutting anything. We will still have a much higher overall debt 10 years from now under the most aggressive of plans that we do now.

    (CROSSTALK)

    CAVUTO: Go ahead.

    PAUL: The proposed increases are $9 trillion in increased spending over 10 years.

    CAVUTO: Right.

    Now, your father, who I had on the show a couple of days ago, got in a heap of trouble for advocating cutting $1 trillion immediately if he became president, balancing the budget by his third year, basically totally unworkable. Even fellow Republicans say it would lead to another severe recession, if not depression. What do you say?

    PAUL: Well, I’m mad at him for a different reason, because he has kind of doubled down and doubled me. I had a $500 billion cut, and now he has come out with twice that much. But he is exactly right. If a president wants to balance their budget within the terms of their office, they would have to have significant cuts in the first year, and then it is not so much after that. What he is pointing out is that all of these people are talking about, oh, I will balance a budget in 10, 20, 30 years.

    They won’t be in office. The only way we can ever believe a politician who says they will balance their budget, it would have to be done in the terms of their office. He is the only presidential candidate who says he will balance the budget in the terms of his office.

    But it is not easy. It would require real cuts. And that is where we have the disconnect. A lot of Republicans are for a balanced budget in the abstract, but they’re not for the real cuts. He has pointed out how he would do it.

    CAVUTO: All right, as have you.

    Senator, very good to have you. Be well.

    PAUL: Thank you.

    CAVUTO: Rand Paul. All right.

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