• With: Alan Simpson, former National Commission on Fiscal Responsibility and Reform co-chair

    This is a rush transcript from "Your World," February 14, 2012. This copy may not be in its final form and may be updated.

    (BEGIN VIDEO CLIP)

    PRESIDENT OBAMA: And the truth is we're going to have to make some tough choices in order to put this country back on a more sustainable fiscal path.

    (END VIDEO CLIP)

    NEIL CAVUTO, HOST OF "YOUR WORLD": Tough choices, the president says his budget makes him.

    Does Alan Simpson, his debt co-chair, agree?

    What do you think, Senator?

    ALAN SIMPSON, FORMER CO-CHAIRMAN, NATIONAL COMMISSION ON FISCAL RESPONSIBILITY AND REFORM: It sounds good, but the music doesn't match the lyrics.

    No, it's a good start, you know, in the sense of not letting this go to sequester. That would be a bad thing in my mind, where you just do a mindless cut on both defense and non-defense. But it's a start.

    But I tell you the irony to me is that he's speaking to a group of community college students there in Northern Virginia. And these are the sheep who are to be sheared by doing nothing. By not doing something with Social Security solvency right now, these young people, 20 years old, in 24 years, they'll be 44. And in 2036, you're going to get up to the window.

    They're not going to not go up there yet. They got a long time to go. And you're going to get a check for 23 percent less. No mention of it.

    (CROSSTALK)

    CAVUTO: So where are the tough choices, Senator? When he talked about the tough choices, talks about saving trillions over 10 years, and neglecting to mention $5 trillion in more debt after that same 10 years, what is tough about that?

    SIMPSON: Not much.

    And it is an election year and he knows all the hot buttons. Let's just say that this guy -- that this president -- he's not a guy -- I respect the office of president, always have. And I get called a Republican toady covering Obama's fanny so he can destroy the party because I took on this beautiful job with Erskine.

    But there are no tough choices unless you do something with the mastodon in the kitchen, which is health care.

    CAVUTO: But he didn’t. Medicare and Medicaid are essentially untouched.

    (CROSSTALK)

    SIMPSON: Yes.

    CAVUTO: So, I don’t know how we get to where you outlined with Erskine Bowles where you want us to get. We're a long way from that.

    SIMPSON: Yes, but it will come, because...

    (CROSSTALK)

    CAVUTO: When? When will it come?

    SIMPSON: It will come when the money guys, the people -- the market, they don’t care who's running the shop, whether it is Democrats or Republicans or Obama or Romney. Whoever is running the shop means nothing to the money guys.

    At that point, they're going to pull the trigger and say, you are dysfunctional, we love you, we're going to loan you more money, but we want more interest. You're on the same trajectory of debt, deficit and interest as the PIGS country, as Portugal, Ireland, Greece, Italy. It is -- that course of debt, deficit, and interest is the same trajectory as those countries that are on the ropes.

    And Italy hanging by its thumbs, they only owe $2.6 trillion. We owe $16.2 trillion.

    CAVUTO: But don't you think that’s what saves us, Alan that people look at what's going on in Europe and say, well, they're deflecting our attention because they are so bad? You're arguing we are actually statistically worse.

    SIMPSON: Well, as Erskine says in his inimitable way, we’re the healthiest horse in the glue factory. That's what we are right now.

    (LAUGHTER)

    CAVUTO: Alan, always good having you. Thank you very much.

    SIMPSON: Always a pleasure.

    CAVUTO: Alan Simpson.

    He called it when a lot people were afraid to even talk about it, the debt commission co-chair.

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