This is a rush transcript from "Your World," March 7, 2013. This copy may not be in its final form and may be updated.
NEIL CAVUTO, HOST: Are Democrats worried that the president cried Wolf too much, too often, and now have put the party in a box that is way too big and awkward?
A top-ranking House Democrat joins us now. Steny Hoyer is with us.
Congressman, do you think the fear thing was overplayed?
REP. STENY HOYER, D-MD, HOUSE MINORITY WHIP: Neil, this is not shutting down government, so obviously it's going to be a slow erosion, not an immediate tidal wave.
But I don't think there's any doubt when you talk to leaders in the Defense Department, in the military, that they believe sequestration is going to have a very negative effect on our ability to maintain national security. There's no doubt that when CBO says that this is going to cost 750,000 jobs over the next 18 to 20 months, that those are big consequences.
Now, they haven't happened. A door didn't slam. A door didn't open. People didn't stream out of government offices being shut out on any given day, or yesterday, or today. But I think there is going to be a slow erosion. I think the numbers that are being reached are unreasonable. As a matter of fact, these numbers that I think Paul Ryan is going to mark his budget to are numbers that were presented on the House floor two years ago as numbers to follow, and Paul Ryan voted no on the Republican Study Committee's budget, as you may recall.
CAVUTO: I understand that.
But, again, on the sequestration thing, Congressman, I just want to be clear, because charting it out, they might be onerous to your point and they might have longer-term implications that we're not appreciating right now.
CAVUTO: But looking at a chart of government spending and where this sort of slices out, these sequester cuts are just tiny, tiny little percentages.
HOYER: Neil, I don't agree with that.
CAVUTO: But I do say that because Governor Ed Rendell had said talking about the fear tactics used here and about the administration, "They probably went over the top in terms of saying the consequences were going to be horrible, especially because it happened and the lines at the airports aren't long and the world has not changed overnight."
What do you think of that?
HOYER: This happened, what, a few days ago, Neil.
This is not shutting down government. This is a slow erosion. So, it will happen. But, now, let me speak to this small percentage that you're talking about. And I hear people talking about $3.7 trillion, $3.8 trillion budget. That's not what these cuts are out of.
Essentially, these cuts are of the 30 percent of the budget which is about half on the defense side and half on the non-defense side of what is called discretionary spending. 70 percent of that is not included in this figure.
So, the sequester largely -- not exclusively, but largely comes out of the discretionary side of the budget and therefore we're talking 5, 6, 7, 8 percent cut. Now, obviously, this year will be the first year of those cuts. But I will tell you, if you talk to Hal Rogers, who is the Republican chair of the Budget Committee -- I mean, of the Appropriations Committee, he will tell you making these cuts over the next 10 years that sequester will require is going to hurt very badly the operations of government, the American economy and our national security.
CAVUTO: Maybe so, but can you blame Americans, though, Congressman, looking at this and the market of course, been racing to new highs this week through this? Are they just whistling past the graveyard and are they merrily going along naive to the calamity to come? Because they might look at this and say well, awkward cuts, sloppy cuts, even damaging cuts via sequestration beat no cuts at all.
That appears to be what they're saying.
HOYER: Well, I think you're right because they haven't seen, as I said, government shut down, they haven't seen a cataclysmic event.
CAVUTO: Right. Right.
HOYER: I agree with that, Neil, and nor did anybody expect that to happen. This is a plan -- and this is not just a plan for this year or April, or May, or June. This is plan for the next 10 years. And I think it's going to have very devastating consequences for our economy. And I think Paul Ryan, frankly, when he tries to present a budget which was pursuant to the deal that Boehner made with his most conservative members to make sure we didn't go over the cliff is a budget that is not going to be real, and these numbers aren't real.
CAVUTO: But, Congressman, even you yourself are open to addressing things like Medicare and other entitlements.
HOYER: That's an entirely different issue. I'm for a balanced deal. I'm for a big deal. I'm for dealing with entitlements.
CAVUTO: But when you talked about looking at Medicare, sir -- I just want to be very clear, because Nancy Pelosi had said she wouldn't mess with -- I'm paraphrasing here -- anything having to do with raising the retirement age or all that.
I think I got the gist of that right. Is that off the table for you as well, that whatever you're looking at at Medicare, for example, will...
HOYER: Neil, what I have consistently said is everything is on the table. It has to be.
CAVUTO: Including raising the age?
HOYER: Now, very frankly, my Republican friends say revenues, we have done that, been there, it's over.
That's not accurate. You cannot get to where we need to get without looking at additional revenues.
CAVUTO: On top of the revenues you already got?