• With: Sen. Rand Paul, R-Ky.

    This is a rush transcript from "Your World," October 9, 2013. This copy may not be in its final form and may be updated.

    NEIL CAVUTO, HOST: All right, it turns out that next Thursday's debt deadline isn't nearly as dire as some would have you believe. Because, to hear one credit ratings agency tell it, it does not automatically mean default when we are pushed up against the edge.

    Here is the way Moody's is explaining it. And this bears repeating here, and it does sound a little wonky, but if I can quote: "Will the government default after the 17 October if the debt limit is not raised? We believe the government would continue to pay interest and principal on its debt even in the event that the debt limit is not raised, leaving its creditworthiness intact."

    Again, what Moody's is saying is that, when pushed to the brink, sort of like you and I at home, if we are pushed to the brink, we prioritize what bills we pay, our mortgage, our rent first. We might let the MasterCard or Visa slide.

    Rand Paul says that makes sense. It's not an ideal way to conduct business, but it is a backstop and it is a way for the government to not necessarily immediately go into default.

    Senator, very good to have you. Nevertheless, they have been equating, that is, those in the administration, a lot of other prominent Democrats, that hitting this deadline is, in fact, defaulting, and they are scaring folks.

    SEN. RAND PAUL , R-KY.: Yes. I think it's inappropriate for the president to be doing that. And it's irresponsible, because the thing is, is, we won't default.

    If the president were any kind of leader, he would be saying, this is America. We have never defaulted and we never plan on defaulting, and I will do everything in my power not to default. We bring in $250 billion a month. Our interest payment is $20 billion. There is no reason why tax revenue shouldn't be plenty to pay the interest on the debt.

    CAVUTO: How long do you think we could do that, Senator?

    PAUL: It isn't an ideal situation. I'm not advising we do it.

    I'm just advising we don't scare people to death and scare the markets. I have a pension plan. I have retirement income. I don't want the markets to be spooked either. No American who has a retirement income wants the markets to be spooked.

    But the thing is, is that we also need to do something about a $17 trillion debt. The president has added $7 trillion to the debt in the last five years. Maybe we could come to an agreement. In 2011, we came up the sequester, which is slowing the rate of growth. We need something like the sequester, equally dramatic, if not more so, to put us on the right course.

    CAVUTO: We had the co-founder of Home Depot on with us a few minutes ago, Senator, saying the one positive, if you want to call it that, that has come out of the shutdown of the government is, it's -- it's -- it's forced, you know, a lot less spending outside of those barriers and barricades they have put up around otherwise open-air monuments.

    In the long run, we have -- we have been saving a good deal of money and maybe, maybe pushing back that deadline, that October 17 deadline when we are told we run out of cash.

    Do you agree with that, and do you think the deadline is actually much further back than that?

    PAUL: Well, you know, I think really if we wanted to move this along and continue to negotiate, I have always been in favor of a clean C.R. for a week or a clean debt ceiling for a week or two.

    There is no reason to meet these deadlines. If we are having a discussion and we are approaching a compromise, why wouldn't you? I will vote for one week or two weeks, you know, to move things if we are going to negotiate.

    But the president doesn't want that. He wants, "Give me the debt ceiling, give me everything I want. Give me ObamaCare, 100 percent of what I want, and then I will negotiate with you." And then we say, "Oh, yes? We don't think you will negotiate at all if we give you everything you want. "

    CAVUTO: So, that's the big block right now, right, Senator? It seems that Republicans are open to some sort of a deal that would -- he's talked about that, the president, a rider or something in writing that would say, all right, you guys open up the government. I'm going to sit down and talk to you about these things.

    You guys just don't trust him, do you?

    PAUL: Well, the thing is, is, many times, he has said, well, we could fix entitlements. But it never happens. Many times, he has said well, maybe we are spending too much, but the only time he ever compromised is in 2011, when he had a debt ceiling and we forced him to compromise, and we got the sequester, which isn't enough.

    But it's going in the right direction. It's slowing the rate of growth of government. But we only got that because the leverage of the debt ceiling was used to get him to come to the table. If the Democrats had no pressure, they would spend us into oblivion, because they are not concerned about the deficit.

    CAVUTO: But they feel -- that is Democrats -- that they have the upper hand on you because you guys are looking, or at least in the eyes of the public, as very obstinate and stubborn. It's not that the president's poll numbers are great. They're low, too, but yours are a lot lower, not yours specifically, both it seems that the American people are saying a pox on both their houses. These guys seem incompetent.

    How do you address that?

    PAUL: I think the American people -- I think the American people do want us to talk. I'm willing to negotiate and I'm willing to compromise.

    I think the president is not. But I'm also looking at the long term. I'm not looking at polls today, tomorrow or next week. I didn't run for office to be popular. I ran for office because I was worried about the country, and I'm worried even more so, $7 trillion of added debt. This president is going to add more debt than all of the previous presidents combined.

    It is weighing heavily on the economy. Some economists say a million jobs a year are being lost because of this debt. So I think you have to look at the big picture and not just at polls and not just at deadlines. You have to say, we can't heap all of this debt on our kids and our grandkids.

    CAVUTO: Senator, always good seeing you. Thank you.

    PAUL: Thanks, Neil.

    CAVUTO: Rand Paul.

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