This is a rush transcript from "Your World with Neil Cavuto," July 23, 2008. This copy may not be in its final form and may be updated.
STUART VARNEY, GUEST HOST: A live look at Capitol Hill, House members inside, right now, voting on that $300 billion housing bail-out bill — the president saying, today, he will sign it, even though Democrats tacked billions onto it.
My next guest voting against it.
Ron Paul is a Republican congressman from Texas.
Congressman, good to have you with us. Thanks for being here.
REP. RON PAUL (R), TEXAS: Thank you. Thank you. Nice to be with you.
Now, you'll vote against it. OK. You don't like this thing. We understand it. But the argument is that, if we don't backstop housing with government action, the pain will spread to everybody, because the economy, overall, will get much worse than it is now. You reject that argument?
PAUL: Not entirely, because I think there's some truth to that.
But the question is, is, how long do you continue to make bad mistakes? And it's, sort of, like a drug addict. You know, we're going to give the economy a fix, and the economy may feel better for a while, but we're going to make our problem worse. So, bailing out everybody constantly will always put a burden on the dollar. And that is where our problem comes from, because the Fed has already been involved, to the tune of hundreds of millions — billions of dollars.
And now the Congress is getting involved. So, we're just adding fuel to the fire.
VARNEY: Well, go back to the late 1980s and the Resolution Trust Corporation. The government formed it. It bought up all those useless assets at the savings and loans. It cost over $100 billion. But we got out of a jam. We made the money back, and the dollar didn't go into the tank.
That was a successful bailout. This one can't do the same?
PAUL: Well, it might, to a degree, but there`s a limit to it, because, eventually, it will destroy the currency. And you can do it for a long time, because we have done a lot of bailing out over the last 35 years, but we`re in worse shape now.
Our entitlement obligation is overwhelming. Our over — it`s overwhelming what we`re obligated with our overseas expenditures. Our productivity is down. We don`t have the productive jobs. Our international debt is worse.
So, the conditions are much worse, and we're more vulnerable. But whether they can revive this economy and delay the inevitable, it`s a possibility, but, long term, we have to save the dollar, because, without the dollar, all those concerns that you have now will be much, much worse.
Passing out a lot of money to take care of — with all the retired beneficiaries — and trying to buy medical care, it won't work.
VARNEY: Would you take responsibility, if you voted against this bill, it didn`t happen — never happened — and the housing market crashes? Would you take responsibility for that?
PAUL: No, I wouldn't. I would give all the responsibility to the Federal Reserve system that created the bubble by having interest rates down at 1 percent, and Congress for passing a law that encouraged bad loans. You know, the subprime mortgage market was encouraged by the Congress.
So, I would say you would have to look at the source of the problem. The source of the problem comes from the Federal Reserve, who creates the bubble, not the person who tries to solve the problem.
Congressman Paul, thanks very much for joining us, sir. We do appreciate it. Thank you.
PAUL: Thank you.
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