This is a rush transcript from "Hannity," March 24, 2009. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: In yet another attempt to persuade the American people that he's on the right track, the president took to the airwaves tonight. But Senator Judd Gregg, who withdrew his nomination for Commerce Secretary, maintains that President Obama's budget will bankrupt this country.

And he joins us now. Senator, it's good to see you. Thanks for joining us.

SEN. JUDD GREGG, R-NH: Sean, thank you for having me on.

HANNITY: You heard the president tonight. I do not think he had a lot of tough questions, as we were discussing earlier. There were no real follow-ups, no real analysis, no tough questions, but do you really believe his budget will bankrupt this country?

Video: Watch Sean's interview

GREGG:

And, basically, it puts us in a position where we are going to have so much debt on the books, and it is going to be coming at us so fast that it will be very hard for us to pay for it.

I suppose we can always inflate our way out of it, but as a very practical matter, we will under either scenario, pass on to our kids a country we can't afford and something that is less than what we were given by our parents.

HANNITY: But Republican senators, including yourself, Senator, have had some pretty strong words. You said that these debt levels are unsustainable, that it has put us on a fiscal path resembling a banana republic.

Senator Mitch McConnell said earlier the Obama budget makes us worse than Cuba, a higher deficit than Cuba. Senator Charles Grassley says this budget moves America toward socialism.

Does that mean — you're shaking your head. Do you agree with all those statements?

GREGG: Well, basically, they point out the real concerns. Historically, budgets have sort of been sort of pooh-pahed (ph). But this is a very serious budget, and the purpose of this budget is to dramatically expand the size of government, and in the process, it dramatically expands the burden of government, and the debt burden, specifically.

And then it significantly raises taxes, but it does not use those taxes to reduce the deficit or reduce debt. It actually uses those taxes to expand the size of the government again.

And when Bill Clinton came into office — he is a Democrat, as is President Obama, and their purpose was to raise taxes. Bill Clinton used that tax increase to actually reduce the deficit.

What President Obama is suggesting or his budget is proposing is to use this tax is to basically explodes the size of government. And it grows so quickly that it actually can't be afforded because of the amount of debt that is being put on the books is massive.

To put it into another perspective, if you take all the debt put on the books between George Washington and George W. Bush, every president we have had, all of that debt — President Obama's budget puts more debt than that on the books than the first five years.

HANNITY: Senator, you have emerged as one of Barack Obama's staunchest critics, but yet you were on the verge of becoming part of his hat administration. How did we go from there to where we are now?

GREGG: I do support him on a number of issues, too. I think initiatives in the area of financial stability have been good, and that his initiatives here in Iraq and Afghanistan have been the right approach.

But on the issue of the budget, I can't support him, and that's one of the reasons why I chose not to serve in his administration. Obviously a member of the Cabinet should be 100 percent with the president, 100 percent of the time, and I realized I couldn’t do that.

It was my mistake, and I acknowledge that. But when you look at this budget, it's a lot bigger than me. It's a lot bigger than actually the president. It's about passing on to our kids a government that can be afforded and a nation that can prosper.

HANNITY: One of the things that is frustrating to me, and we are literally witnessing, senator, one of the biggest power grabs we have ever seen in the history of the country. As we watch, different proposals just emerged this week.

For example, they want the right to curb CEO pay even for companies that are not part of the bailout. They are asking for the power to actually seize firms that are not getting government bailouts here. They are talking about reconciliation as a means of passing their health care reform and cap and trade. This is under deep consideration.

In other words, for those that do not understand what this means, they would literally pass this with a simple majority, taking away historical powers of the United States Senate for a huge power grab. Don't you think those —

GREGG: Reconciliation means you pass a bill in 20 hours and it is not allowed to be amended, and it's an up and down vote, with 51 votes.

The whole concept of the Senate, of course, the reason we put it into our constitutional structure, was to have a place where issues were aired out, where the was debate, discussion, and then amendments, especially on issues of major public policy.

Reconciliation has been used in the past. I've supported it in the past. But it has always been on issues on policies which already exist — adjusting tax laws, adjusting tax rates, affecting this program that already exist, or that program.

When you are taking the entire health system of the United States, restructuring it, changing it fundamentally, moving it to the left significantly, basically nationalizing it for all intents and purposes, and you do that in a 20-hour period without amendment, without any opportunity to change on the floor of the Senate, well, you might as well not have a Senate. You might as well just have a House of Representatives.

It totally undermines the purposes of the two branches of government.

HANNITY: One of the things the president also was impressed on today, the actual numbers that we're talking about. If we look at the CBO numbers that get rid of the Obama rosy projections that about here, the CBO is projecting we are literally adding a trillion dollars a year for 10 years.

But the president insisted again and again tonight that, in fact, his budget will cut the deficit in half. By 2019 the government will be paying $806 billion annually on interest charges alone. Senator—

GREGG: Your numbers are right.

What's happening here is he's claiming he's cutting the deficit in half by doing this. He takes six steps backwards. In other words, the budget basically quadruples, and then you cut in half, and you end up only taking two steps forward. So you are still going backwards.

Basically, when you take a deficit of $1.8 trillion or $1.4 trillion, depending on which number you use here, and you cut it $700 billion or $500 billion, basically, you are not moving forward very fast. You're actually compounding the problem, because you haven't moved the deficit down to a level that is affordable.

And as you say, it basically averages out at $1 trillion a year. At a $1 trillion dollars a year, you're running a deficit which is four to five percent of GDP. No industrialized country can sustain that type of a deficit. No banana republic can sustain it either.

And it basically leads to so much debt so fast that, basically, you have to inflating to get out of the situation, or you put the country in a very difficult situation relative to tax burden.

HANNITY: Senator, thanks for being with us. We appreciate it. Thanks you very much.

GREGG: Thank you, Sean.

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