This is a rush transcript from "On the Record," May 25, 2009. This copy may not be in its final form and may be updated.

MEGYN KELLY, FOX NEWS GUEST HOST: Well, it has been three months since President Obama signed the stimulus package into law, but is there any evidence that this $780 billion bill is actually helping Americans? Stimulus projects going into effect around the country. Signs like these mark road and highway projects around the nation that have been paid for with your tax dollars. And yet unemployment continues to rise, up to 8.9 percent in April. And it was 8.5 percent in March. So what is going on?

Stephen Moore of The Wall Street Journal is my guest now. Stephen, thanks so much for being here.

STEPHEN MOORE, WALL STREET JOURNAL, "THE END OF PROSPERITY" CO- AUTHOR: Hi, Megyn.

KELLY: Thanks for coming in on Memorial Day. All right, so, you know, we're looking at...

MOORE: No problem.

KELLY: ... the numbers, and you know, Barack Obama certainly claims that he's had some success turning around the banking industry, but we're talking now about that economic stimulus. And we've got unemployment at some shocking rates. I want to ask you. He told us that with the stimulus, that we would be in April at around a 7.8 percent an unemployment rate, around 7.8 percent, and that without the stimulus, it would be 8.5 percent. It's already at 8.9 percent, so it's higher than he predicted it would be if we had no stimulus at all! What does that tell you about the president's plan?

MOORE: Well, it tells me, Megyn, that this -- what I call the Argentina strategy of economic recovery, of borrow and borrow and borrow and then borrow some more, hasn't worked very well. We have lost -- we've been averaging about 500,000 new lost jobs every month now for the last four or five months. It's a dismal record. Not all of that, of course, Megyn...

KELLY: But it's even...

MOORE: ... can be blamed...

KELLY: ... than that, isn't it? Steve, let me just interrupt you. Isn't it -- the weekly jobless claims are over 630,000. We do this on my morning show when the numbers come out, and every week, it's another 630,000, another 630,000, another 630,000.

MOORE: Right.

KELLY: We've got over six million people in this country who are unemployed now.

MOORE: That's right. I mean, we've seen a massive (INAUDIBLE) as you say, about six million lost jobs since the recession started. Now, of course, that started before Barack Obama was president.

The problem is that the borrowing isn't causing the economic growth that we hoped for, Megyn. You know, we've been spending and borrowing a billion dollars an hour. The hour that you're going to be on TV tonight, we'll borrow another billion dollars at the federal level. These numbers are so huge, about $30,000 of borrowing per family in America -- and you know what? When you borrow like that and then you tax and you spend, you just don't get a robust recovery.

Now, the good news, Megyn -- I'm going to predict that I think we are going to see a bit of a recovery this summer. I think those large numbers of unemployed that you talked about -- I think we're going to see that coming down. There are some indications that have come out in the last couple weeks that are showing some progress with respect to consumer confidence coming back. The banks are making more credit available. Business inventories are falling.

But you know, the question is whether it's going to be a sustainable expansion. I don't think you create a sustainable expansion with massive amounts of government borrowing. And as you talked about in the last segment, who's borrowing -- who's taking out all these loans? It's basically the Chinese government.

KELLY: And not even them anymore. But let me ask you this...

MOORE: That's right!

KELLY: ... Stephen, because you know, the concern a lot of people have when they see this mounting debt, not to mention deficit, and they see these unemployment numbers, and the Federal Reserve came out last week and said, Our forecast says it's going to be a lot worse than we thought it was -- then you see all these plans, these aggressive plans that Barack Obama still has in place, laudable perhaps on paper, but -- but big questions about how we actually pay for them, not just education reform and environmental reform and health care reform, which is a huge number...

MOORE: Right.

KELLY: ... for which he's not getting the funding, his plans to pay for that...

(CROSSTALK)

KELLY: ... to cap your charitable donation deductions and to reduce your mortgage interest reduction -- those are being blown off my lawmakers (INAUDIBLE) So there's still big questions about how he's going to pay for that. But now we learn...

MOORE: Yes.

KELLY: ... that Social Security is running out of money at a faster rate than predicted. Medicare is running out of money faster than predicted. So where -- where does all the money come from?

MOORE: Well, this is the real crisis. I mean, you put your finger on the problem. I mean, we just found out in the last couple of weeks that the big entitlement programs, Medicare and Social Security, have much bigger deficits than we ever thought possible. In fact, social Security spent more money than it took in this year for the first time in 25 years.

And if you have a big problem where you've got, you know, huge amounts of debt with the national debt, and then Social Security and Medicare are both in debt, the last thing you want to do is create a new entitlement program that you can't pay for. But what's going to happen in the next couple of weeks right out here in Capitol Hill? They're going to try to pass a $1.5 trillion expansion of the entitlement programs with no way to pay for it!

KELLY: All right, then, on that note, we say good night to Stephen Moore, our guest. Thank you so much for coming in, with The Wall Street Journal. Steve, we appreciate it.

MOORE: See you, Megyn. Take care.



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