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President Obama's Proposed Budget Versus Reality

This is a rush transcript from "On the Record," February 1, 2010. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: All right, now for a field trip to Capitol Hill. Republican senator Chuck Grassley, a member of the Senate Budget Committee, went "On the Record."

(BEGIN VIDEOTAPE)

VAN SUSTEREN: Senator, nice to see you, sir.

SEN. CHUCK GRASSLEY, R - IOWA, BUDGET COMMITTEE: Glad to be with you, of course.

VAN SUSTEREN: And I appreciate you inviting us to your office. Actually, we asked to come, but nonetheless, thank you very much, sir.

GRASSLEY: Welcome to a part of Iowa.

VAN SUSTEREN: All right. The president has delivered his budget, fiscal 2011, to the -- to the -- Capitol Hill. What do you think about it?

GRASSLEY: It's representative of Washington, D.C. And I'm surrounded by reality. And I say that because how unreal it is to have this big budget deficit and so much increase in expenditures when the taxpayers, the working men and women back on Main Street, are living probably on less this year than last year. There hasn't been big wage increases. There hasn't been the ability of people to support more of this budget. And it's leaving a legacy of debt to our children and grandchildren.

VAN SUSTEREN: Well, as I understand it, this is sort of, for lack of a better word, sort of a wish list from the president, since the president's not the one who actually makes the deal, right, it's Congress?

GRASSLEY: Well...

VAN SUSTEREN: I mean, he says, This is what I'd like to do, but it's Congress who cuts the check or makes the decision.

GRASSLEY: Well, constitutionally, the president proposes and we dispose. But as a practical matter, particularly when you have an overwhelming number of Democrats in both the House and Senate, what a Democrat president says is very much an outline of what's probably going to come out at the other end. I'd be surprised if it didn't come out very much like he has in his budget.

So it might be easy for him to say that to you so that he proposes, and then we're going to take the heat for it. Well, constitutionally, that's absolutely right. He can't spend a penny we don't appropriate.

But I know how a liberal Congress will operate. I even know when we had Republicans, we spent more than we should have spent, quite frankly. But not to this tune that we have right now, doubling the deficit in just three months of last year, as an example, after this president was sworn in. So I think it's very much a pattern that you're going to see come out at the end of the pipeline when Congress gets done with it.

VAN SUSTEREN: All right. In terms of the suggestion that the president -- or the budget the president sent here for 2011 fiscal, the estimated deficit will be $1.3 trillion? Is that your understanding?

GRASSLEY: That's my understanding, yes.

VAN SUSTEREN: All right. Now, as I understand it beyond that, that assumes that unemployment will be at a 9.2 percent rate, and if it's anything higher than 9.2, that deficit necessarily has to increase since there's less revenue to the government, right?

GRASSLEY: You know what you have to do? You have to create three million jobs between now and the end of the year for that 9.2 to come out. I don't think you're going to create three million jobs this year. But also, don't forget that you get a budget deficit like that, assuming over the next 10 years, $2 trillion of new tax increases. Now, maybe down the road five years, maybe you can increase taxes without doing harm to the economy. I don't happen to think so, but let's say you could. But right now, a tax increase right now is going to be a jobs killer.

VAN SUSTEREN: In terms of -- can you -- when this budget gets -- when you start debating or talking about this budget, can you send it out to the CBO to score it for an unemployment rate let's say at 10 percent? Because that may be where our unemployment rate is. I mean, can we do that so we can find out truly what the impact is?

GRASSLEY: Well, we -- through your ranking Republican on the Budget Committee, that can be done and I hope it is done because we ought to know because I think it's wishful thinking to think of that. I started to tell you we're going to have a $2 trillion tax increase over the next 10 years. That's going to be -- if that happens -- starts right now, it's going to be detrimental and a job killer to the economy. So if you increase taxes and it's a job killer, particularly when you hit small businesses, these tax increases are going to do, you're not going to get unemployment down one percentage point without encouraging small business because that's where the jobs are created.

VAN SUSTEREN: And of course, this is based on 9.2 percent unemployment. So what's going to happen? Is he going to get everything that he is suggesting to Congress in this bill?

GRASSLEY: He won't get everything. But as I said to you, when the president's for something, the president's a powerful position -- particularly because Democrats in Congress even want to outspend their own president in many ways, and that's evidenced by the stimulus bill of a year ago. It was more of a presidential -- or a congressional document than a presidential document. I think you could even come out worse than where the president submits his budget.

VAN SUSTEREN: Thank you sir.

GRASSLEY: Thank you. Glad to be with you.

(END VIDEOTAPE)

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