Will we really default if debt ceiling not raised?

Heritage president-elect Jim DeMint weighs in

This is a rush transcript from "Your World," January 16, 2013. This copy may not be in its final form and may be updated.

NEIL CAVUTO, HOST: We spare no expense in our graphics department here, because it's time for another mainstream media alert. All this talking that Republicans are putting us on the verge of defaulting a little misleading?

My next guest says that even if we pass the debt ceiling or refuse to get it hiked, we can still pay our bills. We're not defaulting on anything.

The president-elect of the Heritage Foundation, the former Republican senator from the fine state of South Carolina, Jim DeMint.

It's sort of accepted as fact that we don't raise this thing, we're all defaulting, when the only way to do that is not to meet our bond obligations, right?

JIM DEMINT, R - FORMER U.S. SENATOR: Neil, I think you know that is not true.

The federal government brings in $230 billion every month. The interest on our debt is about $19 billion. We can pay our interest, we can pay for Social Security, Medicare, Medicaid and our troops and still have some left over.

Certainly, there are going to be things that we have to cut. But we need to think about that anyway. This is a point in time where Americans need to decide that we don't want to be like Greece.

CAVUTO: All right, now, the reason why I think it's worth repeating, Senator, is that you don't default unless you don't make payments to creditors.

DEMINT: Right.

CAVUTO: And like you said, we would have more than enough wiggle room to do that and to made good on our commitments to Social Security, Medicare, Medicaid, the defense, with plenty of money left over.

Now, other tougher decisions will have to made about the excess spending of 40 percent over what we take in, but the idea that we default or become Greece instantly is wrong, it is a lie.

DEMINT: It is a lie.

And the president and some others in Congress are trying to say if we don't spend what we have planned to spend, then we have defaulted in some way. You know that is not true. A lot of families have to cut back on what they have planned to do. A lot of businesses do as well.

We need to make some tough decisions about our spending. The president said if he got his tax increase, he would cut spending. He needs to fulfill that promise. But this is an important time for us to decide that we're going to make those hard decisions and cut spending.

You have really got two choices, Neil. We can balance the budget this year by not raising the debt limit or we can do it the Democrats' way and never raise it at all. Actually, you are going to hear conservatives present us a third option. And that is to put us on a path to balance over 10 years. We can do that without cutting anything from what Americans are expecting. That is what we need to do.

CAVUTO: You know what bothers me the most, though, Senator, is we go through these elaborate hoops to avoid this thing, like a trillion dollar coin, like using the 14th Amendment, giving the president sole discretion to raise the debt ceiling on his own, than address the underlying problem that keeps creating it, spending. Why do we do that?

DEMINT: Well, you're right.

The problem is not the debt ceiling or the debt limit. The problem is our debt. And the reason we have a legal limit on our debt is because we know, if we keep borrowing, we're going to hurt the country and everyone who lives here.

So, I think the president is trying to scare people. He's trying to distract from the main issue. He said he was going to cut the deficit in half his first year in office. We have doubled it every year. It's just time to make some hard decisions.

There is nothing wrong with suggesting that over the next 10 years, we stop borrowing from our children's future and we balance our budget. We can do that. I think most Americans will agree.

CAVUTO: But you got to wonder. If the mainstream media says it's Republicans who are being obstructionists if they dare reject raising the debt ceiling, even though no one in the mainstream media said that of a single Democrat when they were doing the same seven years ago, including then-Senator Barack Obama.

Then Republicans are damned no matter what they do.

DEMINT: Well, it's part of the strategy of this administration on the "fiscal cliff," on all kinds of issues is just to frighten people, try to frighten seniors.

So, we need to do everything we can to reassure seniors with the truth, that their Social Security and Medicare is going to get paid unless the president is just completely irresponsible. Our interest on our debt is going to get paid and frankly, I think our credit rating as a nation is likely to stay where it is if we cut spending, rather than just blow through another debt limit without making those hard decisions.

CAVUTO: All right, Senator, always good seeing you. Thank you very much.

DEMINT: Good to see you, Neil.

CAVUTO: Jim DeMint.

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