Are Democrats in denial about spending?

This is a rush transcript from "Hannity," February 11, 2013. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: With the State of the Union now less than 24 hours away, Democrats seem to be in panic mode, and some are resorting in complete denial. For example, take House Minority Leader Nancy Pelosi, who said on "Fox News Sunday" that the country spending was, well, this.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI, D-CALIF.: So, it is almost a false argument to say we have a spending problem. We have a budget deficit problem that we have to address.

(END VIDEO CLIP)

HANNITY: Seriously? Now more than $16 trillion in debt doesn't scream a spending problem, I don't know what does. Now, surprisingly earlier today, when asked about Pelosi's absurd denial, White House Press Secretary Jay Carney had no choice but to completely contradict her. Watch this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MAN: House Minority Leader Nancy Pelosi, one of the Sunday broadcasts, speaking specifically about the risks of cuts referring to the sequester on the future of the United States, she's talking about education and scientific research. She said, quote, it is almost a false wrong to say, we have a spending problem. Does the President think we have a spending problem?

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: I think this is a little bit of deja vu here. Of course the President believes that we have a spending problem.

HANNITY: Now, at least Carney admits it.

(END VIDEO CLIP)

HANNITYU: Joining me now to explain why the Democrats are in denial about the dismal economic state, democratic Congressman Charles Rangel. How are you, sir?

REP. CHARLES RANGEL, D-N.Y.: I'm doing well, doing well.

HANNITY: All right. Do you agree with Nancy or Carney?

RANGEL: I think both of them. You have a budget problem, don't you? And when you have a budget problem and you have $16.4 trillion in debt, it seems to me, you've got to raise some money and cut back some spending. So, you've got to have both, there's no question about.

HANNITY: And raised taxes, so you've got that part, now it's time to cut.

RANGEL: No, I think that we really have to look at this to see whether or not this revenue is out there, these tax cuts out there. There's a trillion dollars in the tax code. If you're looking for a tax reform, then you'll be raising revenue. By the same token, I think we have to look at everything that's on board and I think you believe that, too.

HANNITY: You're in New York, OK. How much do these evil rich people that the president always lectures as they're not paying their fair share and they got to pay their fair share. No, hang on. Out of every dollar they make, those terribly rich people, how much should they be able to keep out of every dollar they make?

RANGEL: I don't think that we are talking about a class war which you want to lend this to. What we are talking about is, whether or not the top one percent should have been entitled to a continuation --

HANNITY: They just raise the taxes.

RANGEL: And we're taking care of that. But I think that when we talk about corporate tax, we have to reduce the corporate tax and you can only do it --

(TALKING OVER EACH OTHER)

HANNITY: I'm with you.

RANGEL: Yes, and I was trying to do that myself. But in order to do it, you have to get rid of those tax cuts that are not, no longer necessary, those so-called incentives.

HANNITY: You're really good, but you did not answer my question, Mr. Charlie Rangel, sir.

RANGEL: Let's try it again.

HANNITY: Out of every dollar, every one of those rich people in New York make, how much should they be able to keep?

RANGEL: Well, depends on what the tax rates are, and that's what they're trying to do.

HANNITY: After they pay state, federal --

(TALKING OVER EACH OTHER)

RANGEL: Look, if you make yourself, $6, $7 million a year, I'm not going to tell you how much of that that you should -- because you do a lot of charity work.

HANNITY: You think -- 60 cents of every dollar that that's too much --

RANGEL: I think of course, it's ridiculous.

HANNITY: If you live in New York, that's what you pay.

RANGEL: I don't think that we're here to define what the tax code is going to be.

HANNITY: That's the reality, that's what it is now.

RANGEL: No, no, no, no, no.

HANNITY: Yes, yes.

RANGEL: If you really take a look at the rich people that we have in this country, most of them don't pay any taxes at all.

HANNITY: OK, I pay 60 cents of every dollar.

RANGEL: Well, that means that you need yourself a good accountant.

HANNITY: I mean, listen, Charlie, if I use your accountant I'd be on the verge of being in trouble in Congress, let's be honest.

RANGEL: You're not really talking about individual tax rates. What you talked about is tax reform and that is something that we need to do. I don't think anyone, including you, challenges that.

HANNITY: Let me ask you this, you said about Barack Obama and the lack of diversity that he has, you said it's embarrassing as hell. What did you mean?

RANGEL: There was a picture that they had in the New York Times, I think, and it excluded the one black person that was appointed by him. And I meant that it was -- Mitt Romney had the same type of picture and I said that there was no diversity in the picture and that that picture, the next day, another one came out and we saw that there was a lady standing up in the room.

HANNITY: Just one. They are amazing. They let her in the club. Wait a minute. Maybe he needs Mitt Romney's binders, so he could hire few more women.

RANGEL: Well, I don't know if Mitt Romney ever had a chance to use his, so if you do have it, send it to the White House.

(LAUGHTER)

HANNITY: Obviously they need it.

All right. Your friend Menendez speaking in the New York Times, this is what they said in an opinion piece about Menendez. They said, quote, "Instead of trying to protect Mr. Menendez, a New Jersey Democrat, the Senate Majority Leader Harry Reid needs to remove the gavel."

Now, when the New York Times is raising questions about his fitness to serve in light of, you know the allegations out there. What does that tell you? That tells me that there's a problem.

RANGEL: It tells me that there's a problem with the newspapers. But I don't know whether or not The New York Times is fit to judge the conduct of the members of the Senate.

HANNITY: Yes.

RANGEL: -- unless there's something in the Constitution I overlooked.

HANNITY: Let me ask you a question about you. Here you are, the head of the powerful House Ways and Means Committee. You guys are in charge of writing tax law. And then all of these ethics issues come out on you, and taxes. Seriously, why did you allow that to happen knowing you spent all these years in Congress and that that was going to hurt your reputation? Why didn't you just pay the bill?

RANGEL: Actually, that case is not really over. And according to my counsel, Jay Goldberg, I don't think it would be proper for me to discuss it further on your show, but I tell you one thing. When it is over, you'll be the first one to get the answers.

HANNITY: That's a promise?

RANGEL: That's a promise.

HANNITY: All right, I'll take it. Charles Rangel, good to see you.

RANGEL: Good to be back.

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