This is a rush transcript from "Your World," March 7, 2013. This copy may not be in its final form and may be updated.
NEIL CAVUTO, HOST: Are Democrats worried that the president cried Wolf too much, too often, and now have put the party in a box that is way too big and awkward?
A top-ranking House Democrat joins us now. Steny Hoyer is with us.
Congressman, do you think the fear thing was overplayed?
REP. STENY HOYER, D-MD, HOUSE MINORITY WHIP: Neil, this is not shutting down government, so obviously it's going to be a slow erosion, not an immediate tidal wave.
But I don't think there's any doubt when you talk to leaders in the Defense Department, in the military, that they believe sequestration is going to have a very negative effect on our ability to maintain national security. There's no doubt that when CBO says that this is going to cost 750,000 jobs over the next 18 to 20 months, that those are big consequences.
Now, they haven't happened. A door didn't slam. A door didn't open. People didn't stream out of government offices being shut out on any given day, or yesterday, or today. But I think there is going to be a slow erosion. I think the numbers that are being reached are unreasonable. As a matter of fact, these numbers that I think Paul Ryan is going to mark his budget to are numbers that were presented on the House floor two years ago as numbers to follow, and Paul Ryan voted no on the Republican Study Committee's budget, as you may recall.
CAVUTO: I understand that.
But, again, on the sequestration thing, Congressman, I just want to be clear, because charting it out, they might be onerous to your point and they might have longer-term implications that we're not appreciating right now.
CAVUTO: But looking at a chart of government spending and where this sort of slices out, these sequester cuts are just tiny, tiny little percentages.
HOYER: Neil, I don't agree with that.
CAVUTO: But I do say that because Governor Ed Rendell had said talking about the fear tactics used here and about the administration, "They probably went over the top in terms of saying the consequences were going to be horrible, especially because it happened and the lines at the airports aren't long and the world has not changed overnight."
What do you think of that?
HOYER: This happened, what, a few days ago, Neil.
This is not shutting down government. This is a slow erosion. So, it will happen. But, now, let me speak to this small percentage that you're talking about. And I hear people talking about $3.7 trillion, $3.8 trillion budget. That's not what these cuts are out of.
Essentially, these cuts are of the 30 percent of the budget which is about half on the defense side and half on the non-defense side of what is called discretionary spending. 70 percent of that is not included in this figure.
So, the sequester largely -- not exclusively, but largely comes out of the discretionary side of the budget and therefore we're talking 5, 6, 7, 8 percent cut. Now, obviously, this year will be the first year of those cuts. But I will tell you, if you talk to Hal Rogers, who is the Republican chair of the Budget Committee -- I mean, of the Appropriations Committee, he will tell you making these cuts over the next 10 years that sequester will require is going to hurt very badly the operations of government, the American economy and our national security.
CAVUTO: Maybe so, but can you blame Americans, though, Congressman, looking at this and the market of course, been racing to new highs this week through this? Are they just whistling past the graveyard and are they merrily going along naive to the calamity to come? Because they might look at this and say well, awkward cuts, sloppy cuts, even damaging cuts via sequestration beat no cuts at all.
That appears to be what they're saying.
HOYER: Well, I think you're right because they haven't seen, as I said, government shut down, they haven't seen a cataclysmic event.
CAVUTO: Right. Right.
HOYER: I agree with that, Neil, and nor did anybody expect that to happen. This is a plan -- and this is not just a plan for this year or April, or May, or June. This is plan for the next 10 years. And I think it's going to have very devastating consequences for our economy. And I think Paul Ryan, frankly, when he tries to present a budget which was pursuant to the deal that Boehner made with his most conservative members to make sure we didn't go over the cliff is a budget that is not going to be real, and these numbers aren't real.
CAVUTO: But, Congressman, even you yourself are open to addressing things like Medicare and other entitlements.
HOYER: That's an entirely different issue. I'm for a balanced deal. I'm for a big deal. I'm for dealing with entitlements.
CAVUTO: But when you talked about looking at Medicare, sir -- I just want to be very clear, because Nancy Pelosi had said she wouldn't mess with -- I'm paraphrasing here -- anything having to do with raising the retirement age or all that.
I think I got the gist of that right. Is that off the table for you as well, that whatever you're looking at at Medicare, for example, will...
HOYER: Neil, what I have consistently said is everything is on the table. It has to be.
CAVUTO: Including raising the age?
HOYER: Now, very frankly, my Republican friends say revenues, we have done that, been there, it's over.
That's not accurate. You cannot get to where we need to get without looking at additional revenues.
CAVUTO: On top of the revenues you already got?
The revenues that we already got are about, what, 40 percent, 35 percent of what the gang of six, three Republican senators, three Democratic senators, Simpson-Bowles, Domenici-Rivlin, all of them indicated you have to get significantly more revenue than that.
CAVUTO: Those Republicans who are chafing that that last deal, they figure you got the better of them by getting a deal that was 40-1 in favor of more spending than anything else, that you don't feel...
HOYER: Neil, you and I both know that was huge tax cut. That was a huge tax cut from what was in place.
You remember on the day that we voted on it, in place was a higher tax structure for not only the 2 percent of Americans that we affected, or 1 percent of Americans that we affected, but for the other 98 percent.
CAVUTO: No, that I understand. What they're saying is what was agreed to -- you're quite right. Those rates all would have expired had that not been the case.
HOYER: They did expire.
CAVUTO: But that the deal they got was weighed heavily more in favor of raising taxes than cutting spending, and they don't want to get snookered again. What do you say to them?
HOYER: They didn't get snookered at all. We had cut a trillion dollars pursuant to the Boehner rule that if we were going to raise the debt and not have America welsh on its debts, not pay its debts, and raise the debt limit, we had to come up with $2.2 trillion. Well, we came up with a trillion dollars, as you know, of cuts.
CAVUTO: But those were baked-over cuts, right? There were warmed- over cuts that were agreed to before. Right?
(CROSSTALK) HOYER: Oh, no, no, no.
No, they were in the Budget Control Act. That was -- warmed over. It was in the Budget Control Act, but we had already made those cuts. We hadn't done any revenues.
So when you say 40-1, that's not accurate, Neil. We did $930 billion, to be exact, plus interest, and then we did $600 billion in revenues. Now that's about 60/40. So, to be fair, I think you got to count what we did, not just put it in your pocket and say, OK, now we're going to make a new deal.
CAVUTO: Fair enough. Fair enough. We can go back and forth on the numbers and who said what and when and how the math adds up.
I do want to add, obviously Republicans feel they survived the whole sequestration thing pretty well and that the economy did OK, markets did OK this week. It has put the administration in a box not being able to crow about market that raced to new highs every day this week. So they feel they got the upper hand.
You seem to be saying down that down the road they might not be so cocky because these cuts will come back to hurt them and hurt the economy. But what do you think happens now?
HOYER: I think these cuts are going to come back to hurt people.
CAVUTO: But what if they don't?
CAVUTO: You have a convenient built-in excuse, right?
HOYER: Wouldn't it all be nice if they won't?
But the pretense that they won't I think is not accurate. Now, if they don't, yeah, you're right. But if they do, as I expect them to do and as CBO says, job loss, as the military says it's going to hurt national security -- I don't say that. The generals are saying that. The admirals are saying that. They're not Democrats or Republicans. I don't know what their parties are.
But when you have General Odierno, when you have General Dempsey, the chairman of the Joint Chiefs of Staff, saying these cuts are going to hurt national security, I'm not saying that.
CAVUTO: I know what you are saying, sir.
CAVUTO: But are you saying that down the road...
HOYER: By the way, I agree with them, though. I'm not saying it, but I agree with them.
CAVUTO: If there's a slightest pickup, I just get a feeling that it won't be a slowdown coming on. It will be Republicans' fault for what they did on sequestration. Are you going to do that?
HOYER: Look, we will have to see what is going to play out.
CAVUTO: All right.
HOYER: But what we really need Neil, all this who back and forth, what has happened in the last 48 hours or last 72 hours, I think that's kind of unrealistic. You and I both know that it is going to take a longer time to play out as the consequences of our actions.
CAVUTO: Steny, I don't know. Last week at this time, I was afraid I was going to be eating Mr. Ed at the start of the week and horsemeat was going to be everywhere. That's how scared I got. So what happens?
HOYER: You didn't think that, nor did I think that.
And, frankly, my opinion is the president didn't think that. I think he wanted to put out the harsh consequences. But the fact of the matter is, this is going to be -- this is going to be a rolling problem.
CAVUTO: You don't think he overplayed it?
HOYER: Well, let's -- for the sake of argument, let's say he played it more heavily than was going to be self-evident immediately, yes. Let's say that.
HOYER: But the fact of the matter is he was right on the fact, as the chairman of the Joint Chiefs of Staff, as CBO says, these are going to have very negative consequences.
And very frankly, we bought a lot of stuff in the last decade and we didn't pay for it. So we have a big debt. And who is going to be asked to pay for it? Students, senior citizens, Medicare, student aide, job creation.
CAVUTO: We all have to. It's a big old debt.
CAVUTO: All right, Steny Hoyer, thank you very much. We will see what happens. Always a pleasure.
HOYER: Thanks, Neil.
CAVUTO: All right, Steny Hoyer.
Content and Programming Copyright 2013 Fox News Network, LLC. ALL RIGHTS RESERVED. Copyright 2013 CQ-Roll Call, Inc. All materials herein are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of CQ-Roll Call. You may not alter or remove any trademark, copyright or other notice from copies of the content.