Pawlenty: America shouldn't dine and dash

Push to resolve debt ceiling issue


This is a rush transcript from "Your World," October 2, 2013. This copy may not be in its final form and may be updated.

NEIL CAVUTO, HOST: Former Governor Tim Pawlenty. The governor is the CEO of the Financial Services Roundtable.

And I don't know, Governor, if I'm the president of the United States, if I want to even be mentioning the markets or talking about that what they should or should not be doing.

TIM PAWLENTY , R-FORMER MINNESOTA GOVERNOR: Well, the president and all the other stakeholders and leaders in the discussion of course want pressure to try to get the situation resolved.

But I think what the markets are saying, Neil, at least for the continuing resolution, as opposed to the debt ceiling, is, look, we have got crisis fatigue. If you are outside of Washington and New York, most people shrug their holders and say, oh, they will figure this out. We don't like this, but they will figure this out.

So, I think the markets are reflecting that seasoned view or cynical view of the fact that this will drag on awhile, but they will figure it out.

CAVUTO: Yes, but obviously markets can be surprised.


CAVUTO: And I think what the president is laying out in this interview is that they will be surprised if this drags out and it could be a very unpleasant surprise. And it will be reflected accordingly.

Is he right?

PAWLENTY: Well, the debt ceiling -- I think we should distinguish between the continuing resolution and the debt ceiling. They obviously...


CAVUTO: But they're bumping into each other here, right?

PAWLENTY: They're going to merge into one, which may be, by the way, allow the president to say, look, I won't negotiate on the debt ceiling, but if they get lumped into one, he can say whatever accommodations I gave up in the end were for the C.R.

He may have an exit out of that discussion that saves some face.

CAVUTO: How do you think this is settled, though?

PAWLENTY: Well, there are some issues where I think both parties could agree on that are attractive.

Let's say, for example, the Keystone pipeline. Now, more Republicans than Democrats want that, but some Democrats that want and that could be a concession or...


CAVUTO: But nothing health care-related?

PAWLENTY: Well, what about the medical device tax, another area, if that were repealed or reduced, that would have bipartisan support. So, you could see if you could cobble together enough of those things where people can support it on a bipartisan basis...


CAVUTO: I just wonder because all of these individual things, the Keystone thing notwithstanding, were ferreted right over to the Senate, rejected, rejected, rejected, even the one that I thought was beyond belief, special exemptions and subsidies for Congress from the president's health care law itself rejected, rejected, rejected.

So, what changes it?

PAWLENTY: Well, I think what the Senate is saying, we don't want to do this piecemeal. We want a global solution or a complete solution to both C.R. and ultimately the debt ceiling. So, they are saying we don't want to do it piecemeal.

It is not that they are necessarily against each of the pieces in the end.


PAWLENTY: It's just they want one big package.

CAVUTO: No, I do think you are right, Governor, that they are planning for the next battle. And that is the debt ceiling one.

But, you know, you and I recall, and we talked through the last debt crisis, this can create a crisis. Do you think the only way -- and maybe that's what the president was saying -- the only way that these guys, either party, moves is if the market tumbles?

PAWLENTY: Well, that would be one factor.

And what the president may be saying is, look, the markets perhaps should pay closer to attention to this, because this is not 20 years ago. This is not Reagan and O'Neill.


PAWLENTY: This is a situation where the politics changed, the systems have changed, the system is more polarized, and the people in it are more polarized, and the kind of laid-back attitude of, oh, they will figure it out, like you said, markets could be surprised.

And this debt ceiling issue is serious, Neil. America should not dine and dash. We have to get our debt and our entitlement reform under control. But the United States of America does not eat our spending meal and then run out the door without paying.

CAVUTO: Yes, but that assumes that when we are up against the wall, like average Americans do, you reprioritize your finances, right, that just like we may pay the mortgage or rent first when we are up against the wall, the government would pay those bondholders first to avoid default, because that would be heinous if they didn't...

PAWLENTY: And that...


CAVUTO: .-- and that the president might be making a scarier deal out of this, and unnecessarily so.

PAWLENTY: But, even under your scenario, if they partially, you know, couldn't pay their bills and they sequence the most important ones first, then that could last for a while.

CAVUTO: It is not pleasant and it's not pretty.

PAWLENTY: No, but the notion -- yes, but the notion that the United States of America can't pay all its bills or won't or is so dysfunctional it can't, sends a pretty shocking signal to the markets.

CAVUTO: Do you think that the Republicans then are really risking their political capital doing this?

PAWLENTY: Well, they feel very strongly about the issues that they have put on the table.


CAVUTO: Yes, but that's not what I asked. Do you think they are hurting themselves?

PAWLENTY: Well, the polls would show, in the near term, they are hurting themselves.

CAVUTO: Do you think they are?

PAWLENTY: Well, my view is they -- they going to have to play out their hand now.

And, you know, I was through a shutdown in Minnesota.


PAWLENTY: And so I have lived and experienced this. There is a little bit of week or two from now, you might have some people, not all of them, say, you know, this was not as bad as I thought. I'm not missing government...


CAVUTO: But you as the chief executive at the time came through fine on that.


CAVUTO: This president might come through fine.

PAWLENTY: But I do think it is all going to merge into the debt ceiling issue.


PAWLENTY: And that's two weeks away. And you can't -- that issue has to be solved. And they will solve it. Their backs will be against the wall. The clock will have run out.

CAVUTO: All right, Governor, thank you. It is always a pleasure.

PAWLENTY: Good to see you.

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