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Special Report

Sen. Mike Lee tackles foreign policy, national security

This is a rush transcript from "Special Report," January 29, 2014. This copy may not be in its final form and may be updated.

BRET BAIER: Back with our panel now, and we welcome to our Center Seat, Utah Republican Senator Mike Lee. Senator, thanks for coming.

SEN. MIKE LEE, R - UT: Thank you.

BAIER: You delivered the Tea Party response to the State of the Union last night. I want to spin off that and some of this divide that people have talked about in the Republican Party. Upcoming you have a debt ceiling increase vote again sometime in February. What do you think will happen? What do you want to see happen? And are you going down the same path, do you think, that led to the shutdown last time?

LEE: What I have always said is that we can't continue to raise the debt limit until -- without at some point imposing some kind of permanent structural spending reforms.

I think what we need is a balanced budget amendment to the Constitution. And the vast majority of the American people agree with that. I continue to believe that that's what we ought to attach to an increase in the debt ceiling. It's not yet clear what conditions, if any, might be imposed, might be attached to the next round of debt ceiling increase, but I have identified the conditions that I would require, and they would all require structural spending reform.

BAIER: But if you run into the same buzz saw, which is president Obama and Democrats being united that nothing should be attached.

LEE: Then they will raise it, as they have done in the past. And unfortunately, the president has said he's not willing to negotiate on this. Unfortunately, the president in the past has said you will do what I say and you will raise it no matter what. That's how we have gotten to the point where we're $17 trillion in debt. I think that's unfortunate and I think that's not how this process is supposed to work. I think the president is supposed to negotiate and compromise with Congress.

BAIER: George?

GEORGE WILL, SYNDICATED COLUMNIST: There's flickers of hope on Capitol Hill that something can be done about immigration this year, but there's also a suspicion that immigration and the Affordable Care Act are entangled for the following reason -- Republicans have watched the president exercising what he calls necessary executive enforcement discretion, simply rewriting portions of the law. Is there a feeling now that there's no point to agreeing on immigration regime because he might suspend crucial provisions of it?

LEE: It's an interesting question, George, because a lot of people say that's why we have gotten to pass something. And then there are other people who say why should we pass something if he's just going to act on his own anyway? I continue to think the answer lies in the fact that Congress needs to act. Congress does need to reform our immigration code.  Our immigration code is stuck in the 1950s, and it can't quite get out.

But we have got to do is do it in a methodical step by step process, and it's got to include and begin with improvements to our border security and a modernization of our visa programs.

WILL: You're the son of President Reagan's solicitor general, you're a former clerk of Justice Sam Alito. Let me ask you a question about four cases actually heading toward the court, perhaps. The Affordable Care Act says quite clearly that subsidies for the purchase of insurance shall be distributed by exchanges established by the state. 34 states have refused to establish exchanges. So the IRS has said, well, text the ACA never mind, we're going to distribute subsidies through the federal exchanges. The legality of that is being challenged by four suits.

A, what do you think the chances of success are? And B, if they do succeed in distributing subsidies through the federal exchanges that's not permitted, what is the fate of the law?

LEE: OK, let me answer the second part of the question first. If the court were to conclude -- let's say this works its way all the way up to the United States Supreme Court, and the court concludes this interpretation is not viable, and I agree that it's not viable. I agree the plain text of the statute properly read, properly interpreted, means you can't offer exchange subsidies except through a state exchange system. If that's the outcome of this litigation, the law is gutted. This law can't operate. It can't operate as it's intended. The whole thing will be thrown off balance.

Exactly how this will unfold is more difficult to tell. We recently had a judge here in the District of Columbia that sided with the administration. I think that ruling was wrong, but that ruling is on its way up through the D.C. circuit and we'll see how that turns out.

BAIER: Elise?

ELISE VIEBECK, THE HILL: Some Senate Republican colleagues of yours made news this week when they unveiled their own alternative to ObamaCare. One of them was your senior Senator Orrin Hatch. And I'm curious, first, what you made of that plan, and if you think the Tea ought to unveil its own alternative.

LEE: I look forward to seeing the details of the Coburn-Burr-Hatch plan. It's been outlined. I think it's got some exciting elements to it. It doesn't yet exist in legislative form, but I look forward to seeing it. And I think that as a party and as conservatives, we need to get behind a plan as some point. In the meantime, we need 10 plans. We need to offer up our own alternatives, and this is an important first step in that direction.

BAIER: Steve?

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: Picking up on that point, you have been a strong proponent of this sort of conservative reform agenda, making the argument many times in many places that conservatives need to tell people what they're for. Republicans need to tell people what they're for, not just what they're against. What do you say to other conservatives who say now is not the time to lay out a governing agenda? ObamaCare is collapsing, the administration is having myriad troubles, the president's approval numbers are low. Why would Republicans provide a target at this point?

LEE: Well, first of all, I think there is a hole within the Republican Party that is exactly the size and the shape of a conservative reform agenda. There's a natural tension that exists between a party's base and its elected political leadership. And that's kind of where this gulf comes in. This hole that's the size and shape of a conservative reform agenda, this is how we repeal, this is how we show that the inequality problem that the president keeps harping on is really the product of an out of control federal government that knows no boundaries, no limits on its authority.  This is how we show that this is how we create more upward mobility in our society, creating opportunities for the poor and for the middle class.

HAYES: Are you saying that the Republican establishment, for lack of a better term, wouldn't embrace such a conservative reform agenda?

LEE: No, I'm saying that they will and this is part of how we unite the base with the elected political leadership, is we identify these areas where we can all agree as conservatives that there are certain things we need to do, and they all relate to reigning in the size, scope, and cost of the federal government, and they'll all enure to the benefit of America's poor and working class.

BAIER: But do you concede that there's a growing divide in the Republican Party as far as conservatives and mainstream Republicans, or do you think it is diminishing?

LEE: There's certainly a divide. But it's a divide that can be healed. Whether or not it continues to grow or whether or not it shrinks depends on the extent to which we embrace this conservative reform agenda.

BAIER: Senator, stay with us, if you would, and we'll continue our discussion with some more questions for Senator Lee after a quick time-out. 

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