Europe Tells Obama to Cool It on Spending. Former House Majority Leader Weighs in

This is a rush transcript from "Your World With Neil Cavuto," July 8, 2009. This copy may not be in its final form and may be updated.


UNIDENTIFIED MALE: We are not happy with the job loss that we're seeing....

UNIDENTIFIED MALE: I know you're not happy.

UNIDENTIFIED MALE: ... right now.

UNIDENTIFIED MALE: We are not happy either.


Video: Watch the 'Your World' interview

UNIDENTIFIED MALE: Three-point-five percent of the stimulus is infrastructure, as I understand it, roads and bridges.

I mean, that's — that's the...


GOV. ED RENDELL (D), PENNSYLVANIA: It's a little higher than that. But, look...

UNIDENTIFIED MALE: Scam-wow, you know?


BRIAN SULLIVAN, GUEST HOST: Scam-wow. The fireworks fly over tracking the stimulus bucks.

Hi, everybody. I am Brian Sullivan, in once again for Neil Cavuto. And this is "Your World."

It is supposed to create jobs and jump-start with the economy, but, with billions already spent, the White House still has little to show in the way of new jobs from its massive spending plan.

Instead of putting people to work, a new government report says many states are simply using the dough to fill budget holes, and, in some cases, don't even know where the money is going.

A congressman about just that in just a moment.

But, first, you know it is bad when even Europe is telling America to cool it on spending, the present today getting a G8 moment, if you will.

The former House Majority Leader Dick Armey now. He is chair of FreedomWorks.

Mr. Army, it's Brian Sullivan. Welcome to the program.

Listen, even Germany is saying global leading nations, like us, need to shift policy priorities to deficit reduction, all while we continue to talk about a possible second stimulus plan, health care spending, et cetera.

Your thoughts?

DICK ARMEY, FORMER REPUBLICAN HOUSE MAJORITY LEADER: Well, I think, of course, the — the prime minister in Germany is correct — the chancellor.

The fact of the matter is, we now have such a huge, massive deficit and debt, that we spend $600 billion a year on interest. The world is worried about the United States' financial stability. Our government is too big. And it is choking the private sector of the economy.

The Germans are trying to tell us we need to cut it back. And we should remind ourselves, even Keynes, in 1936, said, you can stimulate by either cutting taxes and turning resources loose in the private sector or spending. But even Keynes today would say you don't further deficit-spend when the government is an already existing burden on the economy.

Our biggest problem that beleaguers the American economy is, this government is too big, it is too intrusive, it is too busy trying to manage what it doesn't understand. And it needs to just back off and cool its heels, and give the economy breathing room and running room.

SULLIVAN: The government...

ARMEY: And the Germans are trying to tell us.

SULLIVAN: The government is funded by two things, really, taxes, and, of course, issuing debt, which, as you noted, we have got...

ARMEY: Right.

SULLIVAN: ... to pay interest back and the coupon on the debt back.

In your estimation, has the government — is the economy getting so big, and the debt so big, that the tax base in America and even the demand for our treasuries around the world are not going to be enough to cover the debt load?

ARMEY: That's right.

And the fact of the matter, the world is less willing — I, for example, can tell you, in domestic investing today, Americans are — are not willing to buy federal securities, and they are not willing even today to buy corporate bonds, because the federal government is betraying corporate contracts on bonds.

So, we have got an American investment class that is saying, whoa, I'm staying out of this game. The world is staying out. That means that, in the end, they are going to have to print the money in order to resolve the — which I say the fiduciary obligations. And that is of course the perfect formula for — for inflation.

And they understand that in Germany. And they are trying to tell us, you guys are headed...


ARMEY: ... for a certain disaster.

SULLIVAN: Well, debt is saleable. OK? Corporations are able to sell debt, if they offer a high enough interest rate.

We are starting to see interest rates trickle up through the debt that we have to issue. Could it get to the point that the interest burden on what we have to pay to get people to buy our debt is what really stifles us and — and prevents us from being able to pay it down, ultimately, like the presidential administration has promised will cut the deficit in half?


ARMEY: It is already there.

The fact — you have $600 billion in current interest expenses, and this guy wants to grow the debt. He's got a — he's got a health care system where he's forced — where we have forced all the seniors into Medicare, and we can't fulfill our obligations there, and he wants to expand it to everybody.

You know, these people have a constant tendency to see what is not working and say, let's double down on it. It's that only government is able to look something that is a complete failure and say, what we need is more of it.

And we have got at least somebody in Europe that is trying to say, hey, you guys need to wise up and get smarter about economic policy.

First of all, let's make economic policy, and let's let — let's get politics out of it, for a change.


ARMEY: Politics is intellectually and morally inferior to damn near everything. Let's make some serious adult decisions about a real substantive matter called economics...


ARMEY: ... and let our politics ride for a while.

Dick Armey, thank you so much.

ARMEY: Thank you.

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