Sen. Pete Domenici, R-N.M.

This is a partial transcript from Your World with Neil Cavuto, October 9, 2002, that was edited for clarity. Click here for complete access to all of Neil Cavuto's CEO interviews.

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NEIL CAVUTO, HOST: Where is all this money going to come from to fight Iraq, to deal with the war on terror? Let's ask the number-cruncher extraordinaire, New Mexico Republican Senator Pete Domenici.

Senator, good to see you.

SEN. PETE DOMENICI, R-N.M.: Hello. How are you?

CAVUTO: I'm fine, sir. Where is all this money coming from? We're talking maybe 30, $40 billion more for defense on top of increased appropriations last year.

DOMENICI: Yes. Let me say I wasn't privileged to watch your previous interviewee. But I heard it. I assume it was Dick Morris.

CAVUTO: It was.

DOMENICI: And while I won't comment on the substance in any detail, let me remind you, the agenda and the United States Senate is not run by the Republicans, it is run by the Democrats. Their leadership has got this place in the worst mess it has been in my 30 years as a senator. We don't have a budget. Therefore we can't do appropriations until we come back from the election because nobody wants to vote until they are all reelected. That's their fault.

CAVUTO: So Senator, does that mean that the increased amount for defense, it's just a moot point, all this is just sort of...

DOMENICI: No, there is a very big increase in defense. And the one part that they are going to do and not sit around and let that rest is the defense appropriations and the military construction will be approved - voted on and approved overwhelmingly by the middle of next week. But nothing else will get done. All the nice things they said they wanted to do, they didn't do them. They can't get them to the Senate floor because either Robert Byrd or the way the majority leader has set things up in an effort to catch us, he caught himself. And they can't bring any other issues to the public. We're glad to say here and talk about how much money we're giving to defense. This is the largest defense package in history, not the largest since 10 years ago, the largest in history, about $354 billion.

CAVUTO: But see that size alone, Senator, while we take a look at the market boards today, the stock market, I'm sure you're aware now, fell off better than 215 points today. There were many concerns, as you know, Senator. But one of them was where is this money going to come from? Are we revisiting serious deficits and is it a long-term problem? What do you say?

DOMENICI: No, I don't think that's the case, because the stage is set, when you talk about the budget, by some very smart analysts. And actually even though we did not get a total budget, the numbers were forthcoming. They all know what they are and yes, we will have another big deficit. It will be the second one in a row. But it follows on the heels of four balanced budgets. And those who analyze well say unless the war begins to cost out of all respect to common sense and reason, we will probably be back in a balanced budget position in five to seven years.

CAVUTO: Well, Senator, what is if it is a hundred, some say a $200 billion expenditure going into Iraq over these years, then all bets are off; right?

DOMENICI: No, all bets aren't off. We have been counting on this money that the president asked us for going to Iraq. We didn't count on it going to a war. But before we're through, our allies and the United States will chip in and pay the excess for this war.

CAVUTO: Do you really think our allies will, Senator?

DOMENICI: Well, the first Desert Storm, you all forget about it, but go look at it, our allies paid, believe it or not, 92 percent of the entire cost. America paid less than $13 billion with people like Saudi Arabia doubling that...

CAVUTO: It's a good point. But Senator, as you know, this time we have got maybe England, we've got Turkey, but unless someone rushes to open their wallet soon, it is just our expense, right?

DOMENICI: You all don't understand the power of this president. I mean, he sits in rooms with people like me and says, before we're finished our allies will come back on board. You're worried about it Senator, they will be back on board and we'll have a lot more than one or two. And I say we will. But let me put it this way, the American Treasury is still very powerful, our fiscal policy is still extremely sound. When you think of balancing the budget and how much we put on the debt just four or five years ago, we can pay for this war. The problem is not the war and what it is will cost. Interest is so low right now, interest and inflation are not a problem. Something is not kicking in as this equity, this balloon of equity stock comes down...

CAVUTO: And that's what's hurting.

DOMENICI: Everything is in order, but it doesn't seem to want to kick.

CAVUTO: Senator Domenici, thank you very much.

DOMENICI: You're welcome.

CAVUTO: Senator Domenici joining us out of Washington.

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