The following is a transcribed excerpt of "FOX News Sunday," Sept. 18, 2005.

CHRIS WALLACE, HOST: For more on how the federal government will pay for the Katrina cleanup, we're joined now from South Carolina by Republican Senator Lindsey Graham.

Senator, good to have you with us once again.

SEN.LINDSEY GRAHAM, R-S.C.: Thank you, Chris.

WALLACE: The president said this week that the federal government is going to pick up most of the check for the cleanup of Katrina. Here is one of the statements that he made. Let's watch.


GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Well, it's going to cost whatever it costs, and we're going to be wise about the money we spend.


WALLACE: As a fiscal conservative, how concerned are you about this torrent of federal spending?

GRAHAM: Well, we've got $60 billion appropriated. I think it will take more than that. I think it could take — somebody mentioned the number $200 billion. We basically had a city destroyed.

What I want to make sure of is that the money goes to the people who need the help, that we have an inspector general in place to monitor the funds and that we don't just blindly spend. I want to make New Orleans better, and I want to learn from the hurricane.

So economic opportunity activities in minority communities should be one of our goals. Replacing public housing with private housing should be one of our goals. But if we don't learn from Iraq, where we spent billions with little effect, it would be shame on us, because we're going to borrow all this money.

WALLACE: Well, let me ask you about it. The other aspect, which is just exploding the deficit — the president says some of the spending should be offset by budget cuts in other areas. But the House majority leader, Tom DeLay (search), says that after 11 years of Republicans in the majority in Congress that there isn't a lot of fat left in the government.

Question, do you agree with Tom DeLay or do you think that there are areas of the budget that can be cut?

GRAHAM: I do not agree with Tom DeLay. I've been a Republican for 11 years, and we're failing when it comes to controlling spending. The transportation and the energy bill would have been a good place to go back and revisit for some of the spending that occurred there.

The idea that this government of $2.4 trillion is efficiently being spent I disagree with. An across-the-board cut of some amount would be appropriate, I think.

WALLACE: Let me ask you about one other idea that's being floated, and that is to postpone the Medicare (search) prescription drug benefit, which I know you opposed in the first place, but to postpone it for a year or two, which could save up to $60 billion.

GRAHAM: There are many ways to save money. You could you have an across-the-board cut, non-defense across-the-board cut. You could delay the implementation of the prescription drug bill.

We could start — you know, there's so much opportunity here to go back into the budget and extract some savings to help pay for this hurricane relief that I look at it as an opportunity for the Congress to get back to its roots of being fiscally sound and conservative. Maybe something good can come from this hurricane.

WALLACE: Senator, the president said that the storm and the aftermath dramatized something else, and that is the continuing economic inequality between the races. Let's watch.


BUSH: That poverty has roots in the history of racial discrimination which cut off generations from the opportunity of America. We have a duty to confront this poverty with bold action.


WALLACE: Here are the specific measures that Mr. Bush proposed, a Gulf Opportunity Zone giving tax breaks to businesses that invest there, individual recovery accounts, up to $5,000, for job training and education, and an urban homesteading act giving poor people federal land to build homes.

Senator, I don't think anybody would argue that those ideas aren't good ones, but are they the bold action that's needed to confront persistent poverty?

GRAHAM: They're part of the bold action. We need sort of a Marshall Plan (search) to deal with this problem. I'm a son of the South, Chris. I was in the sixth grade before I ever attended school with an African-American student. The president's right. I've lived this.

The reality of races at schools were not separate and equal in South Carolina when they were segregated. They were inferior. And it's going to take generations to get over this.

But the idea of starting anew in New Orleans, having private homes replacing public housing — a lot of places in the South, throughout the country, not only do you know where the minority community begins because of the deterioration of the road and infrastructure, there are no businesses. So the idea of creating private homes and business activity in minority communities should excite us all.

In my state, there are 13 counties of the 46 that live in abject poverty. We call it the quarter of shame. There is a major effort by the business community in South Carolina to marry up with the public sector to create a Marshall Plan to deal with the 13 counties in my state that are lagging behind because of race.

This should be a wake-up call to America and both parties share the blame.

WALLACE: Senator, another issue that the president raised this week is whether to change the laws to make it easier, quicker, for federal troops to get involved when there is a disaster.

How do you feel? Are you comfortable with the idea of active military being involved in a crisis, an emergency, in an American city?

GRAHAM: I'm very comfortable with the military being involved. I am not comfortable with suspending local laws and state laws and allowing American military people to come into any community, arrest people and seize property, unless there is a very good reason.

The Posse Comitatus Act goes back to the 1880s in our history, and it's a prohibition against the federal military coming in and taking over a local community or a state and becoming law enforcement officers.

The Insurrection Act can be invoked as it was in the early 1990s in Los Angeles when the governor of California asked President Bush I to come in and help bring about order.

Yes, we need to look at our laws to make sure the military can provide assistance when it comes to bringing order. But we should not allow the federal government, willy-nilly, to take over state and local functions in terms of law enforcement. That creates a very bad atmosphere, in my opinion, if we don't watch it.

WALLACE: Senator, I want to change subjects on you. You are a member of the Senate Judiciary Committee that spent hours listening in the confirmation hearings this week to Judge John Roberts.

You're also a member of the so-called Gang of 14 that helped avoid judicial filibusters.


WALLACE: Question, have you talked to your fellow gang members and do you detect any sentiment among any Democrats to filibuster the Roberts nomination?

GRAHAM: I have talked to my fellow gang members, and I think Judge Roberts is going to get an up or down vote. I've been in the room with a legal genius for the last week, and in terms of the hearings, if this were a fight, they would have stopped it about the first day.

This guy is brilliant. America has seen one of the great legal minds in the history of the nation. He has acquitted himself well. If we use an objective test of qualifications, integrity and character in preparation for the job, he should get an overwhelming vote like Ginsberg and Scalia.

If we use a political test where he has to show allegiance to a particular case or we try to start judging one's heart, some subjective standard — in other words, if you don't agree with my values I can't vote with you — I don't know how many votes he's going to get. But in any scenario he'll get well over fifty.

WALLACE: Some conservatives now wonder whether, in fact, Judge Roberts will be conservative enough, especially if it comes to overturning Roe versus Wade. What did you pick up this week?

GRAHAM: Well, if your view of being conservative is he has to decide your way, then you're going to be disappointed. What he will do with Roe v. Wade or any other case before him is judge it based on the briefs and the facts and the arguments made.

Roe v. Wade is a legal precedent for over 30 years now. It can be overturned. There is a four-part test to change precedent. I know what Judge Roberts will do. He'll listen to the arguments of those who are challenging Roe v. Wade, he will listen to those trying to uphold it, and he will make a decision not based on politics but the rule of law.

The one thing I've learned about this guy — that he loves the law more than politics. He's not an ideologue. But he is a true, strict constructionist believing in a limited role of a federal judge in our society. I think he'll be an outstanding justice, maybe the best in the history of the country.

WALLACE: That's a tall order.

Senator Graham, we want to thank you so much, as always, for joining us.

GRAHAM: Thank you.

WALLACE: Always a pleasure.

GRAHAM: Thank you.