Battle over spending intensifies as election nears

This is a rush transcript from "Your World," October 12, 2012. This copy may not be in its final form and may be updated.

NEIL CAVUTO, HOST OF "YOUR WORLD": Well, it is the battle over sacred cows. From the GOP defending defense spending, to Democrats trying to save Big Bird, we have seen it at both debates and we are seeing it in races pretty much across the country.


TED CRUZ (R), TEXAS SENATORIAL CANDIDATE: Under Barack Obama, there has already been $500 billion taken out of the military. And if sequestration goes into effect, that is another $500 billion.

Those are draconian cuts that I think would imperil our ability to protect our national security. And as the last few weeks have show, this is still a very, very dangerous world.


CAVUTO: That was Ted Cruz, of course, the Republican senatorial candidate in Texas. He was with me yesterday in Kentucky.

Now, fair and balanced, to his Democratic challenger, Paul Sadler.

Very good to have you, sir.

Where do you, sir, see this race ultimately decided, not your own, just in general? If you had to distinguish between parties right now, how do you look at it?

PAUL SADLER (D), TEXAS SENATORIAL CANDIDATE: Well, between myself and Mr. Cruz, it is a very different background.

I have legislative experience. I have passed major pieces of legislation in this state. And I am the more qualified candidate from that standpoint. He has a more extreme agenda. He wants to get abolish the Departments of Education, Commerce, Energy, ultimately the IRS.

I will support Social Security and Medicare and Medicaid and so I think that is really the difference. One has a more -- what I call more extreme agenda.

CAVUTO: Are you saying that he doesn't support Social Security, Medicare and Medicaid?

SADLER: He wants to do wholesale changes to the programs.


CAVUTO: Wait a minute. You don't think the programs need changing?

SADLER: I think that there are things we can to do shore up the programs and continue them, yes, I do.

CAVUTO: Like what?

SADLER: Well, there are a number of things.

One is; obviously, restore the framework of Social Security to the 90 percent level of funding through income. We are currently at about 83 percent or 84 percent. You can adjust the cost of living -- cost of living standard.

And you can also over a very long time period of time, as has been proposed, increase the retirement age a month at a time over a year. Those things make Social Security valid and good through the future.

CAVUTO: You know, what is interesting? Those are a number of great ideas, seriously.


SADLER: Those are not hard decisions.

CAVUTO: Well, but neither party seems to be making them.

And my worry is, beyond just your race in Texas, sir, is, why it seems so difficult for the two sides to come to agreement to save some of the entitlement programs for future generations because, as you know, the way things are going, whether you are a Republican or Democrat, the money just will not be there at the rate we are going.

So, you come up with a number of great ideas. Your opponent had a number of pretty good ideas. So, you are not that far apart on ways to keep some of these American staples ongoing. What stops do you think in Washington? Why does it freeze?

SADLER: Well, I don't know. That is a good question.

I think you are seeing it right now with the end of the year coming on.

CAVUTO: Right.

SADLER: You have spending cuts that have to be made and you have a decision that has to be made on the Bush tax cuts. Nothing says you can't do one without the other, except ego. And a lot of times ego gets in the way.

CAVUTO: Are you raising them then on the upper income? In other words, let all the rates continue, except those for the upper income?

SADLER: I don't like the tax debate that is going on in this country from either side. I think both sides are being divisive in nature.


CAVUTO: I understand that. But are you for that are you for that? Do you think that rates at least for the upper income should be raised?

SADLER: I think the national debt and the deficits that we are facing are all of our problems. I think all of us as Americans should participate in solving that, not just the wealthy.


CAVUTO: I know that. I'm sorry, sir. I just want to be clear. Yes or no on raising some people's taxes, like the wealthy?

SADLER: I think that you have to raise revenue in order to solve the national debt problem.

I think of -- an approach that buys in all Americans is better than simply one group pitted against the other. I don't think you raise taxes just on the wealthy. I don't think you raise taxes just on middle income. I think this is a shared responsibility that we have.

And if we talk about it in terms that it's being talked about today, we divide each other. This is our shared responsibility in this country. It should be a united effort, not a divided one. In the current debate in this country, it is one American against another. And I don't think that is the right way to be doing it.

CAVUTO: Mr. Sadler, thank you very much.


CAVUTO: Go ahead. Finish your thought. No, finish that thought.


SADLER: To be clear, I think that we have to -- I think that we have to raise revenue eventually to deal with the national debt. Everyone that has looked at it knows that.

CAVUTO: OK. Paul Sadler...

SADLER: We have to cut spending. Thank you.

CAVUTO: And a little bit of revenue.

Paul Sadler, thank you very, very much. Very good having you.

SADLER: You bet.

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