This is a rush transcript from "Hannity," February 25, 2011. This copy may not be in its final form and may be updated.

TUCKER CARLSON, GUEST HOST: While the newly elected House GOP majority is fighting to keep its campaign promise to take the party in a new direction and rein in government spending, the challenge is proving to be difficult. In an effort to protect the looming federal shutdown next week, House Republicans interviews the new short term spending bill today, that would keep Washington running for an extra two weeks and cut about $4 billion from the budget.

But arguing these measures are just too extreme, Democrats are reportedly drafting their own budget plan which will call for more limited spending cuts. With a national debt of more than $14 trillion and climbing, will Republicans be able to bring an end to the budget battle before it is too late?

Sean sat down with the party's new Chairman Reince Priebus to ask him just that.


SEAN HANNITY, HOST: Mr. Chairman, welcome back, well, actually, welcome now, first time since you have been chairman.

REINCE PRIEBUS, RNC CHAIRMAN: Well, it is an honor and privilege to be on your show, Sean. I'm happy to be here. Thanks for having me on.

HANNITY: All right. One week on Friday, March the 4th, that's drop dead date in terms of the budget, right?

PRIEBUS: That's right.

HANNITY: All right. So, now, the RNC has released this web ad, let me run it and we'll talk about it. Let's roll the tape.

PRIEBUS: You bet.


ANNOUNCER: Barack Obama is preparing a billion dollar campaign. With his record, he will spend every penny. Families are struggling. State budgets have run dry. And the federal debt is skyrocketing. But Obama and the union bosses are standing in the way of economic reform. Intimidating taxpayers. Leaving classrooms empty. They made this mess. Let's clean it up.


HANNITY: All right. They made this mess. We got to clean it up. Future generations in jeopardy. So, we are literally now, you know, one full week away from America being bankrupt if we don't have continuing resolutions. What do you think the Republicans ought to do if the Democrats don't agree to the spending that they are asking for?

PRIEBUS: Well, I mean, first of all, Sean, we are in a battle for freedom in this country, I mean, there is no doubt about it. The difference is between what the Democrats are doing in Wisconsin, Indiana, New Jersey, Washington, D.C. and what the Republicans are talking about are night and day. And I think that when we are on the verge of spending 42 cents on every dollar made in America to run federal government, we are in a battle for freedom. So, what do we need to do? We need to get serious about our budgets, whether it be in Wisconsin, whether it be in Washington. These crushing deficits are going to provide an America for our kids and grandkids that we don't want to pass on to them.

So, I think we need to get serious about budget cuts as Speaker Boehner and Paul Ryan has been doing. I think that the Democrats have to come to the table and face reality and quit talking about the fact that they understand that these deficits are a problem and put their actions into motion. And they are not doing it. So, what we're trying to do with this web video Sean, is show that the real truth is, and the real debate is, that these government union employee and the union bosses, they are the ones organizing these protests in Madison. And they are the ones that are funding in over $700 million in the last two election cycles, the democratic campaigns.

HANNITY: Let me ask you very specifically. Republicans made very specific promises. And one was, they were going to vote in the House if they were elected and got a majority that they would roll back health care. They followed through on their promise, and they said, it they weren't able to get the Senate and the president to go along with it, they would defund it. They're in the effort of doing that. They said, they'd start with $100 billion in cuts. A $100 billion when we are facing $14 plus trillion in debt and trillion dollar deficits as far as the eye can see, is really a drop in the bucket. We've got to deal with entitlements, are the Republicans going first now that the president punted on this? Would you recommend that they make the tough decisions on issues that we are told are the third rail in politics?

PRIEBUS: Well, here's where we are at. And I appreciate what you are saying. I think that the green flag in this country, the start of the race has gone down. I think the American people are ready for the debate that you are laying out. I think that where we're going in this country completely off the rails in our economy and spending and deficits, I think that the American people are ready for the debate. I think we must have the debate. And let's see who wins. Because the America we want to pass on is not an America that has as much debt as our entire economy.


PRIEBUS: So, to your question, certainly, I think the Republicans have followed through. I think we need to govern as we campaign. We need to do that, and I think that Speaker Boehner and Mitch McConnell and Paul Ryan are doing just that. I think 100 billion on the CR over seven months is exactly what we promised. We are following through on defunding Obamacare. We're following through, and directly to your question now, I think that Speaker Boehner and Paul Ryan have made it very clear that everything is on the table. And I think they made it very clear that they intend to offer a budget that tackles the issues that the American people are ready to debate. And all of these things have to be on the table. Because look, we've come a long way since the Boston Tea Party. Forty-two cents on every dollar made to run the government. That is not the America we want to pass on, Sean.

HANNITY: Right. But we see the way the Democrats are going politically, is they're trying to claim that well, Republicans want to shutdown the government. Shouldn't you reverse that in terms of your argument to the American people? Wait a minute, at this time where we have record budget deficits and record debt, why won't you Democrats go along with $100 billion and then you get your continuing resolution as we begin the process of reining in some spending here. It seems that this debate is going in one direction, and that is Republicans want to shutdown government. And that mantra is being repeated in the media quite a bit.

PRIEBUS: And the Democrats keep repeating that. No Republicans are talking about wanting to shut down the government. But the Republicans are talking about having to get serious about spending cuts, having to cut spending in the CR, having to get serious on the permanent budget. We've got a president that introduced $1.65 trillion budget deficit and a $1.6 trillion upper. I think what is happening here though, Sean. And I think, you know, the cheese heads again, pardon me, are leading the way again in Wisconsin. They are showing this country, through what is happening with these government employee unions, that if we don't get serious about our budgets and if we are not willing to fight for America, whether be in Wisconsin, Indiana or New Jersey, we are going to lose this country.

HANNITY: All right. Last question. Rand Paul was on this program this week. And what he said is, look, to get my vote on raising the debt ceiling, I'm going to need something bigger than even 100 billion. He goes, that's basically a drop in the bucket. I want to see either a balanced budget amendment or I want to deal with entitlements or both before he gets their vote. Do you worry that you are going to lose maybe some of the Tea Party members?

PRIEBUS: No. I don't think so. I mean, I think that's a good debate for us to have. Like I said before, I'm happy, if Senator Paul is joining in that debate and talking about bigger cuts, and, you know, that's what we should be doing in our caucus. I think that's healthy for the Republicans to talk about it, like I said before, thank God that we are having that debate. How much to cut? That's the debate I want to have as chairman of the Republican National Committee. And like we have said so many times, and I know you have too. If we don't govern like we campaign we are going to have problems. But we are doing it and we're grateful for it. And I think the American people are ready to put everything on the table and talk about how to get this fiscal train back on the rails and get serious about our economy and that's what you're seeing all across the country.


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