Updated

This is a rush transcript from "Your World With Neil Cavuto," May 5, 2010. This copy may not be in its final form and may be updated.

NEIL CAVUTO, ANCHOR: Well, detained and still talking, but all over the map, and I have got to tell you, very confusing. Officials say they simply can't verify anything, anything the alleged Times Square bombing suspect has been saying — anything — just that his story keeps changing and changing, at first insisting he acted alone, now that he trained in Pakistan and had accomplices there.

Amid all this confusion, what the heck do we call Faisal Shahzad here, an American citizen, which he is, or an enemy combatant, which he could be?

Joe Lieberman is ready to revoke his citizenship to make the choice a lot easier.

Welcome, everybody. I'm Neil Cavuto.

And Joe on the go, igniting a firestorm on Capitol Hill today by proposing we revive a very old law in the wake of a botched Times Square attack.

(BEGIN VIDEO CLIP)

SEN. JOSEPH LIEBERMAN I-CONN.: I think it's time for us to look at whether we want to amend that law to apply it to American citizens who choose to become affiliated with foreign terrorist organizations, whether they should not also be deprived automatically of their citizenship.

(END VIDEO CLIP)

CAVUTO: Now, critics on the left, including Senator Chuck Schumer from the great state of New York, a state very familiar with terrorist attacks, labeling Joe's plan unconstitutional and ineffective.

But Joe ain't backing down. And now Joe is here.

Senator, good to have you.

LIEBERMAN: Great to be back.

CAVUTO: I'm surprised the reaction you're getting, particularly on the left, even from those whose states were hit by terrorism. What do you make of that?

LIEBERMAN: I'm surprised too because I hope that — when we bring this out, and I hope to bring it out tomorrow, they'll look at it and can respond a little more coolly to what I'm proposing.

The fact is there is an existing statute on the books; it's been there since 1940. It says that if an American citizen joins a foreign army that's engaged in hostilities with the United States, that is evidence that they intend to renounce their citizenship, and it's taken away. There's a process, but effectively that's the road to taking citizenship away.

Today we're fighting an enemy, Islamic extremists, terrorists, who don't essentially wear the uniform of a conventional army, but if an American citizen, like Shahzad, is shown to be — have joined and worked with a foreign terrorist organization whose aim is to attack and kill Americans, I don't think it makes sense to continue to give them the privileges of American citizenship.

So to me, this is not a major step. It's just updating a law that exists, and it's doing what is right. American citizenship is a privilege; it's not a right.

CAVUTO: I'm seeing, Senator, what the ACLU and other groups like that have said about this. I would imagine they wouldn't be too keen because you're essentially hurting their citizenship and rights simply through their associations. What do you say?

LIEBERMAN: Try that one again, Neil, I'm sorry.

CAVUTO: Other groups won't like this because they say you're punishing people for the company they keep.

LIEBERMAN: Not at all. I mean there's a total freedom of association. It's one thing to belong to a club, even a political group that I might think is radical here in the United States. But when you join a foreign terrorist organization as designated by the United States Department of State, that's not your freedom association.

You've joined a group, one of whose central purposes is to bring down America, to ruin our security, to change our way of life. And I think when you do that, you've essentially said, "I don't want to be an American citizen anymore," whether you intended to say it or not. You should lose your rights of citizenship.

CAVUTO: You know, I really don't — I tried to look at the other side of this, Senator, and I don't see much to debate here because you're an American citizen, but you're talking to groups intent on killing American citizens, it seems like a slam door case to me. But nonetheless, it's a fiery debate today. Why is that?

LIEBERMAN: I don't know. I think maybe people when they hear the idea of stripping citizenship — you know, this is not going to just be Joe Lieberman in a room somewhere saying, "Oh, you're an enemy of the United States. You lose your citizenship."

There's a process in the law that we're amending. State Department begins a process that says that somebody no longer deserves the rights of an American citizen. They're notified, and they can even contest it if they want. They even have a right of appeal. So this is not exactly an arbitrary act.

CAVUTO: Well, I think what they're saying — the one comment I did have, Senator, someone said a group that might be disdainful for the moment, later on is proven to be a lot more than that; they're actually proven to be a terrorist group, but at the time an American citizen was either talking with that group or had friends in the group, might have been able to say, "I didn't know they were talking about that in that group." He could still be — see his citizenship revoked.

LIEBERMAN: So I want to come back to what we say in the law. This is not sort of anybody's idea, "Oh this looks like a terrorist organization or a radical organization." This has to be a foreign terrorist organization designated under the law by the Department of State.

In other words, if you're affiliated with such an organization that's been designated by the U.S. State Department, then you're in jeopardy of losing your citizenship. And if for some reason they take that group off of their foreign terrorist organization list, then that all changes.

I mean this in no way will compromise any American's freedom of politics and political opinion and political action. I mean, basically, we're talking here about somebody who is affiliated with a foreign terrorist organization, enemy of the United States.

Maybe it's hard for people to understand because it's a different kind of war, but you have to think about it as if somebody went over to Germany or Japan during the Second World War and joined the German or Japanese military. That would be the end of their citizenship as far as existing law is concerned.

CAVUTO: Senator, it's always a pleasure. Thank you very much.

LIEBERMAN: Thank you. All the best.

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