Updated

This is a rush transcript from "Your World," July 31, 2013. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

GOV. CHRIS CHRISTIE, R-N.J.: I have got nothing personal against Senator Paul. If we disagree on certain issues, we disagree. You know, it's seeming his response seems that he has something personal against me. But that's OK. He can just get in line on that front.

(END VIDEO CLIP)

CAVUTO: And here we go.

Welcome, everybody. I'm Neil Cavuto and this is "Your World." A very controversial world. My chat with conservative firebrand Mark Levin raising the stakes, as a rift between these top two Republicans raises a stink.

Now, we have requests out to New Jersey Governor Christie and hope to get him on soon. We have had him on a number of times in the past, so hope springs eternal.

To Kentucky Senator Rand Paul, who joins us right now.

Senator, good to have you, no stranger to this dust-up. Do you think it's gone too far?

SEN. RAND PAUL, R-KY.: Yes, I think it's time to dial it down.

I think we have got enough Democrats to attack that maybe Republicans can quit attacking Republicans. I have said my peace on this. I don't like Republicans attacking Republicans, because it doesn't help to grow the party bigger. In the Northeast, the Republican Party is shrinking. It's basically on life support. So really dividing up the party, which is already shrinking in the Northeast, isn't good.

I have tried to spend a lot of time talking about some libertarian ideas. And I don't like that, that being criticized, that that can't be part of the party because I think that's actually part of the way we grow the party. And I will continue to talk about privacy, about foreign aid, sending money to countries that are burning our flag.

And that may not be popular with all Republicans in Washington, but it's very popular with Republicans out across the country.

CAVUTO: But are you worried that it could be backfiring, Senator?

And by that I mean there's a move afoot to sort of disinvite you from a funding gathering I believe in New York next month. It doesn't appear to be going anywhere, but a number of New York-related Republicans, including those who were pushing for Sandy aid, the same aid that you had referred to as part of a gimme-gimme mentality, are angry at you.

PAUL: Wait, you know, some of this, Neil, comes from people who aren't really fully discussing the issue.

I actually did support Sandy funding. I supported doing it one year at a time and paying for it by taking money from money that we're sending overseas in foreign aid. I was objecting to spending four years' worth all at once without sufficient oversight, without offsetting the cost by cutting elsewhere.

So I was never against the funding. I was just against doing the funding without offsetting it with spending cuts.

CAVUTO: You know, Senator, rifts come in both parties, but this one seems to be particularly pronounced and one may be preceded by John McCain and your run-ins with him in the past.

And he told The New Republic when asked whether he would support you if you were the party's nominee in 2016 over Hillary Clinton, he said, it's going to be a tough choice.

What did you make of that?

(LAUGHTER)

PAUL: I think there was a chuckle that supposedly went along with that interview.

And, you know, John McCain and I are friends. We don't always agree on everything. We had a dust-up today on the floor over foreign aid because I think it doesn't help our country to send money to Egypt, particularly when we have cities like Detroit and Chicago decaying in our country, that I don't think we have money to be sending overseas.

And so I offered to try to obey the law that says when a military coup happens, you have to stop funding, that then that money could be used for some bridge projects in our country and to help infrastructure when we desperately need it.

And so we have a disagreement on that. That doesn't mean I don't respect John McCain as a war hero. And I try to keep things on a less personal way, less personal kind of a battle. And I think with Governor Christie, it's gotten a little too personal, so we're ready to kiss and make up.

CAVUTO: All right, it doesn't look at this point, sir, like he is. And the gimme-gimme thing I guess is what stuck in his craw.

This was yesterday. And you have responded in a way to this since, but I do want to you hear the full comment from Governor Christie from yesterday and your response to it.

Governor Christie.

(BEGIN VIDEO CLIP)

CHRISTIE: If Senator Paul wants to start looking at where he's going to cut spending to afford defense, maybe he should start looking at cutting the pork barrel spending that he brings home to Kentucky at $1.51 for every $1, and not look at New Jersey, where we get 61 cents for every dollar.

So, maybe Senator Paul could, you know, deal with that when he's trying to deal with the reduction of spending on the federal side. But I doubt he would, because most Washington politicians only care about bringing home the bacon so that they can get re-elected.

(END VIDEO CLIP)

CAVUTO: What did you think of that?

PAUL: Well, it's just not true. I don't vote to bring home any bacon, because I told the people of Kentucky when I ran for office there wasn't any money up here and I would try to vote to keep more of their money in Kentucky by lowering their taxes, but I wasn't bringing anything home, because we were $1 trillion short.

Governor Christie can't point to any votes that I have ever voted to bring -- quote -- "pork barrel projects" to any state. I do work to try to bring money home from overseas and use it here at home, but really it's just not accurate. I would probably say I'm the most fiscally conservative or not one of the most fiscally conservative members of Congress. So it really just kind of doesn't stick or make any sense.

CAVUTO: Well, I think what he was referring in the general sense are the states, sir, that New Jersey spends roughly $38.3 billion in taxes that go to Washington, and gets not nearly any of that back. In the case of Kentucky, he said $26.5 billion, and you get more than that back.

(CROSSTALK)

CAVUTO: What do you say?

PAUL: Yes.

But none of that has anything to do with me. Those formulas are based on poverty. And I'm one of the leading proponents of saying to folks who are getting entitlements that I think, if you're working and able-bodied, you shouldn't be on the dole, and if you are -- cannot help yourself, that we will find some way to help you.

But poverty formulas have nothing to do with me. I didn't create these programs, so it's kind of a stupid point probably to try to blame me for poverty formulas.

CAVUTO: Well, I think he was referring -- and you tried to clarify that Kentucky gets a lot of this because you have two big military bases.

PAUL: It is. And it does have to do with military spending.

(CROSSTALK)

CAVUTO: But, to be fair, New Jerseyans could turn around and say, well, they have five or six big bases, including Fort Dix, Picatinny Arsenal, Fort Monmouth, a naval weapons station, McGuire-Dix, McGuire Air Force Base and on and on.

PAUL: The bottom line -- the bottom line, though, is what this is about is we're trying to figure out -- those of us who are conservative and who believe in a strong national defense -- how do you have enough funding?

I'm willing to cut entire departments. In my five-year balanced budget, I cut entire departments, but I actually bring in military spending above the sequester level. I avoid the sequester for the military because that cuts so much spending.

My problem with some of the more liberal members of the Republican parties is, they're not willing to cut spending other places in order to preserve national defense. They're for national defense, but they're for all the other spending too.

CAVUTO: Do you think Chris Christie is a more liberal member of your party?

PAUL: It would be hard to tell. We would have to see whether or not -- for example, if you want disaster funding and you're not willing to offset it with cuts, I think that's a liberal proposition.

If you want disaster funding, but you're willing to cut in other parts of the budget, or if you want military spending, but you're willing to cut in other parts of the budget, that's a conservative notion. People have to make their judgments.

CAVUTO: OK. Let's say there was something of the severity of a hurricane to hit your fine state, God forbid, of Sandy's magnitude and your residents were clamoring for the money fast so they could right their lives. You would argue the same thing?

PAUL: I would do exactly the same thing. I would argue exactly the same thing. If Kentucky were in need -- we had tornadoes recently.

CAVUTO: Sure.

PAUL: If there's going to be extra money come from FEMA, I would argue that it should be offset.

And I have consistently said that every time there's been a FEMA bill come up. I have put in an amendment to say it should be offset by spending cuts. And I think, frankly, if the American people could vote on whether or not we send the money to Egypt or to New Jersey and New York, I'm all with them. I would not send a penny -- I would not send a penny...

CAVUTO: But what if that takes a long time, Senator? What if that takes a long time? The frustration Governor Christie showed at the time was that this was taking really, really long and the folks in New Jersey were really, really hurting and they needed it.

PAUL: My amendment -- my amendment was the same day that they passed the appropriation.

If they would have passed my amendment, they would have gotten their money, but they would have gotten one year's worth and it would have been offset with spending cuts.

CAVUTO: Gotcha.

PAUL: And the spending cuts occur over time, but the bill would have happened at exactly the same speed of time.

So, no, really it's just about whether or not you want to have responsible government or whether or not you want unlimited spending without offset cutting.

CAVUTO: Gotcha.

Do you like Chris Christie?

PAUL: I don't really know him, but I think the party's big enough for both of us.

CAVUTO: You're off to a bad start, it would seem, the two of you.

PAUL: Excuse me?

CAVUTO: You're off to a bad start, it would seem, the two of you.

PAUL: Yes, but I think I'm a pretty easygoing guy, to tell you the truth.

I have had many dust-ups with the more eager-for-war faction in our party. And we still get along. We sit next to each other at lunch and as far as I'm concerned we're still personal friends, even though we disagree on some issues.

(CROSSTALK)

CAVUTO: I'm sorry, Senator.

If he were the Republican nominee in 2016 for president, you could support him?

PAUL: I will support whoever the Republican nominee is.

CAVUTO: Chris Christie included?

PAUL: Whomever wins, and that would include Chris Christie.

CAVUTO: There had been talk, Senator, that the two of you would make a nice ticket, in fact. That had been bounced around. I don't know which one would play which role. Would you ever envision that?

(CROSSTALK)

PAUL: We're going to have to patch things up. If we can sit down -- I'm inviting him for a beer. Any time he'd like to come down and sit down at the pub right around the corner from the Senate, we will have a beer.

CAVUTO: Have you heard anything on that invite?

PAUL: Excuse me?

CAVUTO: Have you heard anything on that invite?

PAUL: It hasn't been formalized. I just thought of it.

CAVUTO: Just now?

PAUL: So, we will formalize it and we will put it in writing.

But I think we could sit down, and have a beer and mend things and probably -- at times people have said Chris Christie has some libertarian leanings, so it's actually a little ironic that we see him criticizing libertarians in the party or libertarian influences, because some libertarians actually had high hopes that he had some libertarian leanings. I don't really know.

(CROSSTALK)

CAVUTO: Do you think he just drew the line and maybe because of 9/11, the experience and so many lost in his state, that he drew the line when it compromised our national security?

PAUL: I don't know.

CAVUTO: And that it put many peoples' lives in danger? And he had to deal with a lot of the victims of those disasters.

(CROSSTALK)

PAUL: I don't know.

I think it really has to do with a bigger, broader issue about whether or not we're going to be the party that protects the Fourth Amendment and protects privacy. I think we do need to be the party that protects privacy, Internet freedom. And I think if we are, it will help us grow the party, so we may have a disagreement there.

(CROSSTALK)

CAVUTO: Yes, I think that's the least of it, Senator. You're closer to the fire than I am, but that seems like a very big philosophical battle being waged right now within the party. Do you agree?

PAUL: We will see. But, like I say, the offer to have a beer with Chris Christie stands.

If he wants to break bread and see if we can find some common ground, I think it will help the party to not have us feuding. So...

CAVUTO: So, when you say break bread or have a beer, you're open it to it being in Trenton as much as you are to it being in D.C.?

PAUL: We can always negotiate a middle ground like Philadelphia maybe.

(LAUGHTER)

CAVUTO: OK. Real quickly, sir, while I have got you here, you're very concerned about pouring good money after bad in Egypt. And you say that the president has pushed it and already broken what is a recognized standard of giving money to countries when there's a military coup or an overthrow, whether justified or not, that the money stops. Where does that stand now?

PAUL: Well, we had a vote by amendment today. And I informed both Republicans and Democrats that if they voted against my amendment they were voting against the rule of law.

The law is very explicit. It says if there is a military coup, all aid must end. But I also think the aid is actually counterproductive. I think it's dangerous to Israel, because I think these tanks and weapons and planes could potentially be used by a crazy strongman that could arise in Egypt and that could be used against Egypt.

I don't think they do any good for the people. They're not buying any bread. They're buying tanks that may well be rolling over protesters. They're buying tear gas made in Pennsylvania that they spray the protesters with. We now have a military in charge that's disappearing people. We rightly criticize the Soviet Union for disappearing, torturing and putting people to death that are in criminal custody. They're not even announcing what's happened to the Muslim Brotherhood. And I'm not a fan of the Muslim Brotherhood, but at the same time, I'm not a fan of disappearing people without charges or trial either.

CAVUTO: All right, Senator Rand Paul, hopefully, Governor Chris Christie is watching. And maybe we will broker some agreement to get the two of you to chat.

I highly recommend our Italian sausage hoagies myself, but that's just me. We will see how it goes.

Senator, thank you.

PAUL: All right.

Content and Programming Copyright 2013 Fox News Network, LLC. ALL RIGHTS RESERVED. Copyright 2013 CQ-Roll Call, Inc. All materials herein are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of CQ-Roll Call. You may not alter or remove any trademark, copyright or other notice from copies of the content.