FOX "Fox News Sunday with Chris Wallace" - Transcript: Obama's Budget Proposal

Interview

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WALLACE: Let me bring in, because we have got limited time, let me bring in Congressman Van Hollen. The president - one of the reasons he says we can afford new spending, even though this is paid for it, because the deficit is going down. But congressman, that only tells part of the story. According to the non-partisan Congressional Budget Office, the deficit does drop this year and next. But then if you look in the out years, it starts to go up again and reaches over $1 trillion again by 2022.

REP. CHRIS VAN HOLLEN, D-MD.: Well, that's right. I can just say a quick word on the Ukraine, Chris. In response to the earlier section. I think we're 48 hours in an international crisis. I would hope Americans would focus on condemning the actions of Putin rather than knee jerk way again criticizing the president of the United States. Let's stand together on this.

With respect to the president's budget, he does exactly what we should be doing. Right now as Rob said, we have seen economic growth. But we're not nearly where we want to be. We need to be ticking on all cylinders. Which is why the president has said let's end some of the tax breaks that actually encourage U.S. companies to move jobs overseas, use those savings to invest in infrastructure here at home. Let's build the backbone of our infrastructure, our roads, our ports, our airports, our broadband. That's what we need to compete. The president recognizes that we've got to deal with the long term deficit issues, which is why his budget is as they've indicated will reduce those long term deficits to below two percent of GDP. So, it will be growing slower and ...

WALLACE: And then it goes back up? And then it goes back up.

VAN HOLLEN: Now, they're on a downward trajectory at the end of that ten-year period.

WALLACE: No, it is as we just showed, it goes up over a trillion dollars in 2020 ....

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VAN HOLLEN: No we're talking about the deficits. We're talking about the deficits at the end of the ...

WALLACE: I am talking about the deficits. The deficits go up.

VAN HOLLEN: The president will submit his budget in a couple of days. And no one is actually seeing it.

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WALLACE: Let me bring in Congressman Van Hollen again, because what we're talking about here is the biggest part, by far the biggest part of the budget. And that entitlements. Mandatory spending. Last year as part of the budget, the president included chained CPI, which is a slower measure of inflation for Social Security. This year, he's taking that out. Now regardless of the rest of the economy, the fact is that the entitlements are running out of money and you're taking out a way to save money.

VAN HOLLEN: Well, two things on that. I find it curious that right now as we speak many Republicans are telling the president and CMS that we should not end some of the overpayments to the private insurers and the Medicare system, which will drive up long term deficits. And by the way, they had included the savings ...

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WALLACE: Can we speak on chained CPI?

VAN HOLLEN: Absolutely. I'm glad Rob brought this up. The president included it. I happen to think that on the merits it has - and I have concerns with it, but the president included that in last year's budget as part of an agreement. Part of a package where he said Republicans, you should join me in at least closing some tax loopholes, even one, for the purpose of reducing our long term deficit. Republicans couldn't identify a single tax loophole that they would close for the purposes of deficit reduction. So, I hear - Rob saying that they're all concerned about reducing the deficit. But they wouldn't close one tax loophole coupled with chained CPI.

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VAN HOLLEN: It's not in this budget.

WALLACE: Congressman, I get your point.

VAN HOLLEN: He says the deal ...

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WALLACE: But I'm saying equal opportunity, because I want to cover one last area. And that is - there is one area where there are big cuts, big cuts. And that's for the Pentagon. Defense Secretary Hagel says that he would shrink the Army from a post 9/11 high of 570,000 to less than 450,000, which would be the smallest Army since 1940. Congressman Van Hollen, especially now with you talk about Russian aggression in Ukraine, should we be shrinking the Army to pre- World War II levels?

VAN HOLLEN: I don't think we need an army that as opposed to support two overseas ground wars that we're winning at the same time. I think you can respond to the threats as they arise with the lower army. You still have the Air Force. You still have the Navy. You still have a very large Army to go with it. And the other point I'd make, Chris, is part of the budget agreement that was reached in a bipartisan way calls for reductions in defense spending through fiscal year 2015. The president has actually said he doesn't think that defense spending is enough, which is why he's proposed additional funds, paid for by taxpayers.

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