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BLITZER: And joining us now from Bowling Green, Kentucky, the senator-elect from Kentucky, Rand Paul.
Senator-elect, thanks very much for coming in.
SEN.-ELECT RAND PAUL (R), KENTUCKY: Good to be with you.
BLITZER: I know you can't vote during this lame duck session, you won't be a United States senator yet, but what do you think? Do you support this compromise that President Obama has worked out with the Republican leadership on extending the Bush-era tax cuts?
PAUL: Well, I think the most important thing government can do right now for the economy is to extend the Bush tax cuts. I would be for extending them permanently, so that's my first problem with this.
The other thing is, one of my biggest concerns is the deficit. So, I think if you're going to extend and add new tax cuts, you should couple them with cuts in spending. Instead, we're coupling them with increases in spending, and I think that's the wrong thing to do.
BLITZER: Because this whole package is going to wind up costing $8 or $9 billion, there's nothing paid for in all of these aspects of this deal. So, the bottom-line question, if you could vote, would you vote yea or nay?
PAUL: Well, I'm leaning towards, you know, what Senator DeMint has said. He's concerned that they're bringing back, you know, the estate tax. Right now, the estate tax is zero, and I kind of like that, but the new estate tax under this legislation will be 35 percent, I don't like that. And I also don't like that we're coupling it with increases in spending.
So, my inclination would be with the current package, and I haven't seen all of the details of it, but my inclination would be to say that you really shouldn't cut taxes and increase spending. If you want to cut taxes, you should cut spending, also. So, I'd be leaning against voting for it.
BLITZER: And I assume you don't like the extension of the unemployment benefits because none of that is paid for either?
PAUL: Well, what we have to decide as a country is that, you know, we have an unemployment insurance program and it's sort of works and sort of paid for through about 26 weeks. If the society and if everyone wants to have it at 99 weeks, which is extraordinarily long and extraordinarily expensive, they should say, well, we're going to have to increase taxes to pay for it.
The problem is that if you increase taxes to pay for 99 weeks of unemployment benefits, you're going the stifle employment and make unemployment worse. So really, we're in a catch 22 here.
But I don't think it's a good idea to add to the debt. You know, we started this program pay as you go. And this is what Senator Bunning stood up on was if you're going to add spending, you have to cut spending somewhere. Let's make difficult decisions, but let's just not pile on new spending without paying for it.
BLITZER: This compromise the president worked out with the Republicans, he's deeply angered many of his liberal Democrats, the base of his party. What does this compromise, to you, say about President Obama?
PAUL: Well, I actually think that President Obama is going to turn out to be fairly pragmatic with the new Republican Congress. I think they want to get it through now because they think the more compromise they'll get with more Democrats in the House and more Democrats in the Senate will be better for them, but I think it does show --
BLITZER: You mean more Republicans?
PAUL: Yes, right. There'll be more Republicans in January, but right now, there are more Democrats, and I think the president sees this as the time to have the compromise.
But I think the president will turn out to be someone who may, you know, take Bill Clinton as his model. And after 1994, Bill Clinton did work with the Republicans. We got welfare reform. We actually got more fiscally responsible government.
And I really have always said, and people have given me a hard time for this, but I think divided government sometimes works better because there's more debate, there's more discussion, and maybe will have more of the difficult decisions on cutting spending.
But when I get there, I'm going to propose a bill that will have $500 billion for the spending cuts because you have to start doing it and nobody has been willing to do it. No one is brave enough to put the spending cuts on the line. We're going to lay out $500 billion worth of spending cuts in January and see if anyone is brave enough to say, yes, let's go ahead and do it.
BLITZER: You're going to have a major vote at some point next year to raise the debt ceiling otherwise, the country will go formally into bankruptcy.
I want you to listen to what the president said this week when he was asked about commitment from Republicans to raise the debt ceiling.
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BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I'll take John Boehner at his word that nobody, Democrat or Republican, is willing to see the full faith and credit of the United States' government collapse.
(END VIDEO CLIP)
BLITZER: They're going to have to raise the debt ceiling above the $13 or $14 trillion, where it's hovering right now. Are you with John Boehner when he said to the president, no one is willing to see the full faith and credit of the United States government collapse?
PAUL: I think they've always presented this as a false choice, a Hobson's choice, if you will, where they say either you raise the debt ceiling or we shut down government.
My question is, is there not an in between solution where you say, let's not raise the debt ceiling, but let's only spend what you have?
So, I'm going to introduce an amendment when the time comes or even before that says spend only what you have. So, basically, we bring in $200 billion a month or more, which is about $700 billion a day. It's not like the government would have to shut down if we spent only what we took in.
Let's have an austerity program and starting when the debt ceiling has to go up, let's say, we're not going to raise it, but we're only going to spend what comes in so we don't have to raise it.
BLITZER: Will that might be a long-term solution, but in the short-term April, May, June of next year when the debt ceiling end, you're not going to have time to start cutting hundreds of billions of dollars by then?
PAUL: Well, we're going to introduce, in January, $500 billion worth of cuts. And if people are serious about not wanting to raise the debt ceiling, which I am, then you have to have cuts. And so, we're going to introduce $500 billion of cuts in January.
BLITZER: What if that legislation you're introducing fails and it doesn't get the votes?
PAUL: Right. I think we'll have to cross that bridge as we go forward.
I guess what's great about never having held office before is that I'm new enough to think that we can change the world, and I'm not going to accept them just simply saying, oh, it's never been done that way and it can't be done.
The way they've been doing things in Washington hasn't been getting us very far. They've been running up the deficit to the tune of $200 trillion in a year. I think the American people are ready for some difficult choices.
And some people will not get money that they've always wanted to get and they consider to be free that it comes from the federal government, they will have to do without it because it's not there. They're borrowing it from China or printing it up. These are both bad problems for us as a country.
BLITZER: We're out of time, but what I hear you saying is you will vote against raising the debt ceiling whatever?
PAUL: Well, what I'm going to do is to propose another alternative. I don't want to shut the government down and I don't want to ruin the full faith and credit of the country. I think there's another choice, and it shouldn't be an either/or. And I think maybe that's a false presentation of choices. And I'm going to try to see if there's a third way that says we spend only what we have.
BLITZER: Senator-elect Rand Paul of Kentucky, thanks very much. Good luck.
PAUL: Thank you.
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