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CNN "American Morning" - Transcript: Entitlement Reform


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SEN. RAND PAUL (R), KENTUCKY: Good morning. Good to be with you.

CHETRY: We wanted to talk to you because you've proposed some budget cuts. You have a plan of your own totaling $500 billion in a single year. And it's interesting because your own party has struggled actually to come up with even a fifth of that, $100 billion that it promised in a Pledge to America.

So, what are you willing to cut that perhaps other members of the GOP are not?

PAUL: Everything. What we basically did is we went back to 2008 levels for pretty much everything. We left out entitlements and left out the military on those levels, and that would take -- that would save $100 billion. But then from the $100 billion, we did then go look at military and we looked at various departments that we thought could be better handled at the state and local level.

So, for example, the Department of Education, Ronald Reagan ran on a platform that that should be handled by the states and the localities. We went and set most of the Department of Education back, a few of the college scholarships we kept and we put them in another department, and so, we would eliminate the vast majority of the Department of Education.

We did similar things in the Department of Energy. We said, well, some of this is defense spending, so we took it and put the Defense Department, and let most of the Department of Energy go by the wayside.

So, there are ways to cut spending. The alternative, though, if you don't do it is that we really could face a debt crisis like Greece and Portugal and Spain --

CHETRY: Right.

PAUL: -- are facing. And I don't want that to happen.

CHETRY: But, see, this is the thing -- and the president is going to talk tonight about innovation and the importance of us leading the world when it comes to education and that's going to cost money. So, are you opposed to that?

PAUL: No. But I think the thing about innovation and productivity -- while education is very important and education is very important in, you know, getting people jobs and employment, you know, Russia in its heyday had more PhDs per capita than any country in the world, but had horrible productivity because they had a terrible system.

So, it's a combination of having good education and also having capitalism -- which means getting rid of onerous regulation and getting rid of high taxes. Right now, our corporate income taxes are higher than Europe and higher than Canada and higher than most of the world. And so, our companies can't compete with foreign companies because our tax burden is too high.

CHETRY: Well, I want to ask you about this because you said you left entitlements alone. And when you take a look at the serious efforts to cut our debt, and I know that people's heart is certainly in the right place. But by 2020, more than 60 percent of government spending is to be going towards entitlement.

And we have a breakdown right here. You can see Social Security, 28 percent of our budget gone, especially if it's not touched. Interest on our debt, 28 percent, Medicare at 21, Medicaid at 15 percent and then you get to the "everything else," leaving about 8 cents on the dollar to actually run the government. But that's most of what you're targeting for cuts.

How long can we ignore the entitlement spending?

PAUL: You can't. And you have to immediately do something to the entitlements. We left it out of particular bill, but we do have separate plans for reforming, particularly Social Security. You can fix most of the Social Security shortfall by raising the age by one month every year.

So, take 36 years to raise the Social Security age three years -- I think we, as a society, can handle that. It fixes most of the problem. The bill would be one page long. We raise the age by one month every year. That's what we did in the 1980s when Ronald Reagan passed Social Security reform.

If you do that, you'd fix the majority of the problem. We're all living longer lives. And I think the American people now, more than at any other time, are ready to face this problem with the baby boomers retiring --

CHETRY: Right.

PAUL: We can fix the problem by raising the age gradually.

CHETRY: I think this is interesting. There's going to be two State of the Union responses tonight. One, formal response, and then, one from Michelle Bachman, a tea party supporter in the House. Is this sending a mixed message on the Republican Party's platform or is this a good thing?

PAUL: Well, the thing is, you know, for example, I'll be asked to comment, too. A lot of different senators and congressmen make comments. There's only one official one that the Republicans give, and I think that's fine because you can't have ten different official responses, but you know, there are many different news networks, and they'll all ask for responses from various people.

So, I don't have any problem with Congresswoman Bachman making a response. In fact, we'll also make a response, well, you too (ph), but we'll send out a response after the president's speech as well. So, I think you get a variety of opinions, and all Republicans aren't the same, but I don't see it as trying to usurp somebody else's prerogative. I think there will be one main Republican message, but there's other voices as well.

CHETRY: And you're also deciding not to sit with a member from the opposite party like many others are doing in a show of, I guess, renewed civility or perhaps bipartisanship. Why not?

PAUL: Well, I didn't want to hurt anybody's feelings. I got asked by four different Democrats to sit with them, and I didn't want to hurt their feelings. So, I decided, what will I do? I guess, I'll just sit on the Republican side. I don't know. I want to have cooperation. I want to have conversation. But I think, you know, the symbolism of it is good, but I think really substantive talks is what we need, and I will be talking with the other side, and I've already started having conversation with Democrats in the Senate to try to push different things that we can agree on.

CHETRY: All right. Senator Rand Paul from Kentucky. Thanks for talking to us this morning. I know you'll be watching tonight as were we. Thanks so much.

PAUL: Thank you.


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