Fox News "Fox News Sunday with Chris Wallace" - Transcript: Defunding Obamacare

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WALLACE: Up next, we'll hear what a leading Republican has to say about the president's economic plan, the so-called "phony scandals", and why Congress must stop founding ObamaCare, even if it means a government shut down.

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SEN. MIKE LEE, R-UTAH: This is our last chance. This is the last stop on the ObamaCare express before the law fully kicks in.

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WALLACE: Senator Mike Lee joins us next.

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WALLACE: President Obama ratcheted up the debate over the economy in the coming budget battle this week. Treasury Secretary Lew just made his case. Now, we want to hear from a key Republican and favorite of the Tea Party, Senator Mike Lee of Utah.

And, Senator, welcome back to "Fox News Sunday."

LEE: Thank you.

WALLACE: I want to get your reaction to several things that Secretary Lew said. First, on the IRS targeting of conservative groups, he said, quote, "The problem has been addressed and there is no evidence of any involvement of political appointees."

Your reaction?

LEE: Well, I think you need to ask some of the people who were affected by this, how they feel about it, whether or not this is, in fact, behind us.

I don't think this has been investigated to the extent that we know everything there is to know, nor do I think we should give up. Look, we know how this works. We know that when you put this much discretion, and this much discretionary power in the hands of the few, eventually, it may well be abused for partisan political purposes. That happened here and we've got to get to the bottom of it.

WALLACE: And he was somewhat evasive on the question of whether or not anybody in the IRS has directly spoken to William Wilkins, the chief counsel of the IRS. Is that a hole in the investigation on whether this problem has been addressed?

LEE: Yes. And this is one of the reasons why his answer itself supplied some of the answer to your question, which is the fact that he was being that evasive, means he either doesn't know or perhaps got something to hide. Either way, we've got to get to the bottom of that. We've got to find out who knew what and when they knew it because this is a big problem. There's a big deficit of trust with this administration, particularly when it comes to the IRS, an agency that was given too much power and that's about to get more powerful.

WALLACE: On the economy, Secretary Lew said that we are doing a good job of bringing down the deficit. In fact, he said that our European partners in the IMF are saying that you are going too hard on austerity. He said the key now is growth. And he said the best way to build the middle class is through more government spending, investments, they call it, on things like infrastructure, and education, and manufacturing.

LEE: I beg to differ. This is the same, tired old message that we have been hearing from this president and his administration from day one. And the fact is, it hasn't worked. The fact is, that if you want to help the middle class, the best you can do is limit the federal government's profile, not expand it.

ObamaCare is one of many examples of this, and why we need to move away from this law, which is going to be bad for the middle class.

WALLACE: Well, we're going to get to ObamaCare in a second. But what's wrong with government spending on things like infrastructure, which will create jobs, some things like education of workers who may have to shift from one career to another. Wouldn't that help the middle class?

LEE: Yes. I'm certainly not saying that there's no role for government in any of these areas. But we do have to ask the question, which government? Is that a proper federal role in every instance or should it most of the time be a prerogative of state governments to look out for things like education?

We also have to look at how far we've already gone in with the federal government. This president seems to be using kind of a one- way ratchet, always expanding the role of the federal government, even as we're $17 trillion in debt and we are increasing that debt at the rate of about $1 trillion a year.

WALLACE: One of the things I talked to Secretary Lew about is the question of the sequester, because we are facing that as the government begins to run out of money at the end of September. He said that Congress should find way out of the sequester, which would be another $100 billion in spending cuts over fiscal 2014, beginning next October. But he said that Republicans, and he could have mentioned you, because I know it's something that you feel about are trying steal from domestic programs to bail out the Pentagon by stopping some of the Pentagon cuts that are happening.

The nonpartisan Congressional Budget Office made another point this week. I want to put it up on the screen. The CBO says that if you were to cancel the sequester spending cuts, it would create 900,000 jobs next year and boost growth by 0.7 percent GDP by almost a full point next year.

Question, isn't the sequester a drag on the economy?

LEE: The sequester is problematic on several levels. It's problematic because it tries to cut too much disproportionately out of our armed services. What we need to do is make sensible cuts, not back away from the cuts, but make sure that we're not taking them disproportionately out of those brave men and women who are protecting us.

WALLACE: Let's turn to ObamaCare which is, I know, a special subject of interest to you. The government runs out of money at the end of September and you are making a push to say, that you will not support, and you've gotten some Republican senators on board, you will not support any resolution to the budget shut down, the idea that the government might be shut down, because the government runs out of money in September -- you will not support any solution that includes continued funding of ObamaCare.

Don't you run the risk, because you know the president is never going to go for that, of a shutdown?

LEE: You know, we always knew ObamaCare was going to be unaffordable. We now also know that it's going to be unfair. The president has said that he's not ready to implement this law. And because he's not ready to implement it, he's going to selectively enforce it. He is going to, you know, give a big pass to big business while simultaneously telling hard working Americans, individuals that they have to comply with these laws demands or else they'll face stiff penalties under federal law.

So, what I'm saying is that if the president is not ready to implement the law, if the law is not ready for prime, Congress shouldn't fund it.

WALLACE: But, again, I mean, regardless of the logic of your argument, the president isn't going to go for it. Democrats in the Senate aren't going to go for it. They're not going to accept it. Are you prepared to shutdown the government over this issue?

LEE: Look, Chris, we all know that the government is going to get funded. The only question is whether the government gets funded with ObamaCare or without it? And what I'm saying is that the president has said he's not ready to implement the law, he said that the law isn't ready for primetime. And so, if he's not ready, if the law is not ready, we can't fund it.

WALLACE: Democrats are bashing you over this stance, but you're also taking some heavy fire from fellow Republicans in the Senate, and other places. Let's look.

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REP. TOM COLE, R-OKLA.: It seems to me there's appropriate ways to deal with the law. But shutting down the government to, you know, get your way over an unrelated piece of legislation is political equivalent of throwing a temper tantrum.

KARL ROVE, FORMER BUSH WHITE HOUSE ADVISER: I'm suspect about it because it gives the president the bully pulpit and a gigantic stick on which to beat us.

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WALLACE: Five Senate Republicans who originally signed on your effort -- no government funding unless you stop funding ObamaCare -- have now dropped out of your effort and one of your Senate Republican colleague is calling it, his words not mine, "One of the dumbest ideas I've ever heard."

LEE: Well, Chris, the fact is that this really isn't about Republican versus Democrat. It's not about liberal or conservative. This is yet another instance of Washington versus everyone else.

And we've got to stop Washington from dividing the American people. We've got to stop Washington from hurting the American people. That's what's happening here.

The fact is that Americans, by a margin of about 2-1, believe that this law will make their health care situation worse, not better. Only 12 percent support the individual mandate.

Businesses don't like it. Individuals hate it. Union leaders say it will be bad for workers. And even the law's principal author in the Senate describes it as a train wreck.

The law is bad. The law is certainly not ready to implement and we shouldn't fund it.

WALLACE: But Republican leaders, finally, would make this point -- they say a funding bill, funding the government is only going to last for a year or even less. So, even if you got what you wanted, you wouldn't kill ObamaCare. You would simply delay it for a year. They also say, if we were to follow your logic and end up either with a government shutdown or if you tied it to an increase in the debt limit, that it's precisely the kind of action, which you heard from Karl Rove, that it's going to make it hard for Republicans to keep control of the House and have any chance of winning the Senate.

LEE: Look, I understand that there's some in the Washington establishment, some from both political parties that we weren't happy with me over this. And in this instance, I'm going to take that as a compliment, an indication that I'm doing something right.

The fact is that we can delay this bill, maybe we can't repeal it right, but we can delay its funding. And if we can delay it, we can stop its consequences, at least for now. And we have to do that.

There are many of us who were elected specifically with this mandate, that we've got to stop this law. We have an even stronger reason to that now because the president has said he is not going to enforce it. He is not ready to enforce. And so, he is going to selectively implement the law.

Holding hardworking Americans to the fire, subjecting them to these horrendous fines, while simultaneously exempting big business, that's not fair. It's not right, and we shouldn't fund that effort.

WALLACE: Senator Lee, thank you. Thanks for coming in today. And we will be following the battle of the budget. Thank you, sir.

LEE: Thank you.

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