updated 9/8/2004 10:58:43 AM ET 2004-09-08T14:58:43

Guests: Mark Sanford, Stephen Moore, Pete Peterson, Matt Salmon

JOE SCARBOROUGH, HOST:  Tonight‘s top headline, America is going bankrupt.  The “Real Deal”?  Politicians are fiddling while Rome burns. 

Welcome to SCARBOROUGH COUNTRY, where no passport is required and only common sense is allowed. 

In 1994, Republicans, including me, retook Congress on a promise to balance the budget.  So how has that GOP promise spiraled into the most reckless spending of our lifetime?  Tonight, you‘re going to get the “Real Deal” and we‘re going to tell you how Washington pork-barrel politics works and how it‘s threatening our future and if there is anything you can do to stop it. 

ANNOUNCER:  From the press room, to the courtroom, to the halls of Congress, Joe Scarborough has seen it all.  Welcome to SCARBOROUGH COUNTRY.

SCARBOROUGH:  Hey, welcome to our show.  I appreciate you being here tonight. 

I will tell you what, you‘re going to hear some things tonight that are going to shock you.  Nobody‘s talking about it.  The politicians aren‘t talking about it.  But I‘ll tell you what.  America‘s future is on the line.  And we‘re going to tell you some frightening things that are going on in Washington and tell you how you can make a difference, because, friends, Washington politicians are bankrupting America, and they‘re putting our national security at risk. 

It‘s time for tonight‘s “Real Deal.” 

Now, Osama bin Laden figured out a long time ago that the way to beat America down was to attack our economy.  But the news out of Washington today shows that it‘s not al Qaeda terrorists that are putting our economic future at risk.  It‘s our own elected politicians.  Do you know Congress reported today that the deficit for this year is going to hit a record high $443 billion?  Now, that pile of red ink is going to be dumped on top of a record $7.5 trillion national debt. 

And that is a debt that‘s built on backstabbing, political lies, and Enron-style accounting.  You know, 10 years ago, my friends and I ran for Congress to change the way Washington worked.  And for a few years, we were the barbarians at the gates of an imperial Congress and we threatened to change that culture forever.  But you know what, friends?  The sad truth is that Washington won.  Washington always wins.  And those same barbarians turned into the palace guards, drunk with power and indistinguishable from those people they hoped to replace. 

And you know what?  In the process, the party of Reagan became the party of big government, as it became harder to tell any difference between Capitol Hill Republicans and Capitol Hill Democrats.  Why?  Because, in the end, most seem more interested in keeping power there than in saving America. 

Now, I know it sounds harsh, and it is.  But we‘re a nation sinking deeper in debt with a crippled entitlement system and millions of baby boomers racing toward retirement.  We‘re a nation in deep trouble.  And this is not a matter open to debate, but it is an issue that most politicians are afraid to touch.  You know, George Bush has taken a $150 billion surplus and he‘s turned it into a $430 billion deficit.  John Kerry has posted one of the most liberal voting records in Congress. 

And neither one of these candidates is proposing a single spending cut.  In fact, John Kerry‘s talking about universal health care and increasing troop sizes by 40,000.  Now, that means more spending, higher deficits, greater debt, higher interest rates, a slower economy, less revenue.  And what does that mean?  Higher deficits.  It‘s a vicious cycle.  And we‘re on a one-way ticket to an economic meltdown unless politicians get serious about this crisis. 

And that means we have to get serious by demanding more from our elected leaders.  They have let us down.  And now it‘s time for all of us to fight back.  And that‘s tonight‘s “Real Deal.” 

With me now is a man who was considered one of the top mavericks in the class of 1994, former Arizona Congressman Matt Salmon.  We also have MSNBC political analyst Pat Buchanan.  His book, “Where the Right Went Wrong: How Neoconservatives Subverted the Reagan Revolution and Hijacked the Bush Presidency,” came out last week. 

Matt, let me start with you.  You heard my introduction.  Did I exaggerate anything there?  Or are we seriously a nation that has been betrayed by political parties? 

MATT SALMON ®, FORMER U.S. CONGRESSMAN:  You know something, Joe, you and I had a lot of discussions when we served in Congress about how both of the parties just don‘t get it.  In fact, you and I from time to time called them all Republicrats. 

The fact is, we had a revolution back in 1994.  We had the Contract with America.  We promised that we were going to balance the budget if the Republicans got control.  And we did.  We balanced the budget and there was a surplus.  Now, I left in 2000 and they‘ve been on a spending spree ever since, in fact, spending like a bunch of drunken sailors.  And it‘s easy to say that‘s just because of the war. 

You know, as far as the war on terrorism is concerned, I support that 100 percent.  But that‘s not where the problems lie.  It‘s domestic spending.  It‘s the transportation stinker bill.  It‘s the agriculture bill.  It‘s all those things that you and I fought.  It‘s pork barrel spending.  It‘s committee chairmen offering out big sums of money to anybody who will vote for their pork-laden bills.  And it‘s killing us. 

SCARBOROUGH:  It really is. 

Pat Buchanan? 

PAT BUCHANAN, NBC POLITICAL ANALYST:  Joe Scarborough, I want to ask you, what happened to the fighting class of ‘94?  Why did it come in like a lion and go out like a lamb?  Why did you guys make Bill Clinton look like Bob Taft? 

(LAUGHTER)

SCARBOROUGH:  We really did.  That‘s a good way to put it.  What is so interesting is, when you look back at the numbers, Pat, they‘re really shocking.  Obviously, Matt Salmon and I came in.  We were going against Bill Clinton.  We‘d heard there was almost a $300 billion deficit.  And we wanted to change things. 

But, Pat, the unbelievable thing is, if you look back at Bill Clinton‘s record year by year by year, federal spending under Bill Clinton grew by 3.4 percent.  Now, obviously, it‘s because we Republicans in Congress were there trying to constrain the spending, tried to restrain things, slow it down.  But under George W. Bush, spending has grown at 10.5 percent. 

Now, Republicans come up to me and say, well, yes, but that‘s because of the war on terror.  But, Pat, as you know and as Matt just pointed out, the Cato Institute did a study, very conservative, the libertarian think tank, and Cato found out that, over the past 40 years, that five of the fastest spending years for domestic growth, three of those five years were the first three years of the Bush administration. 

Now, is this about George Bush?  No, it‘s not really about George Bush, as much as it is about a Congress that is drunk on power, spending way too much money, and George Bush has refused to veto a single bill.  What‘s that led us to, Pat?  It‘s led us to a $430 billion deficit and the Democrats are spending as much as Republicans. 

BUCHANAN:  Look, you know, I think the Congress—you are exactly right.  Steve Moore and Brian Riedl over at the Heritage Foundation found more than half of the increase in spending from 2001 to 2003 was domestic social spending in wartime.  Even FDR cut that. 

But, Joe, let me ask you, why did the Republicans—we were going to shut down the Department of Education in the campaign of ‘96 and of ‘92.  George Bush and Teddy Kennedy have increased it by 80 percent.  Have Republicans given up their philosophy?  Do they now believe the federal government should be running education nationally? 

SCARBOROUGH:  Pat, you know what?  They have.  I saw David Brooks front—the cover of “The New York Times” magazine last week, talked about the era of small government being dead. 

You know, when I got to Congress, I proposed a bill that would get rid of the federal education bureaucracy.  We would spend that money in the classrooms.  We would take the money from Washington, D.C., take it to the classrooms in the locales, power to the local people and get it out of Washington.  And you know what?  We had 160, 170 people co-sponsor that bill. 

Look at these numbers, Pat.  I‘ve got these in my book.  Spending for the Department of Education since we first came to Congress up 101 percent.  Department of Justice, up 131 percent.  Department of Health and Human Services, up 81 percent.  The State Department—now, Pat, again, these—and let‘s put those numbers up—Justice, 131 percent.  This is since Republicans took control.  The Department of Education, 101 percent.  Department of Commerce, 82 percent increase.  Department of Health and Human Services, up 81 percent.  You can keep going.  The State Department, up 80 percent. 

The Department of Transportation, up 65 percent.  Housing and Urban Development, up 59 percent.  And, you know, a lot of people out there, some Democrats, may be saying, ah, look at you Republicans.  You‘re hypocrites.  Well, maybe we are, but the thing is, the Democrats usually attacked us for not spending more money. 

BUCHANAN:  All right, Joe, let me ask you, though, Republicans can come back and say, well, listen, Joe, we‘re getting elected.  We‘ve held the House now for 10 years.  We‘re looking good to hold it some more.  We‘ve got 10,500 earmarked projects for congressmen.  That‘s by my count about 25 in every congressional district every year.  This gets these guys reelected. 

They say, who cares?  We‘re staying in power and we‘re better than the other fellows.  And it‘s better that we be here.  How do you answer when they say it‘s working? 

SCARBOROUGH:  Well, first of all, I call them whores.  Secondly, I tell them to look at the national debt clock.  And I want to ask my people, because all night I want to bring everybody the national debt clock live.  It‘s located, of course, in New York City.  And it‘s the tab that our elected leaders are tallying up and the amount we are going to have to pay.  There‘s the national debt clock.  Look at the bottom of the screen.  We‘re going to be showing that all night.  They run that in New York. 

Pat, do you know that when I left Congress in 2001, the people that ran this debt clock actually shut it down because it was confusing people, because we were paying down the debt?  The number was going in the opposite direction.  And they had to put it up three years later.  You know what I say to these Republicans and Democrats that are willing to bankrupt future generations?  I‘d say, read “Animal Farm.”  You‘re no better than the pigs in “Animal Farm.”

And that‘s something Steve Moore told me.  He said it‘s Orwellian that you have these people that came in saying, we‘re going to reform government, we‘re going to change things, but after a while, it‘s hard to tell the farmers from the pigs.  They all look alike. 

BUCHANAN:  Well, let me ask you something.  Is this not an argument for saying: “Mr. Bush, you‘re not a small-government Republican.  You‘re a Rockefeller Republican or an LBJ republican using Reaganite rhetoric.  Republican Congress, you have failed us.  You are not being faithful to the platforms in the past.  Maybe you folks ought to be put into retirement now and be defeated in November and let‘s get back a fighting Republican Congress of opposition”?

SCARBOROUGH:  Well, the question is, who‘s out there to replace them?  I certainly hope that there are people running for Congress now like I was running for it 10 years ago wanting to make a difference, feeling like if they came up to Washington, they would challenge the existing order. 

But right now, there is no doubt the Republicans in Congress know, they know that they‘ve betrayed Ronald Reagan‘s legacy. 

BUCHANAN:  But don‘t they deserve to be defeated, Joe?

SCARBOROUGH:  They know—well, they know—and “The Wall Street Journal,” by the way, “The Wall Street Journal” just wrote the same week that Ronald Reagan was buried an editorial called “GOP Lost Souls,” saying the Republican Party is dead. 

But, Pat, you know why they can‘t be defeated? 

BUCHANAN:  Why? 

SCARBOROUGH:  Gerrymandering. 

The Republicans and Democrats—and this is the real dirty part of this story.  Republicans and Democrats have gotten together.  They‘ve carved up these districts to make sure that the turnover rate in Congress is less than the turnover rate in the old Soviet politburo. 

I mean, Pat, it‘s almost impossible to be beaten these days because all the Republicans have carved out Republican districts and the Democrats in adjoining districts are thrilled.  You know why?  Because they‘ve had their districts carved out, too.  So nobody has to pay for this except us. 

BUCHANAN:  Joe, look, I tell you who is coming up is Pete Peterson.  And on this issue—he served in the Cabinet when I was in the White House.  On this issue of Social Security, we got coming up in 2008 the first of 77 million baby boomers hits early retirement.  Bill Clinton‘s in that class.  George W. Bush is. 

For the next 20 years after that, the major contributors to Social Security and Medicare become the major consumers.  The real deficit then will come out of the water like a volcano.  And there is no way it seems to me we are ever going to have a balanced budget again, given the forces in Washington and this perfect storm that‘s ahead. 

SCARBOROUGH:  It is a perfect storm, Pat.  That is a perfect way to put it.  You take the deficit spending now, you take the federal debt that we have, $7.5 trillion debt, and you add on top the baby bloomers slouching toward retirement, we‘re in big trouble. 

And perhaps America‘s foremost expert in this, Peter Peterson, is here tonight.  And he is going to be with us right after this break.  And he‘s going to tell us just how serious this issue is and what America can do to save itself from sure bankruptcy.

That‘s when SCARBOROUGH COUNTRY returns in a minute.

(COMMERCIAL BREAK)

SCARBOROUGH:  Coming up, a lifelong Republican who worked for Richard Nixon talks about the mess that Republicans and Democrats have put us in. 

Plus, if you want to read more of my new book, “Rome Wasn‘t Burnt in Day,” check out excerpts at our Web site, Joe.MSNBC.com. 

(COMMERCIAL BREAK)

SCARBOROUGH:  With me now Pete Peterson.  He is, of course, the author of “Running on Empty: How the Democratic and Republican Parties Are Bankrupting Our Future and What Americans Can Do About It.”  He is of course the former chairman of the Federal Reserve Bank of New York and served as secretary of commerce under President Nixon. 

Pete Peterson, you‘re a lifelong Republican, but you also believe that America is in trouble tonight.  How serious is it? 

PETE PETERSON, FORMER NIXON COMMERCE SECRETARY:  Well, first of all, I‘d like to say, Joe, that I agree with virtually everything you and Pat said. 

What is stunning about the current situation to me—and I have been

a Republican all my life—it‘s an unholy combination of a bunch of

theologies that are untouched by analysis, history or evidence.  In our

party, we‘ve got the big tax cutters who have never met a tax cut they

didn‘t like.  The trouble with all of that is that when Milton Friedman at

the University of Chicago tried to educate me about economics, he taught us

that a long-term tax cut is not a tax cut at all, unless it‘s accompanied

by long-term spending. 

It‘s just a deferred tax increase on our children.  So I find it distinctly ironic that these congenital tax cutters seem very comfortable with the idea that they‘re actually for a big tax increase on their own kids.  Then they have been joined by, as you pointed out in the earlier segment, the big-spending Republicans.  I used to think big-government conservatives was an oxymoron, but it isn‘t. 

And then finally, we‘ve got the so-called starve-the-beasters, you know, who argue just the opposite of the supply-siders.  They argue that if you cut taxes, of course, revenues will go down and then we‘ll get rid of all those government benefit programs.  Well, I look at those guys and I say, look, if you‘re so serious about cutting spending, why don‘t you tell now, tell us now what you‘re going to do particularly about the big programs, Social Security, Medicare, and so forth, because that‘s where the big bucks are here, Joe. 

SCARBOROUGH:  You know, Pete, and that is the thing that‘s so disturbing.  You look at these campaigns, the presidential campaigns, all we hear about is more spending, more things that are going to cost our children money. 

You look at local campaigns, and I have got to tell you, it just drives me crazy.  You get these Republicans coming on saying, vote for me.  I‘m for less spending, less taxes, less government.  You ask them where are they going to cut a single program, and they can‘t do it.  And this is what disturbs me so much.  And tell me whether I need to just sit back and relax. 

But let‘s look over the past three, four years.  We‘ve had tax cuts.  We‘ve had an increase in spending at just record clips.  I mean, it‘s basically Keynesian economics on crack, and yet our economy is still sputtering along.  We‘ve got these huge deficits.  They‘re going to eventually lead to higher interest rates.  It seems we‘ve got this vicious cycle and I just don‘t know where it ends, short of a depression. 

PETERSON:  You know, we‘ve really outdone LBJ in the Republican Party.  You remember, he was accused of guns and butter.  But we‘re guns and butter and tax cuts. 

And, incidentally, this unholy conspiracy includes the Democrats.  They, you know, have never met a universal entitlement program that they didn‘t like.  And over the last 40 years, you may know, Joe, but I think many in your audience may not know, the Democrats have basically presided, with a little help from some Republicans, but basically Democrats, for a sixfold increase, a sixfold increase in benefits to individuals, after inflation. 

So the Democrats are for any universal entitlement they ever met.  And what they don‘t answer is this tough question.  If everybody is on the wagon, who‘s going to pull it?  So in the recent Medicare prescription drug bill, I don‘t know of a serious person, Joe, who HAS looked at Medicare who won‘t tell you that it the costs are utterly unsustainable when the boomers retire.  So what is their solution?  Their complaint is that the Medicare bill, without saying a word to us about what they‘re do about the costs, that the Medicare bill doesn‘t go far enough on prescription drugs. 

So you have this unholy combination of Republicans and Democrats who tell you seriously—I mean, who tell you, in effect, I should say—they don‘t tell you seriously—that they are willing to sit there and do a highly immoral act, which is to slip their own kids the check for their free lunch.  And it was Dietrich Bonhoeffer, the German philosopher, who once said, the ultimate test of a moral society is the kind of world it leaves to its children. 

So I‘d like to put a moral dimension on this discussion.  And I find what we‘re doing now highly immoral.  And a lot of the parents that I talk to still love their kids, but they are so misled by all of the political amnesia and anesthesia.  For example, the politicians pass the Sarbanes-Oxley bill.  It says we‘re going to put corporations in jail if they don‘t honestly disclose their liabilities. 

You‘ve mentioned Social Security and Medicare.  Let‘s talk about the liabilities that are off the books, Joe, that are not included in your $7 trillion number. 

SCARBOROUGH:  Oh, yes. 

PETERSON:  If the private sector did what these characters are doing, they‘d be put in jail.  The number, Joe, is $45 trillion.  It‘s more than the entire net worth of the country. 

SCARBOROUGH:  You know, Pete, every time I start talking about this with people out there, they always want to go back to private graft. 

They said, oh, yes, well, somehow this money is funneling back to them.  And I said, no, actually, it‘s really not.  But I tell them, we would be much better off paying each one of our congressmen and senators a million dollars in cash.  I said, we‘ll give you a million dollars in cash under the table, you don‘t have to report it to the IRS.  Just balance our budget and reform our entitlement system. 

I said, we would come out way ahead if we had done it that way.  But people just can‘t grasp especially Medicare.  You talk about this drug bill that was passed.  It‘s remarkable that Medicare is going bankrupt, yet the Republicans passed this drug bill.  And on top of that, the biggest insult of all, like you‘ve pointed out in your book, the Democrats are complaining that it doesn‘t go far enough, that we‘re not spending enough money. 

There‘s like no—and I think John McCain may be only rational person left in Washington when it comes to protecting future generations from this debt. 

PETERSON:  But, you see, the politicians do several things. 

They anesthetize the public with all kinds of soothing statements.  Let me give you two or three of them.  You recall the statement, we shall not pass our problems on to the next generation?  Well, who the hell do we think we‘re passing them on to?  Or another lulu is, you know, the trust fund is going to take care of everything for decades.  Well, I was secretary of commerce, as you pointed out.  And “TIME” magazine, for some strange reason, referred to me as the powerful, the most powerful secretary of commerce since Herbert Hoover. 

I burst out laughing.  I didn‘t even know what it meant.  But there‘s never been a powerful secretary of commerce.  Trust me, Joe, the Social Security and Medicare trust fund belongs in the top tier of oxymorons.  It shouldn‘t be trusted and it‘s not funded.  And we have already spent the money that was set aside.  And we keep soothing these people, the public, with these wonderful statements. 

(CROSSTALK)

PETERSON:  Another one is, it‘s your money and you deserve to get it back.  Well, then, when you say, well, who does the debt belong to, the ages or what?

Then somebody will say, it‘s a social contract and we must live up to these promises.  I only had one course in commercial law, Joe, in college, business school.  And there was a minimum requirement of a valid contract.  And that was that both parties to the agreement had to come to an agreement of the principle involved. 

So to have a little fun the other night at a book party, I invited my wonderful 9-year-old granddaughter up there, Chloe Kimball, to demonstrate the point.  And I said, darling, Chloe, have you signed on to $45 trillion of unfunded liabilities?  And have you signed on to a doubling of your payroll taxes to pay for Social Security and Medicare? 

And this adorable little girl looks at me and says, papa, as she calls me, is a trillion dollars more than a billion?  I said, darling, it‘s a thousand times more.  And this sweet little girl says, papa, I‘m going to have to sell a lot more lemonade and I think you‘re going to have to increase my allowance. 

So this notion that we have a social contract with the next generation when we haven‘t told the next generation what we‘re unloading on them is deceptive in the extreme, Joe. 

SCARBOROUGH:  You are exactly right, Pete Peterson.

I want to thank you for coming with us tonight and sharing your thoughts.  Your book is “Running on Empty: How the Democratic and Republican Parties Are Bankrupting Our Future and What Americans Can Do About It.”  It is an important book to read.  This is a critical issue.  And if nobody else is talking about it in Washington, D.C., you are going to make them talk about it, Pete Peterson. 

PETERSON:  Let‘s hope so. 

SCARBOROUGH:  Thanks again.  I greatly appreciate it. 

Now, we‘ll be back.  In just a few minutes, we‘re going to talk about some Capitol offenses out of Washington, D.C.  We‘re going to talk to the governor of South Carolina, going to talk to members of Congress that have been fighting this for some time, and the head of a libertarian think tank that‘s going to tell you just how bad things have gotten in Washington, D.C. and what you can do to change it. 

We‘ll be right back when SCARBOROUGH COUNTRY returns.

(COMMERCIAL BREAK)

SCARBOROUGH:  Can you believe that your tax dollars are being spent on the National Cowgirl Hall of Fame?  Well, they are.  And there are a lot more Capitol offenses out there that you would not believe.  We‘re going to tell you about them. 

But, first, let‘s get the latest headlines from the MSNBC News Desk. 

(NEWS BREAK)

ANNOUNCER:  From the press room, to the courtroom, to the halls of Congress, Joe Scarborough has seen it all.  Welcome back to SCARBOROUGH COUNTRY.

SCARBOROUGH:  Boy, it was great having Pete Peterson here.  That guy is a force to be reckoned with.  And I will guarantee you, he‘s scaring a lot of people in Washington, D.C., right now. 

Glad you‘re back. 

And when we‘re back here with Pat Buchanan and Matt Salmon.  Also, let me bring in Governor Mark Sanford of South Carolina and Stephen Moore.  He‘s the president of Club For Growth and a senior fellow at the Cato Institute. 

Now, I want to read you all a clip, just a little part of my book, from “Rome Wasn‘t Burnt in a Day.”  And it outlines the transformation of our Republican Party. 

And this is what I write: “No Republican swept into office in the ‘94 revolution could have imagined the spending orgy his own party would launch in 2001.  The party of small government quickly morphed into the party of big pork.”

Governor—I like calling you governor—Governor Sanford, you and I sat next to each other from ‘94 to 2000.  We saw that these Republicans always wanted to spend more, more, more.  And once we left, they started doing that.  Is it the same in state government as well? 

GOV. MARK SANFORD ®, SOUTH CAROLINA:  It is. 

I mean, you have in every government system sort of defused cost and concentrated benefit.  And so the folks that oftentimes squeal the loudest are the folks lining up for pork.  I would say this, though.  What‘s been interesting to me from the standpoint of state policy is that there are a lot of incentives out there from a federal standpoint that cause you to spend more at the state level. 

For instance, Medicare, which Pete Peterson was just talking about, there‘s basically a 2-1 match.  So any time you cut a dollar, you are really cutting two, and there‘s this bias towards spending more. 

Let me throw out two other little statistics for you, Joe, based on your conversation with Pete.  One is, Laurence Kotlikoff up at the University of Boston did a study a thing called generational accounting.  What it says is, what is the lifetime tax for a child born in America today based on present trends in government spending?  And that number is near 80 percent.  We‘ll never get to 80 percent.  Our system will collapse before we get there. 

The other historical antidote that I think it that is interesting given your conversation with Pete is this.  Paul Kennedy wrote a book called “The Rise and Fall of Great Powers.”  And its premise was this.  Imperial overstretch was the thing that killed off big empires, big countries.  That‘s the thing that you correctly point out is coming our way.  That same phenomenon is what is our gravest danger.  It‘s a much greater danger, as you correctly point out, than terrorism, this notion of overspending. 

SCARBOROUGH:  But, Mark, why is it that there are so few governors or congressmen or senators talking about this?  I‘m going to ask Steve Moore in a second.  But outside of you and Jeb Bush and John McCain in Washington, D.C., I really can‘t name a lot of Republicans or Democrats that understand that our country is facing economic collapse if we don‘t face up to this debt. 

SANFORD:  I‘d say two things.  One is, you have got to pull more people into the political process who don‘t come from the political process, more business people, farmers, doctors, you name it, but people who don‘t view politics as their career. 

The second thing I‘d say is, I‘ll name one name for you.  And that‘s Tom Coburn from Oklahoma. 

SCARBOROUGH:  Oh, yes. 

SANFORD:  If people care about government spending, send that guy to the United States Senate.  Not one person can change the system, but, boy, he‘ll make a difference. 

SCARBOROUGH:  You know what?  We did find in 1994 that one person could make a difference, especially when that one person came up to fight and then others came up and said, you know what?  I‘m going to take it on myself.  Yes, Tom Coburn is a real hero. 

Steve Moore, I want to bring you in here.  You haven‘t had a chance to talk yet. 

You are a guy who that‘s been studying big government for years now.  You‘ve got to be absolutely stunned that the Republican Party of 1994 has morphed into a big-spending party in 2004. And the Democrats want to spend even more money.  I mean, where does the conservative go that wants to balance the budget, that wants to save future generations from this crushing tax burden that the governor was talking about? 

STEPHEN MOORE, PRESIDENT, CLUB FOR GROWTH:  Well, we had this incredible revolution that took place in 1994 and 1995, when people like you and Mark Sanford were elected to the Congress, Matt Salmon. 

And you came in with this revolutionary fervor to really change the way the Congress works and the way that we budget.  And what happened is that, over the first four or five years, you actually trimmed the budget.  We cut some spending programs, not as many as we should have.  But what happened is, by ‘98, ‘99, we actually had a budget surplus in this town, first time it had happened in 40 years. 

Then what happens is, now that we have a budget surplus, it‘s OK to spend again.  And so we had these enormous increases in the budget.  It happened in 1999, in 2000, in 2001.  The budget is growing at an increasingly fast pace.  And what is so frustrating to me, Joe, is that if you look at the family budget, when the budget, when times are tough and the income isn‘t coming in so fast, what does the family do?  It tightens its belt.  It cuts some of the spending it doesn‘t have to make, whereas, with Congress, during tough times, they increase.  They fatten the budget. 

And there is no law of nature that says that budgets have to increase every year.  A guy like the governor of South Carolina, Mark Sanford, has to balance his budget every year.  He has to.  It‘s in the constitution of his state.  We need to have that kind of constitutional requirement in Washington, because these guys are not going to curb their own spending appetite. 

SCARBOROUGH:  Matt Salmon, you‘ve been to Washington before.  I‘m sure you‘re going to be there again representing the people of Arizona.  What can voters do to make a difference?  What can we do to turn this ship around? 

SALMON:  Well, Joe, I want to go back to a question that Pat Buchanan asked you.  He said, is it time for the Republican Party to lose and would they be stronger—would America be better off if the Republicans were in the loyal opposition, the minority? 

I don‘t think that‘s the answer.  And I will tell you why, because there are a couple of other issues that I care deeply about.  One is the abortion issue.  Another one is the gay marriage issue.  And I do believe that, if that happens, we‘re going to get some real stinker judges that are going to ruin our country for a long, long time.  I do want George Bush to win the presidency.  I do want the Republicans to maintain the control of Washington. 

But these fights need to be fought in the primaries.  We have too many people back there forgot the promises that they made.  When we went back to Washington, we went back to make a difference.  We went back not to represent the Republican Party.  We went back to look for—look out for the future of our children, to basically make sure that our parents were taken care of, that our children were taken care of in the future.

And right now, all the things that we had accomplished, they‘ve been spent away.  And so those fights have to be fought in the primary.  And I will tell you what, Joe, I do want to get back in the game.  It‘s time to take that fight back to Washington.  We need another revolution.  And this time, we need it within the Republican Party. 

SCARBOROUGH:  Pat Buchanan, speaking of revolutions in the Republican Party, Ronald Reagan in 1976, as you know, enraged a lot of Republicans by going after a sitting president.  He dared to make a difference.  And because of that, of course, we had the Reagan revolution four years later. 

Is there any national leader out there right now that is willing to step forward in the next few years and say, I‘m going to take this party back; it‘s going to be a party that—of Ronald Reagan, of less government, of less taxes, you know, and again, with a Reagan-type vision that‘s not going to bankrupt future generations? 

BUCHANAN:  Well, let me say that I agree with the statement that we want George Bush picking the next four Supreme Court justices, not John Kerry, if that‘s the choice we have.  And that‘s too important, I agree. 

But I must say, Joe, I am a pessimist.  And the reason is this.  First is that the bottom 50 percent of American taxpayers now pays only 4 percent of all federal taxes, and they get an enormous share of the benefits.  There is no incentive to vote for people who are going to cut spending. 

Republicans have come to realize that. 

Second, like Thelma and Louise, we are too close to the cliff.  Pete Peterson is right.  We‘re going into 2008 and you got the early retirements coming and then you got full retirement for 77 million baby boomers.  You‘re not going to cut Social Security and Medicare.  Kerry wants to expand it.  It is going to expand. 

SCARBOROUGH:  But, Pat, we‘re close to the cliff, but nobody is saying anything about it, Pat.

(CROSSTALK)

BUCHANAN:  They can say all they want, my friend.

What‘s going to happen is, two things are going to pay the price.  First, the overextended empire, if you will, abroad is going to collapse because the dollar is going to collapse.  It has already lost a third of its value against the euro.  It‘s lost it against the yen.  We are living off borrowed money from the Chinese and the Japanese, who are capturing our markets, but borrowing—lending us the money, so they can sell into that market. 

Joe, I think we‘re too far down the road this time to really stop it.  I don‘t see anybody getting up there and peeling back benefits for Medicare and Social Security.  That‘s suicidal today. 

SCARBOROUGH:  So what does it mean?  Does it mean a depression? 

BUCHANAN:  I think it means massive inflation, quite frankly.  I think the government will try to inflate its way out of this mess.  And down the road, that‘s what it means, a depression. 

I mean, I read Martin Wolf in “The Financial Times.”  And he just said quite simply—and he is a fairly reasonable fellow—the United States is simply on the way to financial ruin. 

SCARBOROUGH:  Yes, it really is. 

And, as Pete Peterson brings up in his book, for the first time ever, the IMF, the International Monetary Fund, is actually writing letters to the United States of America, saying that you are headed toward insolvency.  You have got to change your ways.  And, of course, politicians in Washington on both sides of the aisle simply ignore them. 

Hey, we‘ll be right back with much more SCARBOROUGH COUNTRY right after this short break.

(COMMERCIAL BREAK)

SCARBOROUGH:  I‘ll tell you what.  We have been absolutely flooded with e-mails tonight.  Obviously, some people are paying attention and are worried about this.  Hopefully, they‘ll let Washington know. 

Now we‘re back with South Carolina Governor Mark Sanford—he is a hero on this issue—Pat Buchanan, Matt Salmon and Stephen Moore. 

Pat, you wanted to ask the governor a question. 

BUCHANAN:  Governor, look, you‘re down there.  I believe you have got to have a—you‘ve got a constitutional requirement you have got to balance the budget. 

SANFORD:  Yes, sir.

BUCHANAN:  They don‘t have that up in Washington, D.C.  And you look at Social Security, you look at Medicare, they are unfunded horribly.  The baby boomers are headed for early retirement.  People aren‘t going to cut defense.  They‘re not going to cut unemployment compensation.  They‘re not going to cut welfare.  They‘re not going to cut food stamps, so they‘re not going to cut this and all this spending is going to start. 

Where do you see it all ending?  Because I‘m a pessimist.  I really believing that the borrowing will become so great on the federal government‘s part that they‘ll consume all the savings, whatever there is, of the American people, and much of the world‘s savings, and after a while, people are going to stop lending to a profligate country like the United States, and then you inflate your way out of it. 

SANFORD:  That‘s not at all an unrealistic scenario. 

If you want the real pessimistic view, there was a Scottish historian who lived back in the 1800s...

BUCHANAN:  Right. 

SANFORD:  ... by the name of Sir Alex Francis Tytler.  And his quote, having studied history for the whole of his life, was this.  A democracy cannot exist as a permanent form of government.  It can only exist until the voters discover that they can vote for themselves largess from the republic treasury, with the result that a democracy always fails under loose fiscal policy and generally followed by a dictatorship. 

The average age of the world‘s great civilizations has been 200 years.  These nations have progressed through this sequence, from bondage to spiritual faith, from spiritual faith to great courage, from great courage to liberty, liberty to abundance, abundance to selfishness, selfishness to complacency, complacency to apathy, apathy to dependency, and dependency back again into bondage. 

That is the horrifying scenario.  What I do believe—and I wouldn‘t be involved in politics if I didn‘t believe this—you can extend the product life of a civilization by making the right choices, in the same way that you can extend the product life of soap or any other product sold in the marketplace.  So I think that there are things we can do. 

(CROSSTALK)

BUCHANAN:  Tell me quickly, where do you see a real resolve and determination to pare back or to hold, get rid of cost-of-living increases for Social Security and Medicare?  I don‘t see it anywhere. 

SANFORD:  No, you are absolutely right there.

But I have got to give credit to George Bush on what he has proposed in terms of personal savings accounts, as opposed to the way that Kerry has absolutely pandered on that front. 

MOORE:  Joe, could I intervene something here on how we can get this budget under control?

SCARBOROUGH:  Yes, sure, Steve.

MOORE:  There are some commonsense ideas that we simply can‘t seem to get through Congress. 

And I know people like you lobbied this.  Let‘s start with the line-item veto.  Mark Sanford has the line-item veto in South Carolina.  If there is a wasteful spending item in a spending bill like the Cowgirl Hall of Fame, he can take that veto pen and strike it right out.  Why don‘t we give the president that? 

Another issue, you remember the Grace Commission in the early 1980s, when President Reagan came into office?  They found hundreds of billions of dollars of waste in our budget.  We have not done an audit of the federal budget in 25 years.  Why don‘t we have independent auditors come in, review these agencies?  There is so much waste and inefficiency.  The Department of Defense has $10 billion a year.  It can‘t even tell you what happened to the money. 

The food stamps program., 30 percent of the food stamps that are being sent out, Joe, every year go to people who are not eligible for food stamps, but nobody monitors this thing.  And a final thing.  I think it‘s time that if a federal agency can‘t pass a basic audit, if they have an Enron problem, we should say, no budget increase until you can tell us how you‘re spending your dollars.  If we did those kinds of commonsense things, we could get this budget under control. 

(CROSSTALK)

SCARBOROUGH:  Not only do we have to do that.  We‘ve got so much more we have to do.  You have got to talk about Social Security.

MOORE:  Right. 

SCARBOROUGH:  You have got to talk about Medicare.  You have got to talk about the baby boomers that are slouching towards retirement. 

MOORE:  Right. 

SCARBOROUGH:  So much to do.  You know what, though? 

Unfortunately, we‘re out of time.  I want to ask all of you to consider coming back tomorrow, later this week, because I‘ll tell you what.  We have so much more to talk about.  This is a critical issue. 

I want to thank you all for being here. 

And, Governor, I didn‘t have time to tell the story of the pigs.  I‘m going to tell it tomorrow night.  We‘ll see you all in a little bit. 

(LAUGHTER)

(CROSSTALK)

SCARBOROUGH:  SCARBOROUGH COUNTRY will be right back.

(COMMERCIAL BREAK)

SCARBOROUGH:  You know, since we started this show, America has added $3.5 million of debt—unbelievable—in just one hour. 

Now, remember, you can read more of “Rome Wasn‘t Burnt in a Day” at our Web site, Joe.MSNBC.com.  Or you can get a copy at a bookstore near you or at Amazon.com.

We‘ll see you tomorrow night.

Copy: Content and programming copyright 2004 MSNBC.  ALL RIGHTS RESERVED.  Transcription Copyright 2004 FDCH e-Media, Inc. (f/k/a/ Federal Document Clearing House Inc., eMediaMillWorks, Inc.), ALL RIGHTS  RESERVED. No license is granted to the user of this material other than for research. User may not reproduce or redistribute the material except for user‘s personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon MSNBC and FDCH e-Media, Inc.‘s copyright or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.

Discuss:

Discussion comments

,