Special Guests: Bill Kristol - Editor of The Weekly Standard


BRIAN SULLIVAN, GUEST HOST: The proposed presidential 2012 budget includes only a very small cut to foreign aid. All in, we're still shelling out 47 billion in international assistance, money we really don't have, and potentially also to folks like Hosni Mubarak, who simply steal it. Bill Kristol says as distasteful as it is, the alternative might be worse. Why do you say that? Americans are suffering, right? We need money. We talk about all these needs we have. Here we have tens of billions a year going around the world, often to countries that don't like us that much.

BILL KRISTOL, FOX NEWS CONTRIBUTOR: That is true. But if it helps us have a decent outcome in Egypt in the next few weeks and months, I suppose, because of the ties we have with the military, which is due in large part to the foreign aid -- the military aid, that might well be worth it to prevent Egypt from going under the dominance of the Muslim Brotherhood or breaking the peace treaty with Israel. So it is a pretty small part of the general national security budget. I'm sure it can be trimmed in certain ways. I think the Republicans are proposing to trim it a little bit more. You have to look at it case-by- case.

I want to get back to your previous discussion, which was very good I thought, Brian. The entitlements is the big ticket item, obviously, if we're serious about the debt and the deficit. The big news, which hasn't been reported enough, is that today, Eric Cantor, the majority leaders, said entitlements will be dealt with in the House Republican budget. John Boehner indicated that yesterday. There has been an internal dispute about that.

It wasn't clear the Republicans would have the nerve to put forth the 2012 budget, the budget Paul Ryan is going to unveil in a couple months, that would actually show reforms and cuts in entitlements.

I think the Republicans are going to have the nerve to do that. It doesn't mean it will be become law in the next year or two. But I think that is very good news for those of us who want the Republicans to be serious about dealing with the debt and the deficit.

SULLIVAN: The reason I've been pounding it on this network, on my program and sitting in for Neil, is because politicians of both flavors don't have the guts or the political wherewithal to do it. You've got to admit that, right, because --

KRISTOL: Totally.

SULLIVAN: Medicaid grew under Republican administrations and -- because no politicians wants to tell somebody what they're not going to get.

KRISTOL: I saw a Republican senator this morning, budget hawk, who said I'm not sure. We don't want to go first on that. We need -- we'll get beat up politically. I said to him, look, with all due respect, Republicans have been campaigning for a year correctly saying we're going over a cliff. It is unsustainable. This debt and deficit will destroy us as a country.

If you believe that, you can't take control of one of the two Houses of Congress and not make a good-faith effort to at least lay down what you would do about it if you controlled the presidency and the other House. The Republican presidential candidate in 2012 -- I really agree with you on this -- is going to have to run on reforming -- fundamentally reforming the big entitlements. The Republican Congress has to lay the groundwork for that presidential candidate next year.

SULLIVAN: They're not going to win. That's --

KRISTOL: If they're not going to win --.

SULLIVAN: If you and I are running -- we're going up against each other, right? I get up and I say, sorry everybody, I'm cutting your Medicare and Medicaid benefits by 10 percent, right? No one will elect me.

KRISTOL: They may not like you, but Chris Christie is a pretty popular guy. Mitch Daniels got reelected by a big margin in Indiana, when Barack Obama was carrying the state. I think the politics of this may have changed. Frankly if they haven't changed, well then country is in terrible shape. You don't get anything by just going along with mistaken public opinion, if it's mistaken. I'm not so sure it is mistaken.

I think people have the sense that this is out of control. Look, we're not going to destroy these programs. We shouldn't destroy these programs. This is the case the Republicans have to make if you want to save Medicare, you have to radically reform it. It's leaving it alone that is going to destroy it. If you think it is important to help the elderly with their medical bills, especially with catastrophic accidents and operations --.

SULLIVAN: -- what it was intended to be. It is not a daily health maintenance program.

KRISTOL: Yeah. Then you need to save Medicare by reforming it. I think that is the message Paul Ryan is going to try to get out here over the next several months. Republicans are going to try to get it out. We'll see whether the public is responsive or not. I don't think they have much choice.

SULLIVAN: Bill Kristol, "The Weekly Standard," thank you very much.

KRISTOL: Thanks.

SULLIVAN: Take care. The domino effect that could make Egypt look like a walk in the park and 85 dollar oil a distant thing of the past.

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