Transcript: Ron Paul on FOX News "Your World" before the May 15 debate

NEIL CAVUTO (Host): Well, he is one of the ten presidential candidates to face off on tonight's debate here at FOX. But I gotta tell you I have never seen so many viewer emails to get a candidate on our air as I have with this particular gentleman. Our mailbox is consistently flooded with these requests. With us now is Republican Ron Paul of Texas. Congressman, you must have some very loyal fans.

RON PAUL: Well, that's good. That's what you need in a campaign.

CAVUTO: OK, well you got your chance, you're in a debate forum right now. But you're nowhere in the polls. Polls don't mean anything, I know... How are you going to stand out tonight?

PAUL: Well, I guess, just telling the truth like I did last time, and we did very well. I think straightforward answers will serve me well. I think we face a lot of problems and I've talked about them for a good many years. I've talked about why we shouldn't have gone to the war, and why we should end the war. I've talked about the financial conditions. I don't think this country can do well borrowing nearly $3 billion dollars a day from places like Japan and China to serve as our "account deficit". And we're leaving a $60 trillion obligation to the next generation. So this country's in serious financial trouble, and besides, although the market today was excited about good news on inflation, I saw some bad news in that. I mean, 5% inflation rate, and that's probably less than 2% or so of what's really happening [not sure what Paul means by this 2% comment]. The American people are sick and tired of inflation. When they go buy their gasoline or pay their medical bills, so we have some serious financial problems --

CAVUTO: We have a, you can't, Congressman, we've got a pretty good economy going here, right? We've got productivity soaring. We've got retail sales that are strong. We've got corporate earnings that for, what, the 19th quarter, are up double digit? We've got a market chasing highs, I mean, this isn't happening in a vacuum, right?

PAUL: Yeah, that's nice, but when you have to borrow, you know... My personal finances wouldn't be very good if I borrowed a million dollars every month, but, someday, the bills will become due. And the bills'll come due in this country, and then we'll have to pay for it. We can't afford this war, and we can't afford the entitlement system --

CAVUTO: Look, Congressman, did you say this 10 years ago, when the numbers were similarly strong, and we were still borrowing a good deal then.

PAUL: That's right, that means the dollar bubble is much bigger than ever,

CAVUTO: So what do you say is --

PAUL: And of course we've had a few bubbles collapse --

CAVUTO: what's gonna happen?

PAUL: We've had the NASDAQ bubble collapse already. We have the housing bubble in the middle of a collapse, so the dollar bubble will collapse as well. We have to live within our means. You can't print money out of the blue, and think you can print your money into prosperity. And most people are coming around to believing that --

CAVUTO: So what would you tell --

PAUL: It doesn't make any sense --

CAVUTO: If you became President, Congressman, what's some of the tough medicine you would give us?

PAUL: Well, I think we should live within our means. I think we should balance the budget. I think we could do that by bringing our troops home and saving hundreds of billions of dollars on a foreign policy of interventionism. We should go back to the Old Right position, not the neo-conservative position. We shouldn't be adding new entitlement programs. We should live within our means.

CAVUTO: Would you --

PAUL: And we shouldn't print money to pay the bills.

CAVUTO: Would you rescind, sir, the President's tax cuts, let them expire in 2010?

PAUL: I am sorry, rescind which?

CAVUTO: The tax cuts, let them expire in 2010?

PAUL: No! Heavens no, we need greater tax cuts. We don't need to rescind tax cuts, we need to reduce taxes a lot more. And we can only do that if we change our attitude about the entitlement system and foreign policy. We cannot run an empire and police the world and not raise taxes. And if you don't raise taxes, you just print the money, and that's another tax on the poor and the middle class, because that's who gets injured by a depreciating currency. So it's back to the old story: we should have a government that lives within the bounds of the Constitution. It is not authorized to do most of what we do in Washington, and certainly we can't afford it, and as long as they trust the dollar we can get away with it. But there is a day, and we're in the middle of a dollar that is sliding on international markets, and it's going to continue to slide --

CAVUTO: So what about --

PAUL: And it may crash one of these days.

CAVUTO: All right, all right. What about Social Security, you talk about entitlement programs, Medicare: do we need them?

PAUL: Medicare... Well, the only way you can survive by taking care of the people we've taught to be dependent is to change the foreign policy. Because, yes, we should have a transition period, and young people should certainly be given a chance to get out of Social Security. You should give people over 65 the option of a Medical Savings Account. They're not even allowed to have a Medical Savings Account. If they're unhappy with Medicare, they're forced to be in it. It's a monopoly, a government monopoly. So, no, we should have choices, we should have market choices always. And as long as it's forced into the government's system, you're gonna have inefficiencies, and that's what we're suffering from today.

CAVUTO: All right. Well, Congressman, if you say even some of this stuff tonight, you're going to create fireworks. Very good seeing you sir, thank you very much.