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CNBC TRANSCRIPT: SENATOR JIM DEMINT (R-SC) SPEAKS WITH LARRY KUDLOW TONIGHT ON CNBC'S "THE KUDLOW REPORT"

When: Tonight, Wednesday, February 15th

Where: CNBC's "The Kudlow Report"

Following is the unofficial transcript of a CNBC interview with Senator Jim Demint (R-SC) tonight on CNBC's "The Kudlow Report" (M-F, 7-8pm ET).

Video: Washington's Spending Addiction

LARRY KUDLOW

: OUR NEXT GUEST SAYS HOWEVER IT'S JUST ANOTHER EXAMPLE OF WASHINGTON'S ADDICTION TO SPENDING AND HE CALLS IT ANOTHER ROTTEN HIGHWAY BILL AND THERE'S THE OP ED PIECE IN THE WALL STREET JOURNAL. JOINING US NOW SOUTH CAROLINA REPUBLICAN SENATOR JIM DEMINT. SENATOR DEMINT YOU KNOW ONE OF THE POINTS YOU MAKE IN YOUR OP ED PIECE YOU MAKE, THE HIGHWAY TRUST FUND IS BASICALLY BANKRUPT. SO I WAS READING THAT AND I WAS SAYING WHY NOT? EVERYTHING IS BANKRUPT. SPENDING IS BANKRUPT. THE DEFICITS ARE BANKRUPT AND THE ENTITLEMENTS ARE BANKRUPT. WHY SHOULD THE HIGHWAY TRUST FUND BE ANY DIFFERENT? I WANT TO ASK YOU THE QUESTION I'VE BEEN ASKING EVERYBODY ELSE. ARE WE HEADED FOR A CREDIT DOWNGRADE OR TWO BECAUSE OF THIS BANKRUPTCY?

SEN. JIM DEMINT: LARRY, I'M AFRAID WE'RE ON THE VERGE OF LOSING THIS COUNTRY THAT SO MANY HAVE WORKED FOR AND SACRIFICED FOR AND DIED FOR. I THINK IT'S INCREDIBLY SERIOUS THAT THE PRESIDENT'S BUDGET PROPOSES SPENDING MORE MONEY AND DESPITE HIS CLAIMS WILL ACTUALLY DOUBLE OUR DEBT AND YET WE WILL STILL DO THINGS LIKE THIS HIGHWAY BILL WHERE WE ARE ALREADY TAKING 18 CENTS OUT OF EVERY GALLON OF GASOLINE THAT PEOPLE BUY AND WE BRING IT UP HERE AND PUT IT IN THE TRUST FUND TO BUILD ROADS AND BRIDGES AND THAT'S SUPPOSED TO FUND ROADS AND BRIDGES, BUT NOW WITH THE HIGHWAY BILL, WE'RE GOING TO BALE OUT THE TRUST FUND BECAUSE WE'RE SPENDING MORE THIS YEAR THAN WE SHOULD HAVE. SO I JUST DON'T THINK PEOPLE GET THE URGENCY. THE DEBT IS ALREADY BIGGER THAN OUR ECONOMY. WE CAN'T BORROW MUCH MORE MONEY AND TO ANSWER YOUR QUESTION, YES, I THINK WE'RE HEADED FOR A CREDIT DOWNGRADE, I DON'T KNOW HOW WE COULDN'T IF YOU LOOK AT THE PRESIDENT'S BUDGET AND THE FACT THAT AFTER ALL THE HYPERVENTILATING LAST YEAR, WE'RE SPENDING MORE THIS YEAR THAN WE DID LAST YEAR. AT SOME POINT, WE HAVE TO GET THE MESSAGE THAT WE HAVE TO CUT SPENDING. THE GOVERNMENT ACCOUNTABILITY OFFICE, LARRY, HAS IDENTIFIED OVER A TRILLION DOLLARS OF WASTEFUL SPENDING BUT WE CANNOT GET ONE OF THOSE PROGRAMS ON THE TABLE TO CUT.

KUDLOW: LET ME GO BACK TO YOUR HIGHWAY TRUST FUND BECAUSE THAT'S A NEW ONE. I KNOW THE ENTITLEMENTS, MEDICARES BANKRUPT. SOCIAL SECURITY IS HEADED FOR BANKRUPTCY. YOU'RE SAYING NOW, THE WAY WE SET THIS HIGHWAY TRUST FUND UP IT WAS SUPPOSED TO BE FINANCED BY GASOLINE TAXES, FEDERAL GASOLINE TAXES, BUT IT'S NOT, SO WE HAVE TO RESCUE THE THING. YOU SAID A COUPLE OF YEARS AGO WE HAD TO HAVE A BAILOUT NOW YOU SAY ANOTHER BAILOUT IS COMING. WHERE IS THAT MONEY GOING COME FROM? IS THAT IN THE BUDGET OR IS THAT GOING TO INCREASE THE DEFICIT ALONG WITH THE UNFUNDED PAYROLL TAX CUT? DOES ANYBODY CARE ABOUT THESE NUMBERS ADDING UP?

DEMINT: WELL, THERE ARE A LOT OF SMOKE AND MIRRORS, PAY FORWARDS AS WE CALL THEM, THAT THE HOUSE BILL SAYS OH WE ARE GOING TO TAKE REVENUES THAT WE MIGHT GET FROM NEW ENERGY LIKE IF WE OPEN ANWAR, BUT THIS IS VERY PROSPECTIVE IN NATURE AND IT WILL NEVER MATERIALIZE AND THE DEMOCRATS WILL NEVER LET US OPEN UP ANWAR. SO ACTUALLY TO INSULT THE INTELLIGENCE OF THE AMERICAN PEOPLE BY SAYING OH IT'S NOT REALLY DEFICIT SPENDING BECAUSE WE'RE GOING TO PAY FOR IT BY FUTURE REVENUES. IF WE HAVE FUTURE REVENUES WE NEED TO PAY DOWN THE DEBT AND WE DON'T NEED TO BE SPENDING MONEY NOW THAT WE DON'T HAVE. BUT IF WE COMBINE THAT WITH WHAT WE ARE DOING WITH THE PAYROLL TAX AND THE DOCTOR’S PAYMENT FOR MEDICARE, WE'RE GOING TO BE ADDING WELL OVER $100 BILLION TO OUR DEFICIT THIS WEEK AT A TIME WHEN WE'RE ALL TALKING ABOUT NEEDING TO CUT THE DEFICIT. SO LARRY, IT'S VERY DISCOURAGING FOR THOSE OF US WHO REALLY BELIEVE THAT THIS COUNTRY CANNOT ADD MORE DEBT AND EXPECT TO SURVIVE. THE ONLY REASON WE ARE NOW IS BECAUSE WE'RE PRINTING MONEY AND BECAUSE THE EURO'S IN SO MUCH TROUBLE.

KUDLOW: IS THERE ANOTHER $50 BILLION BAILOUT OF THE HIGHWAY TRUST FUND FOR SO-CALLED INFRASTRUCTURE SPENDING? IS THAT REALLY THE THRUST OF WHAT YOU'RE SAYING? ANOTHER $50 BILLION IN THE HOLE TO BAIL OUT THE HIGHWAY TRUST FUND?

DEMINT: I THINK IT IS. BECAUSE WE'LL BORROW THE MONEY AND THEY'RE SAYING WE MIGHT GET REVENUES IN THE FUTURE BUT WE ARE GOING TO SPEND THE MONEY OVER THE NEXT FEW YEARS AND HOPEFULLY GET THE REVENUES OUT OVER THE NEXT TEN YEARS. WE PLAY THIS GAME WITH ALMOST EVERY BILL THAT COMES THROUGH. WE NEED TO HAVE SOME HONEST SPENDING CUTS AND BEGIN TO MOVE TOWARDS A BALANCED BUDGET, OTHERWISE THE CREDIT DOWNGRADE WILL BE THE LEAST OF OUR PROBLEMS.

KUDLOW: YEAH. I JUST DON'T KNOW WHY NOBODY ELSE IS ASKING THIS QUESTION, SENATOR. I'M GLAD TO HEAR THAT YOU'RE AT LEAST THINKING ABOUT IT. WE HAVE GOT TO SHAPE UP OR THERE ARE DOWNGRADES COMING. SEN. JIM DEMINT OF SOUTH CAROLINA. THANK YOU, SIR.

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