MATTHEWS: President Obama‘s calling for a spending freeze on many domestic programs, in fact, an overall freeze over the next three years, in an effort to show the country he‘s serious about deficit reduction. But while that may be a smart strategy politically, isn‘t government spending what kept the great repression from turning into a second-rate Depression?

U.S. Congressman Dennis Kucinich is a Democrat from Ohio who sits on the oversight and government reform committee. And U.S. Congressman John Larson is a Connecticut Democrat who sits on the Ways and Means Committee.

First Congressman Kucinich and then Congressman Larson. Your views on this proposal the president‘s going to call for in his State of the Union to freeze overall domestic spending at something like $447 billion over the next three years? Your thoughts, Mr. Kucinich?

REP. DENNIS KUCINICH (D-OH), OVERSIGHT AND GOVT. REFORM CMTE: Well, first of all, it‘s not clear that it covers the Pentagon, which is over 50 percent of discretionary spending. But more to the point, this is a time we should be investing in America, investing in job creation, investing in infrastructure, investing in education and health care and transition to green technology. And instead, the economy‘s going into a stall. And these are insufficient measures to be able to get us where we need to go, which is out of the recession.

MATTHEWS: Well, let me go to Mr. Larson. Do you think the president‘s right to call for a freeze on overall discretionary spending, actually social spending, it seems? He‘s not going to touch defense, from what I hear.

REP. JOHN LARSON (D-CT), WAYS AND MEANS CMTE: Well, as long as I think the core values of the Democratic Party, which include Social Security, Medicare, Medicaid, are exempt, and we understand that that‘s the case-certainly, I agree that Dennis has a point. And certainly, our caucus will review an awful lot of this with interest. But I think if the president uses a scalpel, if he is not going after this with a hatchet, that that‘s an approach that can work. And we‘re happy to roll up our sleeves and work alongside the president.

MATTHEWS: Mr. Kucinich, Congressman, the debt now-the deficit, the current fiscal year, which ends at the end of September, is about $1.3 trillion, $1.4 trillion. That‘s pretty high by any standards. Of course, this president inherited something well over $1 trillion in deficit.

KUCINICH: He did.

MATTHEWS: Do we run the risk of rolling deficit after deficit and

scaring the hell out of the world money markets to the point where we can‘t

we can‘t borrow any money for the Chinese anymore, the dollar begins to shrink? Isn‘t there a danger? Even as a liberal, aren‘t you worried about a shrinking dollar, or not?

KUCINICH: Well, we should be concerned about the deficit. The question is, how do you deal with the deficit? And what most economists who want to look at deficit reduction in a serious way who are progressive maintain is that you can invest your way out of the deficit.

I mean, that‘s what we did after the Depression. You know, Roosevelt didn‘t talk about, Well, let‘s cut spending. What he said is, We‘re going to invest. We‘re going to invest in jobs and do WPA, bridges, water systems, sewer systems.

We can do that. And the president still has the power to do that. But this talk about deficit reduction by cutting social programs? This is like trying to lift up a big cargo plane and then you‘re sending it into a stall at the moment you need to give it some gas so you bring the economy up. He‘s not doing that, and I think it just cannot work. It won‘t work. It‘s the wrong move at the wrong time.

MATTHEWS: Congressman Larson, what‘s the positive case for this freeze?

LARSON: Well, I think the positive case is that we‘ve done this before, we can do it again. We were able to create through innovation and jobs and deal with the deficit under President Clinton. We can do it again. I think that this provides the president with a great opportunity. You know, we had Eric Schmidt (ph) before our caucus, and Schmidt talked about how we can innovate our way through this. And I believe that that‘s the case that can be made.

And I think what the president is calling upon is to make sure that he uses a scalpel in areas where it needs to be used, but then not to rule out the necessity of job creation. Our caucus has been all about the creation of jobs, the need to invest in the American economy. And that includes our infrastructure, but that also includes the kind of innovation that Mr.-that Eric singled out very specifically and what we need to do to grow this economy. And I think that‘s the positive step forward.

MATTHEWS: Mr. Kucinich, let me ask you about a political question. Let‘s be honest, a good part of this is politics. If you were the president, or his people around him up there at the White House, would you try to do something that moved to the center politically? Would you nod to the center of this country, to the independents at this point, given what happened in Massachusetts, or would you go hard progressive? Just pure politics, what‘s the way to save the Congress?

KUCINICH: I think the way you save the country is to create millions of new jobs. And I think the vote in Massachusetts was a disgust with the economy and with the health care plan, but we-and also the fact that so many people are losing their homes. We need to focus on job creation, focus on housing, and try to do something to revive a semblance of health care. And if we do that, we‘ll regain the confidence of the American people.

You got to remember this, Chris. Banks aren‘t lending money right now for job creation. Most of the wealth that was created from 1980 to 2005 in terms of job creation came from people who were tapping their home equity line of credits to be able to create business opportunities. That money‘s not there anymore. Government is the last resort in terms of investment.

We don‘t really have a choice here. We‘re either going to go forward and invest, or this economy is going to continue to tank.

MATTHEWS: Well, here‘s the interesting part, Mr. Larson. Here are the exemptions the president‘s proposing in his budget freeze-Defense, Homeland Security, Veterans Administration, Medicare and Medicaid, Social Security. You know, I wonder what does get cut. What does get frozen after you leave all those things to float up with costs?

LARSON: Well, we have a very skeptical caucus, as you might imagine, Chris. And certainly, we‘re as interested in where those cuts are going to be made. What we‘re concerned about-and I think a lot of the anger up in Massachusetts was about process, as well, and what happens down here in Washington. We need a more kind of open process.

I‘d like to see these discussions and these cuts be held open to C-Span. I‘d like to see the Republican alternatives. They haven‘t joined on this bandwagon at all, even though they‘ve been screaming about it. Let‘s go back and remind people how we got into this situation, who created this enormous deficit. They should have passed out coal miner hats to each and every one of us the day that the president got sworn in, so we could see how far and how deep that this recession was...

MATTHEWS: Right.

LARSON: ... and the deficit that he had left us. So let‘s open it up.

MATTHEWS: I agree with you on that, sir. I think one of the biggest mistakes of this administration is not reminding us how close we came to the abyss. And if this president hadn‘t spent our way out of it, we‘d be in it.

Here‘s Senator Evan Bayh, a moderate Democrat up for reelection, encouraging the president on this freeze. Let‘s listen to Senator Bayh from Indiana.

(BEGIN VIDEO CLIP)

SEN. EVAN BAYH (D), INDIANA: But we can do something right here, right now, starting next week. The president can say in his State of the Union address, I‘m going to include in my budget a freeze on discretionary spending. I‘m drawing a line in the sand, and I‘m willing to use my veto pen to enforce that.

UNIDENTIFIED MALE: Do you think he will do that?

BAYH: Not-not 10 months from now, not two years from now, but right now.

UNIDENTIFIED MALE: Do you think he will do it?

BAYH: I think there‘s a fighting chance that he will.

UNIDENTIFIED MALE: You do?

BAYH: That‘s what I‘m looking for.

(END VIDEO CLIP)

MATTHEWS: How can Indiana be so far away from Cleveland, Congressman Kucinich, in your thinking? I mean, here‘s a moderate Democrat, and you are, I think, a progressive, a liberal Democrat from Cleveland. Why are you so different in your view of this freeze? Can you explain it?

KUCINICH: First of all, I told you, half of it isn‘t-we don‘t even touch the Pentagon. You want to talk about drawing a line in the sand? Why don‘t we get out of the sands in Iraq, and why don‘t we get out of the rocks in Afghanistan, and start to take care of things here at home?

We need jobs. And the government is in a position where it can invest to create jobs. And it‘s not going to be creating jobs by cutting social spending. That‘s hogwash.

MATTHEWS: Yes.

KUCINICH: We need to start focusing on job creation. And this-this proposal could actually send the economy into a stall, as opposed to helping to lift it up.

MATTHEWS: OK.

KUCINICH: And that‘s what my concern is.

(CROSSTALK)

MATTHEWS: Mr. Larson, Mr. Kucinich took a bye on that question. He didn‘t want to compare himself to Evan Bayh.

But here‘s Evan Bayh fighting for reelection in a relatively conservative state like Indiana, a purple state, at best, if you‘re a Democrat. He seems to think his future lies in moderation, not in progressivism. Is he right?

LARSON: Well, I think he is for where Evan Bayh is coming from and where a lot of members-we have a diverse caucus, Chris. So, I try to use what I call the Augie & Ray‘s barometer. That‘s a little luncheonette in East Hartford, Connecticut.

And, there, they‘re concerned about the kitchen table discussion.

They‘re all tightening their belts.

MATTHEWS: Yes.

LARSON: They all have to go for a freeze. And, so, there‘s a lot of sentiment for that.

But the question remains, at the core values-and I think it comes down to this. The Democrats trust this president enough to make sure, when he‘s using a scalpel, that he‘s going to be using it in the right way. And that means that the core values of Medicare, Medicaid and Social Security, that‘s our bread and butter issues.

And I think that‘s what Evan Bayh was just...

(CROSSTALK)

MATTHEWS: OK.

LARSON: I come down on the side of Dennis in terms of wanting to make more investments.

MATTHEWS: OK.

LARSON: But I think Evan Bayh made the right political choice for Evan Bayh.

MATTHEWS: By the way, both you congressmen and everybody else watching should stay tuned tonight at 7:00 Eastern to catch our latest poll. I think you will be enlightened by it, the positive aspects of what Congressman Larson just said. It‘s amazing to hear a politician speak the absolute truth, according to our poll.

Anyway, thank you very much, Mr. Larson.

Thank you, Mr. Kucinich.