Tom Coburn Fox News Sunday FULL VIDEO and TEXT TRANSCRIPT

The following is a rush transcript of the December 26, 2010, edition of "Fox News Sunday With Chris Wallace." This copy may not be in its final form and may be updated.

CHRIS WALLACE, ANCHOR: I'm Chris Wallace. Welcome to a special holiday edition of "Fox News Sunday."

WALLACE (voice-over): With the lame-duck session in the rear-view mirror, time to look at what's next. Runaway government spending, the country's growing debt, and a possible push for tax reform. We'll discuss America's balance sheet with the Senate's leading fiscal hawk, Republican Senator Tom Coburn.

Then, with the Christmas season upon us, we'll talk about religion and politics with Cardinal Donald Wuerl, archbishop of Washington.

Also, the 2011 political landscape, from the White House, to Capitol Hill, to the presidential campaign trail. We'll ask our Sunday panel what to expect. All right now on "Fox News Sunday."

WALLACE: And hello again from Fox News in Washington. We hope you had a wonderful Christmas and are enjoying the holiday season.

A top priority for the next Congress with Republicans in control of the House and with more clout in the Senate will be to cut spending. Joining us now with his ideas for getting our fiscal house in order is Senator Tom Coburn, known as "Dr. No" for his opposition to government spending.

He joins us from his home state of Oklahoma. Senator, welcome back to "Fox News Sunday."

SEN. TOM COBURN, R-OKLA.: Well, good morning, Chris.

WALLACE: I want to start with the lame duck session of Congress that you just finished. You blocked the Democratic omnibus spending bill, which had $8 billion in new earmarks.

On the other hand, Congress did pass that extension of tax cuts and also unemployment benefits, which adds another trillion dollars to the deficit. So my question is, did Congress get the message that voters were sending in the mid-term elections?

COBURN: I certainly don't believe that the lame duck Congress did. The omnibus would have spent -- raised the baseline about $40 billion when you take all the tricks out of it. When we wanted to have a stimulus program, but we don't want to get rid of the inefficient things that are not working in the federal government, and there is well over $300 billion a year, which I can lay out for you in detail that most Americans would agree we should eliminate.

We made an easy decision to pass the tax cuts and the unemployment compensation, as well as the decrease in Social Security payments. We didn't do the hard work. The hard work is eliminating the parts of the government that aren't working, that aren't effective, and also a lot of it that's not even in our constitutional role. WALLACE: Well, let me turn to 2011 and the new Congress. How much, realistically do you think the new Congress can cut in federal spending?

COBURN: I think that remains to be seen. We could certainly cut $100 to $200 billion and help ourselves. What most of America doesn't understand is if we don't put our house in order, we are going to look like Greece or Ireland or even Spain and Italy, which are coming, or even maybe ultimately Japan.

And so, time is of the essence for us. And you're seeing economists around the world starting to worry about whether or not we're going to make the substantive changes to austerity that we need to make in our country to correct our course and to create the confidence that we don't wind up like in Ireland.

WALLACE: Let's get more specific. We'll get to the debt situation, the economic situation in a minute, but let's talk about the job that Congress has.

You just released what you called "Waste Book 2010," in which you outline $11 billion in what you call wasteful spending, including some of those crazy earmarks like $5 billion for an neon sign museum in Las Vegas.

But Senator, for all the waste, if you are going to cut spending seriously, aren't you going to have to cut programs that Americans now rely on? Aren't you going to be calling on Americans to make some tough sacrifices?

COBURN: Absolutely. The problem that faces our country today, the last 30 years we have lived off the future, and the bill is coming due. So there cannot be anything that is not put on the table. There will not be one American that will not be called to sacrifice. Those that are more well-to-do will be called to sacrifice to a greater extent. But the fact is, if we all want a successful future for our kids, and we want to see a renewal in America's productivity and growth, we're going to have to make sacrifices. We've -- both the Republican and Democratic administrations have refused to do that. And we're at a time where we don't have the option anymore, and we need to make those decisions ourselves, rather than have those decisions forced upon us by the international financial community.

WALLACE: If I can, Senator, let's get a little specific. Give me the idea of some programs, because, of course, the dirty secret is everybody is opposed to government spending in general. But when it affects them, they like government spending for the programs that actually benefit them. Give me an idea, in your mind, not necessarily Congress is going to pass of a couple of specific programs you'd have to say aren't waste, but we simply can no longer afford?

COBURN: Well, first of all, we haven't even done the hard work of identifying all the duplications in the federal government. A year ago or two years ago, I asked the GAO to give me a report of all the government programs that are out there, so we could cross-reference which ones do the same thing. It's taken the GAO a year-and-a-half and they refused to do it until I put it in the last debt limit extension.

But for example, we could save about $50 billion a year by eliminating programs. I'll give you a couple of examples. We have 267 job training programs across 39 different agencies. Why do we have 267 of them?

We have 105 programs to encourage people to go into science and technology, engineering and math. That's 105 sets of bureaucrats. None of them have metrics on it. We have $100 billion at a minimum of fraud in Medicare and Medicaid. The healthcare bill didn't significantly address that. That is money that's just being blown away.

The Pentagon can't even audit its own books. It doesn't even know where its money is going. And we refuse to have the tough forces go on the Pentagon so that at least they are efficient with the money they're spending.

So we have a round-up of about $350 billion that will not truly impact anybody in this country that we could eliminate tomorrow. Sen. Coburn Talks Debt and Taxes

VIDEO CREDIT: FoxNewsChannel