CLINTON: Well, that's what I think. I think this idea-- I think it's very important that Americans understand, you know, tax cuts are always popular, but about half of these tax cuts since 2001 have gone to people in my income group, the top 1 percent. I've gotten four tax cuts.

They're responsible for this big structural deficit, and they're not going away, the deficits aren't. Now, what Americans need to understand is that that means every single day of the year, our government goes into the market and borrows money from other countries to finance Iraq, Afghanistan, Katrina, and our tax cuts. We have never done this before. Never in the history of our republic have we ever financed a conflict, military conflict, by borrowing money from somewhere else.

STEPHANOPOULOS: The president is not going to move. What do Democrats do?

CLINTON: They should continue to oppose it, and they should make it an issue in the 2006 election, and they should make it an issue in the 2008 election. And they should hope, to goodness, for the sake of our country, that the cows don't come home before we have time to rectify it.

I mean, sooner or later, just think what would happen if the Chinese-- We're pressing the Chinese now, a country not nearly rich as America per capita, to keep loaning us money with low interest to cover my tax cut, Iraq, Afghanistan, and Katrina and at the same time to raise the value of their currency so their imports into our country will become more expensive, and our exports to them will become less expensive. And by the way, we don't want to let them buy any oil companies or anything like that.

So what if they just got tired of buying our debt? What if the Japanese got tired of doing it? Japan's economy is beginning to grow again. Suppose they decided they wanted to keep some of their money at home and invest it in Japan, because they're starting to grow?

We depend on Japan, China, the United Kingdom, Saudi Arabia, and Korea primarily to basically loan us money every day of the year to cover my tax cut and these conflicts and Katrina. I don't think it makes any sense. I think it's wrong.