McCarthy said President Obama was "creating hysteria" about the sequestration cuts - rather than working with Republicans. "If we can't find a way to cut $85 billion out of a $3.6 trillion deficit, we're not gonna overcome our problems," he said.

He criticized the people running California's high-speed rail project.   "The worst part about it is, they think the federal government is gonna pay it for them.  And it's a false belief that that will happen."

And he spoke about the state of the struggling California GOP.  "The most important thing that the Republican Party has is, I don't believe we can get any lower.  All right?  So the only way is up."  To get there, McCarthy says the party must be more inclusive, improve its infrastructure and show voters Republicans care about their lives.