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The following is a rush transcript of the June 5, 2011 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.
The economy struggles and nation's recovery is in jeopardy.
WALLACE: With anemic job growth, a weak housing market and gridlock on Capitol Hill over our debt, what needs to be done to America back on track? We'll ask a potential presidential candidate who just completed the first leg of her One Nation bus tour. Sarah Palin in an exclusive "2012: One on One" interview.
Also, Romney makes official. But how strong is the front runner? We'll ask our Sunday panel where the Republican field stands now.
And our power players of the week, with words of wisdom to the class of 2011.
All right now on "Fox News Sunday."
And hello again from Fox News in Washington.
While the front-runner for the presidential Republican nomination got in the race this week, most of the focus was on a potential candidate who hasn't made her intentions known yet. We continue our "2012: One-on-One" interview series with former Governor Sarah Palin who joins us from Arizona.
And, Governor, welcome back to "Fox News Sunday."
FORMER GOV. SARAH PALIN, R-ALASKA: Thank you so much, Chris.
WALLACE: Let's start with the economy and bad news on Friday -- just 54,000 jobs were added in May, the lowest number in eight months. Unemployment rose to 9.1 percent. When you add that to poor numbers on growth, on housing, on manufacturing, where are we in this recovery?
PALIN: And you add, too, the fact that this quantitative easing, one and two, hasn't worked and we're talking about Q.E. 3 already and the devalued dollar is an addition to this problem.
You know, President Obama tried to explain to the public the other day that this is just a bump in the road. But, you know, you try telling that bump in the road analogy to those families out there trying to keep their home, trying to keep their businesses afloat, trying to fund their child's college education and just fuel up their own vehicle.
And the people will tell you it's not a bump in the road. We've hit a brick wall.
So, we know what the problem is. You just run through some of the stats that explained what the problem is. Now, we really need to start talking about the solutions. We need to start ramping, grow industry, production in the private sector, or this sinking ship that we are on will soon be drowning in debt and in additional economic problems. We need to start talking about the solutions.
WALLACE: Well, I'm going to get to the solutions in a minute. But President Obama and his advisors note that, in fact, the trend lines have been good. The economy, the private sector has added 1 million jobs in the last few months. Let's take look at what said.
(BEGIN VIDEO CLIP)
PRESIDENT BARACK OBAMA: We are facing some tough headwinds. Lately, it's high gas prices, the earthquake in Japan, and unease about European fiscal situation. That's going to happen from time to time. There are going to be bumps on the road to recovery.
(END VIDEO CLIP)
WALLACE: And while May was certainly a bad month, the president says that the trend line, the general trend of the economy has been positive.
PALIN: The month of April was tough, too. There were jobs added to the marketplace, Chris, but remember, that was McDonald's out there with their big push to hire 50,000-some people. So, I think there were some numbers skewed last month, too.
The point is this administration has got to be honest and candid with the American public. Bottom is their plan for bigger government, more federal control over our private sector, more regulations and burdensome mandates on the people and our businesses, it's not working and we do need to shift gears and change course. And it's very noble of President Obama to want to stay at the helm and maybe go down with this sinking ship.
But I prefer, many Americans prefer, that we start plugging the hole, that we start powering the build pump and start getting rid of this unsustainable debt that is sinking our ship. We don't have to go the way of the Titanic and there are things that have to be put in place right now before this ship does sink. We don't have to keep going down the road that we're going on today.
WALLACE: Well, let's talk about the debate because what Republicans are saying about what to do next -- Republicans are sounding a familiar refrain: cut spending, cut taxes, cut regulation. Democrats say, promote exports, targeted investment, and the big spending cuts, would actually draw (ph) more people out of work.
Question, what would President Palin do? Specifically, to boost the economy.
PALIN: I would go the opposite direction of what these Democrats and President Obama have already tried in his two-and-a-half years. They're already tried the nearly $1 trillion stimulus package. And we still have 9.1 percent unemployment. We still have about a 17 percent underemployment rate. And we are incurring more and more debt -- as we speak, Chris. So, it's just not working.
What President Palin would do is cut the federal budget, making sure that we're crowding out private sector investment. We will cut that spending. We have no choice. We're going broke. We're going bankrupt.
We have absolutely no choice. And cut the burdensome regulations and mandates that really quash an entrepreneurial spirit in America and do burden our businesses, and create uncertainly. And that's why we kind of stuck in neutral now, why businesses can't expand.
I would taxes. The second highest corporate tax rate in the world we are burden with. No, we need to cut that to incentivize businesses to stay here on our shores, in America. And not outsource all these jobs and opportunities.
And then one of the most important things, Chris, that we have to engage is unleashing our domestic energy production opportunities. It does come down to "drill, baby, drill," in addition to an "all of the above" energy policy that really is non-existent in the Obama administration.
Energy is the key to prosperity, to security. And until we start tapping our domestic, conventional and alternative sources to energy, we're never going to get there.
WALLACE: You talked about the fact we're going broke. And I think everybody would agree with that. Let's turn to the issue of the national debt, because you say you don't believe Treasury Secretary Geithner when he talks about this drop-dead date of catastrophe if will to raise the debt limit by August 2nd. But, Governor, this week, Moody's said that they are going to lower our credit rating for our debt unless we raise the limit, the debt limit, by August 2nd, also they said they may lower our rating if we fail to come up with a serious reduction plan.
So, the question is, wouldn't that be a financial disaster?
PALIN: I don't believe Tim Geithner as cries wolf for the fourth time now, telling us that there is a drop-dead date and crisis will ensue, and economic woes will befall us even greater than they already are if we don't increase the debt limit. He's told us this a couple of times now. In fact, I believe it's four times now where there's a --
WALLACE: What about Moody's saying that what they're saying?
PALIN: Moody's message is very powerful and that should be the warning the American public to make sure that are electing congressmen and women who hold the purse strings in this nation to quit incurring the debt. We rake in $58 billion a day, our federal government, via payroll taxes and or other revenue sources. If we prioritize and took that $68 billion a day and service our debt, we don't have to raise that debt ceiling.
We can make sure that we are funding the debt service and our highest priorities first. And other things are going to have to wait, Chris. Again, we have no choice. It's common sense.
WALLACE: I just want to make sure I'm clear. So, you're saying no deal for deficit reduction. Don't raise the debt limit. PALIN: I have -- I know that the debt ceiling will be raised, whether I want it to be raised or not. There is a majority in Congress, both sides of the aisle, that will raise the debt ceiling. If I were in Congress, though, I would be a "no" vote to raising that debt ceiling. I would send that message that it is failed leadership in the White House and with our elected officials when they have allowed to us to get this breaking point, if you will, that Moody's is warning about.
So, I vote no on the debt ceiling. It's just going to allow the big spenders another tool to continue to increase debt.
So, I believe that the debt ceiling will be raised. But for those who are already committed to voting for it, they better get something out of it for "We the people." They better get a balanced budget. They better get commensurate cuts in federal spending that equate to that increase in debt, because they're going to keep incurring more and more.
How about people like Senator Begich, a Democrat from Alaska. He better get ANWR in this bill, opening another domestic source of energy up there in Alaska when he votes yes for increasing the debt ceiling.
WALLACE: Let me --
PALIN: These folks better get something out of it.
WALLACE: All right. Let me move you along to another subject. Do you support Congressman Paul Ryan's plan to overhaul Medicare?
PALIN: I do. And I have from day one. This will save Medicare. It will save the safety net of health care coverage that our elders in this country need. I am very frustrated with Democrats and with the media trying to spin Paul Ryan's efforts here in trying to save and shore up Medicare, because what's being spun, Chris, this misperception, this misconception that he's trying to do away with Medicare.
Now, what's going to do away with Medicare is if we keep going down the road that we're on. But Obama evidently wants us to go down because we will have a bankrupt Medicare system. There will be no safety net unless we shore it up. That's what Paul Ryan is attempting to do.
WALLACE: But, Governor, what about the nonpartisan Congressional Budget Office that says if you go ahead with the Ryan plan -- and I want point out, as you well know -- that it doesn't start for 10 years. It doesn't affect anyone who is over 55 years of age.
WALLACE: That if you go with that plan, which would turn a fee- for-service plan into a voucher system, according to the Congressional Budget Office, it means that going forward, seniors are going to have to pay more out of pocket for their health care.
PALIN: Well, if we forward, the way that we're going today, as I say, we will be bankrupt. We will have no Medicare system at all. And that's where, again, those in the White House, they need to be honest with the American public and let them know what we're facing here in these very soon to coming years.
So, there are -- there is a need for reform, Chris. We have no choice. There has to be changes.
We have to remember, too, that Paul Ryan's plan -- and I support it because I don't see anything better, more sensible, more fiscally sound out there. So, I do support it. His plan, too, remember, as you point out, it doesn't affect anyone who is 55 and older today. So, that's another misconception that is out there perpetuated by the media and by Democrats, making it sound like our esteemed elders today are going to be harmed. They won't be harmed by this plan.
WALLACE: You also address U.S. foreign policy this week in terms of the budget. You said we should consider a quicker drawdown of forces in Afghanistan. And then you said this, "With Afghanistan, with Iraq, too, and now with Libya, the of the cost of the war, the cost of the war, has got to be considered."
So, the question is: would you pull some of our U.S. forces out of Iraq, Afghanistan, and Libya because can't afford to keep them there?
PALIN: Well, I like to talk about each one of those areas specifically, because there are conditions that differ in each area.
Take Afghanistan, conditions certainly have changed even in this last week or two when President Karzai comes out and acts like the host nation to perhaps want us there, or NATO. NATO, as we help lead NATO, we are still concerned about civilians and making sure that civilian casualties are not part of any kind of strategy. And yet, that kind of get thrown back in our face and there -- it sounds like a message being sent to America and to NATO today by President Karzai that perhaps we're not wanted there. After everything that we have done in Afghanistan, after the billions and billions of dollars that we spent there to help rebuild their nation and to squash the terrorist cell so that we're protected on our own shores. So, conditions have changed there and we need to reevaluate the timeline that we have for ourselves being in there.
Now, I have great faith in Petraeus and he -- his folks with boots on the ground and on the front lines, I trust that Petraeus will know of this timeline that makes most sense for America's interest to be met in Afghanistan.
Now in Libya, conditions there, we have to consider what Congress has passed via this resolution this last week is a good thing. It's a good message to President Obama. He has not been clear about what our mission is in Libya. And that's what the resolution is asking.
We are going to be spending billions and billions there, too, with sort of a nebulous, murky mission that's not really being articulated and that's not fair to the American public. We need to make sure that we know what we are there for.
And if it's explained very concisely and very sensibly, then won't need to be in Libya, which is turning into a civil war there -- we don't need to be --
WALLACE: Just real quickly, back to Afghanistan, I want to move on to some other things. But, really, quickly on Afghanistan, are you saying that the combination of Karzai criticizing and trying to limit our mission and the cost factor, in our U.S. budget, our debt, that we should reconsider our commitment, how long and how and what a footprint we in Afghanistan?
PALIN: We're putting faith in General Petraeus as he lines out timeline for the American public to understand. Yes, those two factors, Chris, that you mention have got to be considered and revaluated. "A," the host nation ability to understand what it is that we are trying to do for them and with them in their nation; and the cost of war.
Three wars that we're going engaged in today and our country nearing bankruptcy, we have to rethink everything that we're doing with foreign aid and with foreign intervention. We have got to make sure that it' America's interest first being met in each one of these nations. And if there is an opportunity to, say, in Afghanistan with General Petraeus' guidance, to back out a little bit perhaps sooner than we have because of these conditions that have changed most recently, then I would support that.
WALLACE: Let's get to your bus trip and to 2012. And I'm going to ask you the question everybody has asked me when they heard you're going to be on the program. What are you up to?
PALIN: Oh, man, it seems like I answered this question a million times in the last week and folks still, I guess, aren't understanding, at least reporters don't seem to be understanding it. Even your own Shep Smith there on Fox News, he announced the other day that I was on some publicity tour.
I wanted to say, Shep, take it one step further. What am I publicizing on this tour? I'm publicizing Americana and our foundation and how important it is that we learn about our past and our challenges and victories throughout American history, so that we can successfully proceed forward -- very heady days, rough waters ahead of us, Chris. We need to make sure that we have a strong grasp of our foundational victories so we can move forward.
That's what we're highlighting on this bus tour. It's not a campaign tour.
WALLACE: I got to ask you real quickly about that, though. You realized that you messed up about Paul Revere, don't you?
PALIN: You know what? I didn't mess up about Paul Revere. Here is what Paul Revere did. He warned the Americans that the British were coming, the British were coming, and they were going to try take our arms and we got to make sure that we were protecting ourselves and shoring up all of ammunitions and our firearms so that they couldn't take it.
But remember that the British had already been there, many soldiers for seven years in that area. And part of Paul Revere's ride -- and it wasn't just one ride -- he was a courier, he was a messenger. Part of his ride was to warn the British that we're already there. That, hey, you're not going to succeed. You're not going to take American arms. You are not going to beat our own well- armed persons, individual, private militia that we have. He did warn the British.
And in a shout-out, gotcha type of question that was asked of me, I answered candidly. And I know my American history.
WALLACE: Well, I got tell you, I wasn't sure entirely before I ask you that question. So, I went to Google to make sure that I knew as much. And we both know now.
But, look, everybody is asking. And I take you at your word that you wanted to celebrate America's history. But, obviously, you're a player in the 2012 campaign. Has the response that you got over the last week, has it changed your mind at all as you make the deliberation as to whether or not to run?
PALIN: It hasn't changed my mind as to whether I want to be a candidate or not, Chris. But the response that I received along the trail, my family and I, from "We the people," from people saying, please, somebody has got to be honest with the public and let Americans understand where our country is headed. The socialized big government takeover type, federal government policies that are burdening our economy and really installing any potential for growth and recovery in America, we've got to stop that agenda.
Well, who is leading that agenda? President Obama is. We have got to turn things around in 2012. Whether it's me -- throwing my name in the hat or just supporting the right candidate, the response has been great confirmation of the need for real positive change in this country. WALLACE: But -- and you've always been really straight with me. After this week, and obviously, you got a lot of attention, there was a big response. Does it make you lean more towards running?
PALIN: I tell you, the response -- I haven't interpreted it as being about me, about being me as a candidate or a potential candidate. It's been about the message, Chris. Truly, it has. It's been about the desire of the American public to get back to our foundational beliefs, our values, free market enterprise, freedoms for Americans to make our decision instead of elite faraway government making the decisions for us.
So, it's not about me. It's about this message.
WALLACE: So, on a spectrum where zero is an absolutely not running and 100 percent is "I'm in the race," where are you now? Give a number.
PALIN: Still right there in the middle, Chris, still trying figure out what the lay of the land will be as these weeks and months go by.
WALLACE: All right. I want to talk about a controversy because this week, Alaska officials, as you well know, are going to release thousands of pages of your e-mails as governor. Are you worried that some of those emails could be damaging?
PALIN: No, because, you know, I think every rock in the Palin household that could ever be kicked over and uncovered anything, it's already been kicked over. I don't think there's anything private in our family now. A lot of those emails obviously weren't meant for public consumption. They are between staff members. They're probably between family members.
So, you know what, I'm sure people are going to capitalize on this opportunity to go through 25,000 emails and perhaps take things out of context. They'll never truly know what the context of each one of the emails was, or each one of the issues were that I was working on that day, or in that time period.
But whatever, Chris. It's like nothing surprises me anymore. We'll keep doing what we're doing. I'm going to keep going forward with solutions that I want to see applied to this great country, the challenges that we're facing. And things like that are going to be perhaps a distraction for others. They won't distract me.
WALLACE: Let me just ask one follow-up in that regard, because one of your former advisers, Frank Bailey, has written a book. And in it, he says, and he uses some of your e-mails because he was the recipient of them, he says that there were times when you were unethical, that he was told to write fake letters to the editor under false names or to spend hours manipulating TV polls by voting on the phone over and over again.
PALIN: Those are complete lies, Chris. And I say it unequivocally that Frank Bailey has some ethical problems of his own. In fact, out the 25,000 employees that I was in charge of, 24,000, in Alaska, and in our large administration, and with the $14 billion that we were working on, heady things, big things were working on, only one person in the entire administration had to undergo ethics training. And it was because of blunders that this individual, Frank Bailey, would engage in, and result in.
It was Frank Bailey who still under investigation today, but making money off of taking private emails from somebody after having hoarded them for some years. It was only Frank Bailey who was ordered to undergo ethics training. So, he's got some issues.
WALLACE: All right. Let's finally take a look at the Republican presidential field as it stands now, because this week when you were in Boston, you took some shots at the unofficial front-runner Romney. You said that -- you criticize the individual mandate, the requirement that everybody get health care insurance in Romneycare, with the reform that he instituted in Massachusetts. You said that he's going to have a hard time attracting Tea Party activists.
Do you think that there are some vulnerabilities in Romney as a frontrunner? How strong a frontrunner do you think he is?
PALIN: Well, I don't think it's taking a shot, nor negative campaigning or rhetoric to speak to someone's record. And it was a simple answer to one simple question about do you think Romney will have a problem with the Tea Party movement. And I said in that particular issue he would, because a mandate coming from big federal government when it comes to health care and in Romney's case, of course, it was a state government mandating on people what they should or should not purchase in terms of healthcare. That's going to be a problem.
But, of course, he is already on the road to explaining why he would want a state government to mandate health care. As opposed to what I did in the state of Alaska, and that was usher in as much as I could, strong efforts to allow competition and more private decisions being made between the health care recipient and their doctor, their insurance company. That's what I engaged in.
WALLACE: Let me ask you quickly --
PALIN: And that's a difference in philosophy.
WALLACE: Let me ask you quickly about Romney, though. He says, well, it wasn't a federal plan or a one-size-fits-all plan, it was a state plan. Does that make a difference for you? Or is the idea of government telling people you got to buy insurance -- is that still the wrong principle, whether it's on federal or the state level?
PALIN: I don't like local, state or federal level of got mandating anything in our lives , in our families, and in our businesses, unless it comes to saving lives. So, but I do understand where Mitt Romney is going with that. Obviously, he's a supporter of the Tenth Amendment. And that's what's missing in this present administration, is any respect for the Tenth Amendment, for states' rights and we need to get back to states' rights.
But, you know, on the local level, you know, for instance, I opposed annexing in areas around our city borders, because I knew that if neighborhoods wanted to be a part of the city, well, they would mandate themselves in and invite themselves into a city. That's just one example of even on a local level how dangerous it is for a politician to start thinking they know more than that individual family, that individual business.
WALLACE: Let me --
PALIN: And we, according to our own priorities, make decisions and mandate, and dictate to them local, state, federal level -- it's not good.
WALLACE: Let me move on real quickly. I'm going to invoke the lightning round rules on you. Quick questions, quick answers.
You would seem to be closest politically of all the candidates to Michele Bachmann, Congresswoman Bachmann. You're both Tea Part activists. You're both social conservatives.
Is there room in the race for the two of you or would you split the same base of voters?
PALIN: No, we have differences, too. I have many years of executive experience, too. And she has her strengths that she will to add to the race. But, no, yes, there's certainly room. The more, the merrier. More competition, the better.
WALLACE: Finally, I want to put up the picture of The New Hampshire Leader, the day -- and you can't see it there in Arizona, but it was the day after your visit, your clambake was the lead story and the big picture on the front page. And if you look way over in the there, you can see Mitt Romney's formal announcement gets a little tiny picture and a story on page three. This is you favorite setup, but you got to answer it in about minute. As a student and as a critic of the media, why do you think, Governor, that you attract so much attention?
PALIN: I think there's a curiosity factor there still that's in play. I don't know. But, you know, I apologize if I stepped on any -- any of that PR that Mitt Romney needed or wanted that day. I do sincerely apologize. I didn't mean to step on anybody's toes.
WALLACE: There are of people that think you love stepping on his toes.
PALIN: Not his. I'll step on -- I'll step on the toes of those who are making poor decisions for our nation. I have faith that Mitt Romney is one who desires to make good, sound, fiscally responsible decisions for our nation. I don't have a problem stepping on toes of those, though, who keep screwing up.
WALLACE: Well, Governor, before I screw up, I'm going to end this interview. Thank you so much for joining us today. It's always a pleasure to talk with you.
PALIN: Thank so much. I appreciate you, Chris. Now, it's time to make the soup.
WALLACE: OK. I have a cook book for you.
Up next, the Sunday panel on the stalling economic recovery.
And, later, the GOP race for president, where does it stand now?
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