SEAN HANNITY, HOST: The debt deal that has many conservatives up in arms was signed into law today by President Barack Obama after the measure easily passed a Senate by a margin of 74 to 26. Now, here is the president from earlier today in the Rose Garden.
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PRESIDENT BARACK OBAMA: Congress has now approved a compromise to reduce the deficit and avert a default that would have devastated our economy. It was a long and contentious debate and I want to thank the American people for keeping up the pressure on their elected officials, to put politics aside and work together for the good of the country. Voters may have chosen divided government but they sure didn't vote for dysfunctional government.
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HANNITY: Now, what our president failed to mention is that members of his own party are spewing the hateful rhetoric that is contributing to Washington's quote, "dysfunction." For example, just yesterday on a day when Congresswoman Gabrielle Giffords returned to the Capitol building for the first time since the shooting that nearly took her life. At least two Democrats are believed to have referred to members of the Tea Party movement as quote, "terrorists." Now, first it was reported that Pennsylvania Congressman Mike Doyle said that, quote, "We have negotiated with terrorists. The small group of terrorists have made it impossible to spend any money." And then not long after that, the vice president of the United States reportedly agreed with Doyle's remarks, by saying, quote, "They have acted likes terrorists." But today, even though a senior Democratic official confirms to Fox that is exactly what he said, the White House, well, they're denying it. Let's take a look.
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JAY CARNEY, WHITE HOUSE PRESS SECRETARY: The Vice President spoke to this and made clear that he didn't say those words. And I think the congressman in question has said that he regrets using them. A number I think, it was product of an emotional discussion. Very passionately held positions in this debate but that does not mean that it's appropriate and it's not, the Vice President doesn't think so. The President doesn't think so.
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HANNITY: And joining me with reaction to the alleged remarks and the White House's frantic attempt at a denial is Fox News contributor, former Alaska Governor Sarah Palin. Governor, good to see you.
SARAH PALIN, FORMER ALASKA GOVERNOR: Nice to see you, Sean.
HANNITY: Alright. You know, when you think of the president's lecture after Gabrielle Giffords, when you think you were in the middle of that debate because you had targeted districts which has been done, you know, for decades. And the assault on your character and the attempts to somehow connect you and the Tea Party to all of this, and then here is the Vice President of the United States and a U.S. congressman and they just dismiss it, this is nothing. Well, how do you react to that?
PALIN: Well, the president's speech in Arizona as he asked folks to start ratcheting down the rhetoric was all talk. He wasn't sincere in that. And that's typical Barack Obama, unfortunately. That is typical of our president where it's blah, blah, blah. You know, it's all talk and no real action. Otherwise, he'd be on Biden and tell Biden to tone it down a little bit. Yeah, right. Independent patriotic Americans who desire fiscal sanity in our beloved nation being called terrorists, heck, Sean, if we were real domestic terrorists, shoot, President Obama would be wanting to pal around with us, wouldn't he? I mean, he didn't have a problem paling around with a Bill Ayers back in the day when he kicked off his political career in Bill Ayers' apartment and then, you know, shaking hands with Chavez and saying, he doesn't need any preconditions with meeting dictators or wanting to read U.S. Miranda rights to alleged suspected foreign terrorists. No, if we were all domestic terrorists. I think President Obama wouldn't have a problem with us.
HANNITY: You know, I got to tell you something Governor, because this was a sticking point for me in the last campaign of which you were a part. You know, this idea that they could use these words, and these are the words that have been used, Jihad, terrorist, suicide bombers, all to describe the Tea Party. And the story about Bill Ayers was virtually ignored. You know, I brought it up again and again and again because it was important. He sat on boards with him. He gave speeches with him. He began his political career in the guy's house. And the guy's an unrepentant terrorist. You say that. I say that. We are excoriated for daring to bring who this president is, in terms of his background, his radical associations. We're being unfair they say, but all of a sudden, it's fair to call the Tea Party terrorists.
PALIN: Yeah. Let's call him out on their hypocrisy then, Sean. Because enough is enough. And I'm not just going to roll over with a sticker plastered on my forehead, that says, hit me baby one more time, call me a terrorist again, call me a racist. Those things that Tea Party patriots have been being called over these months. It is unfair, it's hypocritical of the other side doing that. And enough is enough. And I'm going stand up for those fiscally conservative patriotic independent Americans who wants the best for this country. I'm going stand up for radio talk show hosts, who, if it were not for them, we would have even a less factual information out there about our weakened economy caused by big government, liberal spending, socialist type programs being rammed down our throats. So, I'm going to stick up for people who at this point are being called terrorist, and being accused of waging Jihad against our own country. Enough is enough. And I'm not going to just sit here and take it anymore. And I don't want you or anyone else who is innocent in all of this to take it anymore.
HANNITY: Well, you know something, I oppose these deals for a very simple reason, none of them deal with the root cause of where our problem is. And the problem is obviously spending. And the problem is the baseline budgeting problem in Washington. And, you know, while everyone talks about saving a trillion dollars, the reality is, we're going -- in two years, we're going to have $67 billion in savings. In a day, the president gets $900 billion in a debt ceiling increase in a day. So, they back loaded once again the deal. Everyone says we've come together. We've created a compromise. Here is my take and tell me if I'm wrong. Compromise got us here. Compromise has given us $16.7 trillion in a debt ceiling that is needed. And the people that seem consistent and principled more believe in limited government are the people that showed up in November of 2010, and they are the ones that have stayed true to their values. Everybody else seems to be all over the map here. Why are they under fire? I thought standing up for your principles was a good thing in life.
PALIN: Yeah. Look, thank God for those folks who stood up for their principles. And granted, you know, I'm not going to consider this debt deal that was signed into law today. And by the way, the president sure looked pretty lonely out there in the Rose Garden signing that thing with evidently other people not wanting to be around. And not wanting perhaps to lay claim to what they have just done to this country. What they have just done to this country, Sean, is hand the most liberal president that we'll probably ever see certainly in our lifetime an opportunity to spend even more money that we don't have. To create more debt thinking that that's going to get us out of debt.
No, we're still not dealing with the root cause of our problems in this weakened economy. And that is the overspend of our big federal centralized government. And unfortunately, our president is so off based in his thinking because all of his solutions, all have to do with growing even more government and spending more money that we do not have on programs and departments and people that cannot allow the private sector to grow and thrive and create jobs. He is so off-based in this that I tell you, 2012 cannot come soon enough.
HANNITY: No it can't come soon enough, and I want to get into the specifics, I don't have time in this segment so I'll ask this shorter question. You said, if the right candidate didn't emerge, you would you get into this race. And it's been a while since I've had you on the program. Are you getting closer to making that decision and are you leaning towards getting in this race?
PALIN: Getting closer to making the decision of course for legal reasons, for practical reasons. But still haven't made up my mind yet, Sean. But doggone it, I want these candidates who are in there, I want them to not be sitting back, and bless his heart, I have respect for Mitt Romney, but I do not have respect for what he has done through this debt increase debate. He did this. He waited until it was a done deal that we would increase the debt ceiling, and more money would be spent, more money borrowed and then spent on bigger government. And then he came out and he made a statement, that he didn't like the deal after all. You know, you can't defer an issue and assume that the problem is going to be then avoided. No. You defer an issue like not speaking out on how you really believe about an issue that we've just gone through as a nation, and you are inviting a crisis. So, Mitt Romney and other candidates, you need to get out there, you need to tell the electorate what you really feel about these issues --
HANNITY: So, you think they're sitting back? Is there --
PALIN: Don't do this, don't just wait and sit back.
HANNITY: Is there any candidate that spoke out loudly enough that you were applauding?
PALIN: Michele Bachmann, she spoke out and she cast her vote according to her principles. She stood true but long time to go still with debate, with discussion on who the right candidate will be. I'm not prejudging the field at this point.
HANNITY: Alright. So, that means you are getting in and you just announced -- I'm kidding. I'm just kidding, Governor. All right. We'll take a break. We're going to have more with Governor Palin coming up right after the break. Plus, how will the debt deal shape up the 2012 presidential race? And could this so-called compromise mean higher taxes for you and your family? We have the answers to those questions and much more, coming up straight ahead.
HANNITY: As we continue on "Hannity", and we continue with former Alaska Governor Sarah Palin and Fox News contributor. You know, I don't know if you ever read Malcolm Gladwell, I just happen to really like his writings, Outliers and Tipping Point, they're great books. And Jeffrey Lord of The American Spectator wrote a great article today, using Gladwell's book Tipping Point to explain that this is now, he thinks the "tipping point" is here. With all the vitriol aim at the Tea Party and everybody, and even after people voted against the Tea Party, they are sucking up to the Tea Party, I think what we're seeing here is the ascendancy now of conservatism even though conservatives and Tea Party members didn't get what they want. I think that they weild more power now than even they probably know in terms of influencing the debate. Do see that that way?
PALIN: I do. And that is why I'm an optimist heading into this next election cycle. I believe that the Tea Party patriots really have been strengthened and evidence of that is the vitriol that you see targeted towards these Tea Party patriots who just want a sound fiscal policy adopted in our nation, so that we will not become a bankrupt nation. And now more than ever, the Tea Party patriots have got to be energized. They cannot be numb and calloused and depressed about some of the -- two steps forward, three steps back that we saw happening in the last couple of days with the debt ceiling increase, they need now more than ever to really be united, work extremely hard to get the right candidates in there. Despite the boot on the neck that many of us feel that government is trying to do to us. And those, on both sides of the aisle who kind of run the political machines, that boot on the neck trying to take us down and keep us down. No, now isn't the time to retreat. But it's the time to be united, to move forward, very, very powerful grassroots movement, I believe that will grow even more in these coming months as the election approaches.
HANNITY: You know, I want to ask you this. Because I watch some guys on TV and some people on the radio. And some of the politicians in Washington. You know, the mushy wimpy moderates that think any compromise is a great -- we gotta compromise. We got to get the deal and, these are people that don't have principles or guiding principles or a moral compass even that understand that I don't support conservative, I am not a registered conservative just for conservative's sake. It's because these principles of liberty, freedom, first principles, they work. And as I watch this, this is what was missing in this debate. I don't know. I was asking you off-air if you heard, for example, the Mack-Penny Plan, we free spending 2011 levels, one percent cut a year for six years,18 percent of GDP for two years, after that, we balance the budget in eight years. Why can't we even debate these issues? Cut, Cap and Balance was such a great plan. Why did Republicans in the Senate cut off the legs of the guys in the House. Why don't they just stand firm on their values?
PALIN: Yeah, that still spine. That's still kind of missing in some of them. That still spine that President Reagan would talk about. And he reminded us, that as our spine is stiffened, look around and you're going to see that that strengthens others around you and then they know that it's OK too, to stand on principle and do what's right. So, yes, when we go forward and we talk about how to strengthen our economy, and we talk about the need to cut, to cap, to balance the budget. To balance the budget, Sean, which is so fundamental, and this is want the Democrats or liberals had even preached for many, many years and here they finally have the opportunity in the last couple of months and they squandered that opportunity. And said no, that they didn't want that balanced budget amendment.
Well now, we have to at least take a symbolic vote on balancing the budget with the amendment, sometime after October. So, we'll see how that goes. But I, too, I am puzzled by the wasted opportunities that we have here in Congress as we see the doors open to finally see the fundamental economic change, the reform the transformation that would be healthy when it comes to our entitlements and big government programs that need to change and need to stop or we will be bankrupt. It puzzles me too that they would be so willing to waste opportunities.
HANNITY: You know, I'm looking at the polls Governor, and I see that independents, they're really the people that have helped elect Barack Obama. He has a 34 percent approval rating with independents -- he's lost them. And he had to earn the loss of their votes. Sixty six percent of Americans supported the Cut, Cap and Balance, the Republicans didn't stand firm. They could have just folded their hands and say, present your plan. Seventy five percent support the position both of us support, which is a balanced budget amendment. So, here, I'm going to ask you this question from this prism, is because on these very key issues, you are arguing, you know, no pale pastels here, but to quote Reagan, "bold colors," you know, the question then remains and you're so passionate about it as you I am listening to you tonight. What is the best move for you? And give me your thought process about how you can best influence the things that you are passionate about. Do you think it's true running? Do you think it's getting in the debates? Do you think it's maybe sitting on the sidelines and making commentary and speeches and trouble around the country? Where do you think you could be most effective?
PALIN: You know, I don't have an answer for that question yet. Because that is that contemplation that I'm engaged in right now. Where can I be most effective? I think about you, I think about Rush. I think about Mark Levin, I think about others too. Who may be asked themselves the same question. Could I be effective if I were to run for office and be in one of those positions, where you have a title, you have that voting power, or you have that executive power and really make a positive difference in the country, or can I be a help mate? Can I be a supporter? Can I be campaigner for someone who's in that position? I'm still thinking about it, Sean.
HANNITY: Do you really think me, Mark or Rush Limbaugh are electable?
PALIN: Well, I do. But, you know, I'm one of those terrorists out here in fly over country that perhaps isn't given much credence.
HANNITY: I've gotta move -- I might have a shot if I move to Utah. I could tell you right now. I couldn't be elected dog catcher in New York. But Governor, it's always good to see you. And we appreciate your firm voice. Thank you for being here.
PALIN: You too, thanks so much.
HANNITY: Alright, and coming up, did Mitt Romney get it right? Lingering fears that Washington to new debt deal could open the door to higher taxes. First, will the economy be the president's Achilles heel come 2012? We'll examine that. Why the debt deal did nothing to alleviate the economic downfall. We'll explain all of that coming up next, right here on "Hannity."