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TEXAS GOV. RICK PERRY, REPUBLICAN PRESIDENTIAL CANDIDATE: Thank you and welcome to Texas. I hope you enjoyed your stay.
WALLACE: We have so far.
You have dropped in the polls from a high of 38 percent when you got in August, to a low of 6 percent in one of the polls this week. Your new campaign staffers talk about trying to reboot Perry 2.0.
So, what's the message you want to give to voters as you try to get them to give you a second look?
PERRY: Yes, for the first eight weeks we were traveling across the country, just shaking hands, introducing ourselves, and people knew two things that I was a governor of state of Texas and I had a beautiful and smart wife. In the last two weeks now, they've actually got to put the meat on the bone, if you will. We laid out our jobs and energy plan, 1.2 million Americans back to work, opening up our federal lands and our waters for energy exploration, getting this country back truly secure from hostile countries that we're buying foreign oil from.
Then we laid out just this last week, people are just getting their arms around our "Cut and Balance and Grow" plan where we talk about 20 percent flat tax, where we talk about how to cut the spending, how we grow this economy. And I think when Americans take a look at that, they're going to go -- you know what, not only is it a great plan, this fellow has got the record as the governor of Texas for 10 years of doing it. And that's who we need in the White House, who's got the courage to stand in the gap and put these tax reforms in place.
WALLACE: But why should voters -- and some have certainly been paying attention in the last couple of months. We have 6 million people who watched the last FOX debate. Why should those voters disregard the last two months -- quite frankly, your poor performance in the debates and some parts of your record on immigration, in-state tuition, the HPV vaccine that didn't turn out to be as conservative as they might have hoped?
PERRY: Well, when you take a look at the -- I readily admit I'm not the best debater in the world. With as many debate as we got coming up, I may end up being a pretty good debater before it's all been said and done.
But when they look at the record, when they look at what we've done, nobody has been stronger on immigration than I have. You want to take the issue of whether or not governors have to deal with tough and hard issues because the federal government has absolutely failed at securing that border, and then we have to deal with that. I readily respect that and I would not tell any state they need to do a particular thing on that as we did in the state of Texas.
But whether it's putting Texas ranger recon teams, $400 million, on that border, vetoing driver's license bill for illegals, whether it was passing a voters identification bill before you can vote. There's not anybody on that state that's any tougher, any right on on the immigration issues than I am.
WALLACE: Let's talk about the debates, though. Your staff indicated this weekend that you're going to skip some, but the news overnight is you've signed up for the next five debates, which take you through November and into early December. But you told Bill O'Reilly this week that you felt it was a mistake to participate in any of them. Why?
PERRY: Well, I said that 18 debates is, I think, way too many debates frankly. It's an incredible amount of time and preparation and what have you.
I really like getting out and being able to talk with people, just like I'm talking with you today where you have time to lay out your ideas. We got a great debater, a smooth politician in the White House right now. That's not working out very good for America.
If you want to know how somebody is going to perform in the future, take a look at their past. And as governor of the state of Texas, we created more jobs in the state than any other state in the country. And I think that's what Americans are really interested in.
People sitting around the coffee table today, the kitchen table, and they're going to -- how are we going to get this country back working again? I've laid out the plan, I got the courage and I got the record to put it in place.
WALLACE: We're going to get to your plan and drill down to it in a moment, but I still want to focus on these debates, because what I've heard in e-mails I got from a lot of conservative voters they say, OK, maybe he's not the greatest debater, but we need somebody next fall where there's going to be these three big debates, 100 million people watching each time, who's going to be able to get up on that stage with Barack Obama and make the case against him. And they worry based on your performance that you are not that man.
PERRY: Well, I'm not worried a bit that I'll be able to stand on the stage with Barack Obama and draw a very bright line, a real contrast between an individual who's lost 2.5 million jobs for this country, someone who is signaling to our opponents when we're going to pull out of a particular war zone, an individual who has taken an experiment with the American economy and turned it into absolute Frankenstein experience. I think I will stand on the stage and draw a clear contrast with Barack Obama.
WALLACE: OK. You did propose a major tax reform plan this week, and as I said, we got some time. So, let's drill down into some of the details of it. You give people a choice, a 20 percent flat tax, or they can stay in the current system. Now, one assumes that most people are going to figure it out and decide to go with the plan that they pay the fewer taxes, less in taxes.
Your campaign said and I sent it out to a private acting firm, this would mean $ 4.7 trillion less in revenue over the first six years, from 2014 to 2020. Doesn't the Perry plan blow a hole in the deficit in?
PERRY: You got to look at the spending cuts as well and you have to look at the dynamics of the growth that goes on here. I mean, you can't just take one piece of this and say here's the plan. It's not. This is a plan that gives people an option and I think a good option, to be able to do their taxes on a post card -- literally taking that 20 percent tax -- flat tax, deducting mortgage, deducting charitable, deducting (INAUDIBLE) taxes, $12,500 for each dependent, subtracting it and sending it in -- I mean, literally on a postcard. It's that simple to put it on that postcard right there. That's it.
And then, people have the confidence -- people have the confidence, the job creators, this plan is about getting people back to work, putting the confidence back in the American entrepreneur to know that the regulations are not going to be there, that these tax burdens.
You know who's going to hate this more than anybody, Chris? The Washington lobbyist that have been carving out all of these corporate tax loopholes, they've been manipulating our tax code, make it simple and put those guys out of business. I guarantee you, that's the type of approach that Americans are looking for, a simple tax code corporate tax rate of the 20 percent as well, bring those corporate tax proceeds back from offshore at 5.25 percent.
And we will balance that budget in 2020. No one says it's going to be easy, but we need a president who has a commitment to that, who's got a track record of doing that and I have.
WALLACE: All right. A couple of quick questions to that. You talk about simplicity. But the fact is, a lot of people would have to calculate their taxes the old way, they have to calculate their taxes with the alternative minimum tax, they have to calculate their taxes with the new 20 percent. Far from being simple, you might have to calculate your taxes, it's going to be a boon for my accountant, three ways to figure out the cheapest.
PERRY: I don't think that's not the case at all. I think most Americans know right off the top of their heads they're going to take that 20 percent flat tax, they're going to take their deductions and they're going to send that in. They're not going to have to go ask an accountant or a lawyer.
They maybe some folks out there that want to go ask those accountants, go ask those lawyers, that's their business. That's the great thing about the choice here.
But this will substantively change the IRS as we know it today.
WALLACE: OK. Let's talk about this question of growth because, as I say, your campaign says, static scoring, which is just going with the numbers and the assumptions as they are, almost $5 trillion less in revenue over the first six years. Now, your campaign says, yes, but you got to get economic growth and that's going to end up being a $1 trillion more.
Here's the problem with that -- everybody agrees that if you lower taxes, you do increase economic growth. But even conservative think tanks like the Heritage Foundation say almost never do tax cuts pay for themselves. That you still end up, you may get some increased economic growth, but you still end up with lower revenue.
PERRY: And you know what? There's nothing wrong with lower revenue. I think Americans are ready for Washington, D.C. to quit spending money.
WALLACE: But we have a deficit problem, sir.
PERRY: We will pay off that deficit. Our plan balances this budget in 2020.
PERRY: We'll pay off the debt.
No one else on the stage is laying of on a plan. Mitt Romney basically just nibbles around the edges. He leaves the rates where they are. Mr. Cain's plan, it creates two new sources of revenue.
I don't want more revenue in Washington, D.C.'s hands. I want more revenue in the private sector, job creators' hands, and American citizens out there. I guarantee you, they'll make better decisions about how to spend that money than Washington, D.C.
WALLACE: OK. We're going to get to the spending cuts, because that's an important part of it, in a moment. But I want to any ask you one last thing about the tax plan, and that's tax fairness. Almost everyone who looks into your plan says the people who do the best in this plan, in terms of a tax cut, are the wealthy.
According to one analysis up here on the screen, a family of four earning $425,000 would see their tax bill tax drop from $91,000 to $46,400 -- almost 50 percent cut. This is what you said the other day.
(BEGIN VIDEO CLIP)
JOHN HARWOOD, CNBC: For those at the top, it is hundreds of thousands, maybe even millions of dollars for them.
PERRY: But I don't care about that. What I care about is them having the dollars to invest in their companies.
(END VIDEO CLIP)
WALLACE: Question -- when the rich and by all of the studies of income inequality, when the rich get richer and the middle class are struggling, why don't you care about tax fairness?
PERRY: Everybody gets a tax cut here. Everybody gets a tax cut here.
WALLACE: But the rich got a much bigger tax cut.
PERRY: And, historically, those who have money put more money into their business. They hire more people. That's what we need to be focused on -- how do you give incentives to the job creators in this country so that those $14 million people that don't have jobs out there have a shot of having the dignity to take care of their family? That's what I really care about.
The idea of class warfare, and that's what we're talking about here. You got the president, you have some people out there that want to talk about class warfare, that the rich are having more money or what have you. I am interested in individuals who are going to be able to invest in this country, have the confidence that an environment that's been created, that they're going to be able to keep more of what they work for. When they do that, they'll invest in companies and create jobs. That's what the debate should stay on. Not creating class warfare.
WALLACE: But I just want to make it clear -- you are saying that yes, the wealthy, the job creators, as you've called them, they are going to end up getting bigger tax cuts under the Perry plan than the middle class. And you're OK with that.
PERRY: I want to see people investing. I mean, the idea again -- I'm not for class warfare. If somebody wants to go push the class warfare issue and try to divide this country, I'm for bringing people together to create jobs and give Americans a better chance to take care of their families.
WALLACE: OK, let's turn to spending. You say that you are going to cap spending at 18 percent of the economy, GDP, gross domestic product, which is a level we have not seen since 1966. How on earth are you doing that, Governor?
PERRY: By cutting spending. Listen, Americans are sick and tired of Washington's business as usual. They're sick and tired of seeing hundreds of thousands of federal employees be put on the tax roles that they are having to pay the jobs of stimulus dollars, $4 trillion worth of debt under this president's watch and practically no jobs being created.
They are looking for someone who has the courage to stand up and say, here's how we are going to fix Social Security. If you are on it, if you're approaching, it's going to be there for you. But give our young people the truth and give them options of being able to have a private account or whatever it is, or maybe ratcheting up the age in which people become eligible for it. Americans are looking for some ideas about how to get out of this mess that Washington has put us in and spending cuts is one of them.
Do away with earmarks. I mean, clearly stand up and say, pull out the veto pen, and if you have earmarks coming my way, they'll never make it into law.
WALLACE: OK. But the -- according to a Congressional Budget Office, to cut -- to go down to 18 percent GDP, you would have to make cuts between $700 billion and $1 trillion a year. That's roughly a quarter of the federal budget.
You talked and you said here, you got to have the courage to do it. You're going to make hard choices. Like what? I mean, tell me programs that people count on, not waste and fraud. But programs that people count on that you are saying, President Perry, I'm sorry, you're going to have to do without.
PERRY: Yes. Let me share one place you can go to get a really good broad menu of that. Tom Coburn has a piece of work called "Back and Black." I believe it's $9 trillion worth of reductions. I hope folks will go take a look at that.
But let me give you one example. You can take the Department of Education and you can put the elementary and secondary programs together, and cut those in half and send half of it back to the states. Save $25 trillion right there --
WALLACE: Twenty-five trillion or 25 --
PERRY: Excuse me, $25 billion.
WALLACE: OK. But that still leaves you with $975 billion.
PERRY: But I understand, but you ask for an example. There is one of the examples. I mean, we have so many programs in government that aren't creating jobs. All they are doing is creating government jobs, and Americans are sick of that. They want someone who will stand up and say, listen, we're going to cut the size of spending, we're going to cut the size of these programs. Is it going to be -- anybody who stands up and said, oh, this is going to be painful, you might consider them to be suspect, you better believe it's hard.
In Texas, this last session of the legislature, we cut spending by the first time since World War II, a lot of gnashing of teeth, a lot of people saying, oh, the world is coming to an end. But the fact is, you got to have a president that has the courage to stand up and say, the future of this country demands that we have less spending going on -- and I will do that.
WALLACE: OK. The purpose of all of this, of course, is to put America back to work, to create jobs. No question about it. You have a strong record here in Texas of creating jobs, 40 percent of all the new jobs in the last two years here in the state of Texas.
You talked about that in your first TV commercial. Let's take a look.
(BEGIN VIDEO CLIP, PERRY CAMPAIGN AD)
PERRY: As president, I'll create at least 2.5 million new jobs, and I know something about that.
(END VIDEO CLIP)
WALLACE: Governor, here's what I don't get about that 2.5 million jobs -- 2.5 million jobs is terrible. That wouldn't be nearly enough for the first four years of the administration. We looked at it. We would roughly need 6 million jobs in the first four years just to stay even with population growth.
So, 2.5 million jobs, the unemployment rate would increase. Jimmy Carter created 10.5 million in his first four years.
PERRY: Listen, I think it's amazing people, when we've lost 2.5 million jobs in this country and there is another state that is juxtaposition to that, that created a million jobs and for people to go, well, that's not enough.
Let me tell you any jobs at this particular point in time helps. But you give confidence to the American people. Give you a good example -- bring in that money that's offshore, the money that can be repatriated at 5.5 percent in my plan. That will create, according to the Chamber of Commerce, American Chamber of Commerce, $360 billion worth of economic activity.
We've got to give Americans the confidence that they are going to be able to keep more of what they work for and that these regulations that are strangling businesses, small banks with Dodd-Frank, Obamacare that's coming down to effect, that is going to give the confidence to these job creators.
WALLACE: But how do you answer this question. Two and half million doesn't keep pace with the population growth. We would -- our unemployment rate would increase under this goal?
PERRY: I don't believe that for a minute. That is just absolutely false on its face. Americans will get back to work. Are we going to go out and make some, you know, claim and say, oh, it's going to create 10.5 million jobs? We would be having the same conversation. Oh, that's not realistic.
I will tell you one thing. You give this plan a chance. You put Americans where they know that they can pay their income tax on a postcard, that they're going to have those kind of cuts, that they're going to have a balanced budget amendment to the United States Constitution in four years and they will go back to work. Manufacturing jobs will come back to this country.
The idea that I'm going to let people talk this plan down for the sake of just having an intellectual discussion is not correct. I know what happened. In Texas, we have seen it and Americans are dying for a president that understands, create an environment where job creators know they can risk their capital and have return on investment. They will go create jobs -- and lots of them.
WALLACE: What do you think of President Obama's plan to pull all U.S. troops out of Iraq by the end of the year?
PERRY: Well, I think any time a commander-in-chief -- and I got a little experience here, I wore the uniform of our country as a pilot in the United States Air Force. I also am commander in chief of 20,000-plus Texas National Guard troops that we loan to the federal government on a pretty regular basis.
The idea that a commander-in-chief would stand up and signal to the enemy a date certain of which we're going to pull our troops out I think is irresponsible. You need to be talking to your commanders in the field. You need to be working with the experts who understand what's going on in those countries for instance. We need to finish our mission in Iraq and Afghanistan. You better believe I want our kids home as soon as we can and safe.
But to give that signal that we're going to pull them out is really bad public policy. More importantly, it's putting our kid's lives in jeopardy.
WALLACE: But in both Iraq and Afghanistan, the president says there have got to be limits to how long we spend building those other nations when there are so many problems here at home.
PERRY: Well, have a conversation with the generals. I mean, when you think about what this president has done, he fired one general because he didn't like what they said about it. He didn't listen to other generals on other issues. I mean, from my perspective, he's lost his standing of being a commander-in-chief who has any idea of what is going on in those theaters.
He's making mistakes that are putting our kids that are in the theater and I think future issues dealing with -- whether it's in the Middle East or whether it's in the South China Sea with our allies, putting all of that in jeopardy because of this unwavering or I should say, this wavering or this aimless approach to foreign policy which he has.
WALLACE: You said recently that the federal government doesn't have any need to be subsidizing energy, correct?
PERRY: That's correct. I think the federal government needs to be completely out of the subsidization or tax credit side on the energy.
WALLACE: Why is that?
PERRY: States can do it.
WALLACE: OK. And I understand and you have done it in this state. But why then in 2008 did you as governor write a letter to the energy secretary in Washington, Samuel Bodman, urging him to approve a federal loan guarantee for an energy company in Texas?
PERRY: I don't recall which one that is. But let me share with you -- I think --
WALLACE: Let me just -- just to help, I'll put it up on the screen. It was July 29th, 2008, so not so long ago. You wrote the Bush administration, Samuel Bodman, "I am writing to express my strong support for the proposed nuclear power generating facility." This is NRG, in Matagorda County.
WALLACE: I mean, it sounds like you are asking him to do just what you say he shouldn't do.
PERRY: We were asking to, at that particular point in time, for the federal government to support the nuclear power industry in the state of Texas or across the country for that standpoint. But from a general standpoint, any type of federal dollars flowing in these industries we think is bad public policy, whether it's the ethanol side, whether it's nuclear power side, whether it's the oil and gas --
WALLACE: Well, why did you ask him to give the money?
PERRY: Well, let me just tell you -- I have changed my position from the standpoint of having any desire to have the federal government. What -- I learned some things over the course of the years, and what I've learned is, is the federal government, by and large, you keep 'em out of these issues, particularly on the energy side. And I think that's the best position for us to take as Americans today.
Let the market figure it out. Are you going to have federal government making some impact on the nuclear energy side, from the standpoint of research and development, or having places to deal with these spent fuels and reprocess them? Yes. But giving straight up money to energy -- do away with it.
WALLACE: What do you think of Mitt Romney?
PERRY: I don't really know Mitt Romney well enough to be making statement. You know, we've served together as governors back earlier --
WALLACE: Oh, come on.
PERRY: No, I don't. I really --
WALLACE: I'm not talking about whether you'd like to have dinner with him. But you obviously have a view of his public record and his --
PERRY: Oh, well, he is a competitor and I happen to believe laying out the differences in our record is very important. I mean, I have been a consistent conservative.
You go back through my record through 20-plus years, I have been a consistent conservative. I have always been in favor of the Second Amendment and protecting Second Amendment. I've always been pro-life. I've always been a fiscal conservative.
And Mitt's been on both sides of those issues. He's, you know, been for a ban on guns in Massachusetts. He's been for pro-abortion. He's been for, you know, supporting gay right. And now, he's on the other side of those issues.
So, from the standpoint of having different positions, we certainly do. We are very, very different from the standpoint of consistency on those issues that I've just mentioned.
WALLACE: You have just brought in several new staffers who, quite frankly, have a history of aggressive negative campaigning. For instance, they were involved in the Rick Scott campaign in Florida, which is a tough campaign. How hard are you prepared to go after Mitt Romney in this GOP primary fight?
PERRY: Well, I don't get confused with just telling the truth with someone might say that's negative. If we are telling truth about someone, the truth is the truth, whether it hurts your feelings or not.
WALLACE: You got a little bit of a problem here. And I want to put up a new poll. This is the new "Iowa Des Moines Register" poll just out this morning. It shows Herman Cain and Romney way ahead of the field in the low 20s and you back in fifth place at 7 percent.
Isn't Herman Cain standing your way in terms of a one-on-one battle with Mitt Romney?
PERRY: Well, I think as people of Iowa or New Hampshire or South Carolina or Florida, any of those early states, look at the plan and I think that's what they are just now doing. Obviously, this race is not settled at all.
As they look and see who is it that will lay out a plan to get America working, when they look at what Mitt's doing and just nibbling around the edges, when they look at what Herman's plan does from the standpoint to create two new sources of taxes, both the VAT and a sales tax, and they look at our plan that really will get America working and then they take and know that there is a 10-year record of being a solid conservative on issues, whether it's immigration or whether it's on fiscal conservatism or social issues -- I feel pretty comfortable where we'll be on election day.
WALLACE: Campaigns can -- can -- can make candidates stronger. I want you to be honest there, because you had a rough two months. What you learned in these last two months?
PERRY: Well, the thing that I've learned is that you pace yourself. It's not a sprint. It's a marathon and we got in late, and we worked awfully hard for those first eight-plus weeks to go raise the money and we had a $17 plus million for 40 day fundraising push. So -- and it's always good to come off of the battle line and catch your breath. So, that's what I learned is don't sprint it, just take a nice easy run at it and continue to stay focused and take your message to the people.
And I think at the end of the day, people in Iowa and New Hampshire, all of those early states, they're going to take a look at this and go -- you know what, this is a guy that's got a record, he's got a plan that will actually get America back working and he is consistent and has been all of his life.
WALLACE: And just finally and briefly -- because you're in a hole. They're up in the 20s, you are down at 7 percent -- how confident are you that you can get out of that hole and turn this thing around?
PERRY: Well, I'm confident that we're going to be out there competing. I mean, obviously, we've got a war chest that allows us to get that message out there. We got a great team put together across the country. We've got not just people in -- on the ground but we've got great volunteers.
So, I feel very confident that as people take a look, they focus in on what's important about getting America working again. They're going to look at the plans. They're going to look at the candidates. They're going to look at the records. And they're going to go, you know what, Rick Perry is who needs to be leading this country to get us out of the mess that Washington, D.C. has got us in.
WALLACE: Governor Perry, we're going to leave it there. I want to thank you so much for coming in and answering our questions today.
PERRY: Thank you, Chris. You're welcome.
WALLACE: You'll be happy to know that the people of Austin have treated us great. And we'll see you on the campaign trail, sir.
PERRY: We'll see you, sir. Thank you.
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