CHRIS WALLACE, HOST: I'm Chris Wallace.
A former Republican frontrunner looks to Iowa to launch his campaign come back.
After early stumbles, presidential candidate Rick Perry tries to regain his footing in time for the caucuses. We continue our 2012 one-on-one series with the governor of Texas.
Then, where's the Christmas spirit on Capitol Hill? With the tax hike hanging in the balance, what will Congress do? We'll get the latest from Senate Republican leader Mitch McConnell.
Plus, top Republican candidates go negative on Newt Gingrich. We'll ask our Sunday panel if the frontrunner can weather the political storm.
And our power player of the week help wounded warriors get home for Christmas.
All right now on "Fox News Sunday."
And hello, again, from Fox News in Washington.
With just over three weeks until the Iowa caucus. The Republican candidates for president came out swinging last night in a debate in Des Moines.
Fox News correspondent Steve Brown watched the action to see who scored and who missed -- Steve.
STEVE BROWN, FOX NEWS CORRESPONDENT: Chris, there were plenty of attempts from last night's debate to knock down Newt Gingrich, the frontrunner, a peg or two. But those efforts came up short.
MITT ROMNEY, PRESIDENTIAL CANDIDATE: We can start with the idea to have a lunar colony to mine minerals from the moon. I'm not in favor of spending that kind of money to do that. He said that he would like to eliminate in some cases the child labor laws so that kids could clean schools. I don't agree with that idea.
So, we have differences of viewpoint on some issues.
NEWT GINGRICH, PRESIDENTIAL CANDIDATE: The only reason you didn't become a career politician is you lost to Teddy Kennedy in 1984.
PERRY: Now, wait a second.
BROWN (voice-over): If a clean shot was delivered on Gingrich, it may have been by Ron Paul over Gingrich's consulting gig with Freddie Mac.
REP. RON PAUL, PRESIDENTIAL CANDIDATE: While he was earning a lot of money from Freddie Mac, I was fighting over a decade to try to explain to people where the housing people where the bubble was. So, Freddie Mac gets bailed out by the taxpayer. So, in a way, Newt, I think you probably got some of our taxpayer's money.
BROWN: Michele Bachmann fired this two for one jab at the center state candidates over their previous endorsements of individual mandates for health care.
REP. MICHELE BACHMANN, PRESIDENTIAL CANDIDATE: You just heard Newt/Romney is also with Obama on the issue of payroll extension. So, if you want a difference, Michele Bachmann is the proven conservative. It's not Newt/Romney.
UNIDENTIFIED MALE: You throw a lot out there.
BROWN: But, clearly, the talk about moment of the debate was this exchange between Rick Perry and Romney about individual mandates.
ROMNEY: You know what? You raised that before, Rick.
GOV. RICK PERRY, PRESIDENTIAL CANDIDATE: It was true then. And it is true now.
ROMNEY: Rick, I tell you what, 10,000 bucks, $10,000 bet?
PERRY: I'm not in the betting business.
BROWN: That wager is not playing well here in Iowa. Some observers suggesting it shows Romney is out of touch -- Chris.
WALLACE: Steve Brown reporting from Des Moines -- Steve, thanks for that.
Now to one of the presidential contenders that got a lot riding on Iowa, Texas Governor Rick Perry, who joins us from Des Moines.
And, Governor, welcome back to "Fox News Sunday."
PERRY: Good morning, Chris. Good to be with you.
WALLACE: I got to ask you what everybody is talking about. What did you think when Mitt Romney made or offered a $10,000 bet on something in his book?
PERRY: I was taken a little aback. I'm driving out to the station this morning. I'm sure I didn't drive by a house that anyone in Iowa would even think about that a $10,000 bet was possible. So, a little out of touch with the normal Iowa citizen.
But the issue of individual mandates is still at the center here and Mitt can deny this as many times as he wants, but in his first book, hard cover of "No Apologies," he clearly stated that individual mandates should be the model for this country and then he took that out of the book in the paperback. That's the fact. And even a 10,000 bet is not going to cover that.
WALLACE: Well, one of your big moments, and as you say, it came in this confrontation over the individual mandate. You criticized him for the mandate in Romneycare. He came back at you and said, you had an individual mandate in Texas to make sixth grade girls get the HPV vaccine. And he asked, what's the difference?
PERRY: Well, clearly, we had an opt-out in that executive order and the legislature said that they didn't like the way I had gone forward. I agreed with them. And it's not in the state of Texas.
So, there is a clear difference here. He still is supporting individual mandate and that is the fact.
WALLACE: Governor, you are spending million of dollars right now on campaign commercials in Iowa. You are about to launch a 14-day bus tour across the state where you will hit 44 cities. As they say in Texas, hold them -- are you all in, in Iowa?
PERRY: Well, I'm all in, in all of those states. It's not just Iowa. But, obviously, I was the first in the nation and we respect that.
And retail politics and going out and sharing with the people of Iowa, our plan to get the country back working, how we're going to balance the budget, how we're going to overhaul Washington, D.C.
I'm going to talk to them about making Congress a part-time body, just like they have here in Iowa. And I can promise, the people of Iowa think that Washington is spending too much money. They're spending too much time in town. So, make the legislature or I should say the Congress -- like their legislature here -- part-time and let them come home and have a real job, and work within the citizens, with the citizens and have an opportunity to live within the laws that they pass.
And American would be a whole lot better off and I promise you, they will be spending less and getting in less mischief in Washington, D.C.
WALLACE: Governor, your latest campaign commercial, though, doesn't talk about Congress, doesn't talk about the economy. It talks about faith and it's causing controversy.
Let's take a look at it.
(BEGIN VIDEO CLIP)
PERRY: I'm not ashamed to admit that I'm a Christian. And you don't need to be in the pew every Sunday to know that there is something wrong in this country when gays can serve openly in the military but our kids can't openly celebrate Christmas or pray in school.
As president, I'll end Obama's war on religion.
(END VIDEO CLIP)
WALLACE: Question, Governor, how is President Obama waging a war on religion?
PERRY: Well, I'll give you a couple of examples, when you look at his attorney general and their Justice Department going all the way to the Supreme Court to change the way that churches are allowed to hire or fire their ministers or their staff. I mean, if that's not a war on religion, I don't know what it is.
When you look at the Catholic charities that aren't allowed to have money because they've made a decision that they are not going to allow abortions in their facilities. So, this administration is keeping money away from them on programs that help people who are sexually trafficked. So, again, if that's not a war on I don't know what is.
Clearly, this administration's values are different than I would suggest that certainly the people of Iowa.
WALLACE: Let me ask you, though, about the specific charge in that commercial. You say that gays can serve openly while children can't pray in school. It was the Supreme Court back in 1962 that decided and it's been upheld since then that children couldn't pray in school. Barack Obama had nothing to do with that.
And after repeal of "don't ask, don't tell," are you saying that anyone who supports "don't ask, don't tell" is anti-religious?
PERRY: Well, let me back up and say that I would support a constitutional amendment that would allow our children to pray in school any time that they would like. Right now, those activist judges like Sotomayor and Kagan that he put on the Supreme Court, they would continue to say that that is a decision that the Supreme Court should make.
I happen to believe that that would be a local decision and that's not the Supreme Court's business to be telling Americans when and how they should pray.
On the issue of "don't ask, don't tell," it was working. And for the commander-in-chief to use your military as a political tool while we are in combat in two different locations -- at least two different locations around the world, in Iraq and Afghanistan, I think is just irresponsible.
I am commander-of-chief of 20,000 plus thousand men and women. I served in the United States Air Force. I understand the issue.
And I don't think it's one that the president of the United States and Congress for that matter should be forcing upon the men and women of the military. I think it was bad public policy and I would change it.
WALLACE: The only point I'd make about prayer in school, is that has continued under -- the ban under Republican presidents as well as Democrats, including Reagan and both of the Bushes.
PERRY: I understand that. I'm just -- I'm telling you what I believe, Chris. And I happen to believe that Americans don't agree with that decision that was made in 1962. And that if we have a constitutional amendment election in this country, allowing our children to pray in school, I would suggest to you, will pass overwhelming.
And I'll support that. I will go across this country, as I'm promoting a balanced budget amendment to the United States Constitution. I'll work on a balanced -- I should say, an amendment to allow our children to pray in school. I think Americans are greatly supportive of both of those issues.
WALLACE: Governor, Republicans are saying with this ad is getting a lot of coverage in Iowa you're running a lot, that it's a blatant attempt to reach out to evangelicals who make up about 60 percent of the Republican caucus-goers in that state.
Here is the problem with that. A recent Washington Post poll of likely caucus-goers fond that 70 percent say the economy is their top issue, only 15 percent say social issue, which raises the issue: Is faith really the key concern in Iowa right now?
PERRY: Well, I would tell you that faith is a major part of who I am. I can't change anymore than I can change that I'm the son of two tenant farmers. But I'm going to spend 14 days on a bus traveling across Iowa, talking about how to get this economy back. We've laid out a plan that clearly gets America working again. That 20 percent flat tax that allows Americans to see how this economy can get back on track, getting rid of that $15 trillion worth of debt.
And also, overhauling Washington, D.C. When we talk about overhauling Washington, D.C., American eyes and I know the citizens of Iowa's eyes brighten up when we talk about making Washington inconsequential as we can. And we do that and we get the economy back on track.
As the governor of Texas, I created a million, or I should say, I have created a million net new jobs with our legislature by getting government out of the way. I know how to do this. And Iowans will have a very good handle on it by the time they go to the caucus in January --
WALLACE: Governor --
PERRY: Or I should say --
WALLACE: I was going to say, you spoke to the Des Moines Register editorial board and had another "oops" moment. You criticized President Obama's appointment to the Supreme Court. Here it is.
(BEGIN VIDEO CLIP)
PERRY: Inarguably activist judges, whether it was. -- not -- not Montemayor.
UNIDENTIFIED FEMALE: Sonia Sotomayor.
(END VIDEO CLIP)
WALLACE: And then you said eight judges on the court. As you know there are nine.
How do you respond to those who say, you know, I like Rick Perry, I like his values, but I worry, does he know enough to be president of the United States.
PERRY: Well, obviously, I know there are nine Supreme Court justices. I don't know how eight came out of my mouth. But the fact is, I can't tell you, I don't have memorized all of the Supreme Court judges.
Here's what I do know, that when I put an individual on the Supreme Court just like I have done in Texas, we got nine Supreme Court justices in Texas: they will be strict constructionists. They won't be activist judges. That's what Americans care about.
They are not looking for a robot that can spit out the name of every Supreme Court justice, or someone that is going to be perfect in every way. They are looking for somebody who's got values that are based with a deep rudder in the water.
And I am consistent in my conservative values. I have been consistent. And Americans are looking for someone who is going to make the right decisions, not someone who can either read a teleprompter perfectly or spit out by memory a list of names. That's not what's important to Americans.
What they are looking for an individual who has clear values and a philosophy and a fiscal conservative philosophy at that.
WALLACE: Governor, we got less than a minute left.
This week, congressional Republicans are trying to figure out if there is a way to extend the payroll tax cut. You are on record opposing that. You're also on record opposing extending unemployment benefits.
How do you answer the argument the Democrats make that you and a lot other Republicans are a lot more concerned about protecting the wealthy than you are folks who are struggling?
PERRY: We are interested in creating a climate where people who have money can risk their capital. And it's not rich people. It's about small mom and pop businesses who are afraid because of Obamacare, afraid because of over-regulation, afraid because of over- taxation that come straight out of Washington, D.C., that they can't risk their capital. They can't create jobs that in turn will create the wealth. That's what we need to be focused. Not temporary tax cuts that are going to temporarily stimulate. We already had some of that stimulation out of Washington, D.C. -- trillions of dollars. We found out $7.7 trillion was secretly moved from the Treasury to these Wall Street financers. That's what Americans are upset about, Chris.
WALLACE: Governor Perry, we're going to have to leave it there. We want to thank you so much for talking with us. And we will see you in the FOX debate in Sioux City, Iowa, Thursday night.
PERRY: Look forward to it. Godspeed.
WALLACE: Thank you, sir. Same to you.
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