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CNN "The Situation Room" - Transcript

Interview

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Before we get to the presidential campaign, put your congressional hat on for a moment.

Congress can't seem to agree on almost anything nowadays and there could be a government shutdown as early as this weekend, unless the appropriations bills are passed. What's going on? Why is Congress so dysfunctional?

REP. RON PAUL (R-TX), PRESIDENTIAL CANDIDATE: Well, this dysfunction seems to be business as usual. How many times have we gone through this in the last couple of years? It's sort of to be routine.

You know, at the last minute, they go down to the wire and they negotiate up to the bitter end, always trying to get one angle over the other one. I don't think the government's going to shut down. It hasn't happened in a long, long time. So, I don't think it's in the interest of either party to do it. So, they'll probably come up with some compromise at midnight, you know, and settle the argument.

BLITZER: But it does send a horrible message when various agencies of the federal government are told, get ready, so-called nonessential personnel may be out of work as early as Saturday or Sunday.

I mean, it sends an awful message out there that the people in Washington can't get their act together. I'm just saying it, but if you disagree with me, go ahead.

PAUL: No, I think the problem is that the people in Washington that I know don't admit that we have a serious crisis on our handS. A financial crisis and they don't know how bad it is.

Because we're bankrupt and yet, we're getting -- and we're preparing ourselves through the Federal Reserve to bail out all of Europe and there's no money and the debt is the problem, so they're up against a wall and nobody wants to cut anything.

But if they knew how bad it was, they would cut and start living within our means. And that means looking at all the budget, but no, they're going to delay it.

I think it's a football game and they're going to play it and see who's going to get the best edge in the next election to see who can maintain or gain power.

And they haven't changed their ways, but they won't admit the necessary admission of that we are bankrupt and we better do something about it or this condition in our country and throughout the world. Financial system is going to get much worse.

BLITZER: Let me go through a couple of the issues on the agenda right now, increasing taxes unless action is taken. The payroll tax cut will go away. The tax rates for 160 million Americans will go up. Where do you stand on extending the payroll tax cut for another year?

PAUL: I want to extend it because I see it as a tax increase and the system isn't run like it should be. We're supposed to have money in the bank and have a trust fund. That doesn't exist. It's all been spent into the general revenues.

So many of these funds from Social Security have been spent overseas, so I want to pay for it, that's the whole thing, but I don't consider paying for it by punishing one group and taking that money and giving it to the other group.

So I'd pay for, extend the tax credit cut and pay for it by overseas spending. For instance, why are we going to pretend that we're leaving Iraq and we really aren't and we're going to maintain the biggest embassy in the world and have 17,000 personnel there that are contractors making twice as much as our military?

You can save billions of dollars doing that. So, yes, we have to address it. This is a reason nobody wants to give up a nickel on these overseas expenditures and that's the best place to cut in order to save our system and take care of our Social Security beneficiaries and the health care, the people who have become so dependent.

But I have no idea why they won't consider this. Evidently, the lobbyists were spending this money overseas and for the military -- is so powerful that neither Democrats nor Republicans want to talk about cutting overseas spending.

Bring troops home. That would save billions of dollars. So, the money is there, but this idea that you have to raise taxes on the rich in order to pay for the payroll tax cut makes no sense and that's why they're arguing about it.

BLITZER: Just to be precise, 17,000 Americans, about half diplomats -- diplomatic support staff. The other half would be contractors and you're right. They're going to be getting a lot more than U.S. troops. Unemployment benefits, are you ready to extend the full range for another year?

PAUL: Yes. I'd extend the cuts. So they don't have to pay for it. I don't want to reinstate the taxes.

BLITZER: No, unemployment benefits.

PAUL: I'm sorry. I misunderstood that. The unemployment, no, I'm not ready to extend that. I think that, you know, you subsidize long- term unemployment, you get more of it, but we have to change other conditions so people, you know, that's why the budget has to be balanced and tax codes changed.

Regulatory codes changed. Monetary policies changed, so that we can get these jobs, but just further extending it, believe me, there's less incentive. You know, to go back to work and make $8 an hour, if you can get $8.50 while on welfare, it's not likely.

People -- you can't extend it forever because that's where the problems come from. We're bankrupt. To assume that we can and borrow the money or print the money is just digging a much bigger hole for ourselves and that's why we have to admit the truth.

BLITZER: Should the federal government have a rule in recommending when you can use your cell phone while driving?

PAUL: No, no way. I look it in Article 1 Section 8. They don't even say anything about telephones there. So, no, they should be doing that. That is really nitpicking away and if some state decided you shouldn't do it.

They certainly have the authority to do that, but what if I came up with a statistic and I could prove that eating in a car causes more accidents than using your cell phone.

Reckless driving, people could cause accidents. They're liable and responsible and should be punished for this, but this idea that the federal government's going to write a rule about when we're going to use cell phones.

And then force them maybe to buy a certain type of cell phone that's already in your car, that's more government than we need and one of the reasons why we're in such a mess.

BLITZER: We've got a lot of questions for you because I asked our viewers on Twitter, Facebook, if you have a question for Ron Paul. Here's one. Would you consider Mitt Romney or Newt Gingrich as your vice president?

PAUL: Probably not. Not unless they change their ways and change their beliefs and convinced me of it.

BLITZER: You're doing amazingly well in Iowa right now. You're not surprised a lot of the so-called pundits are pretty surprised. Can you tell us right now? Do you think you will win the Iowa caucus?

PAUL: I think I have a good chance, but I'm not saying that I'm not on -- I'm not working on a daily basis, you know, I'm assuming I'm going to win this thing. No, I'm not at that point, but I'm assuming we're going to do very, very well and have a much better showing that anybody has given us credit for the past year.

BLITZER: Because if you do win Iowa, it shakes up the situation going into New Hampshire, South Carolina and Florida. Pretty dramatically you want to give us a name or two of someone you would consider as a possible vice president?

PAUL: Probably not today. I haven't thought it through and there are so many people that I know that would qualify, I would hate to pick one or two names out right now. But time will tell later on maybe.

BLITZER: One final question, Congressman, before I let you go. In the past, I called you an isolationist. I got hammered by your supporters out there. They write to me and they say, Ron Paul is not an isolationist. He's a noninterventionist. All right, tell our viewers right now once and for all, the difference between an isolationist and a noninterventionist.

PAUL: An isolationist is a protectionist that builds walls around the country. They don't like to trade. They don't like to travel around the world and they like to put sanctions on different countries.

So some of the people who call me that or actually much more in favor of sanctions and limited trade, they are the ones who don't want to trade with Cuba and they want to put sanctions on anybody who blinks their eye at them and yet the opposite is what we believe in.

We believe Nixon did the right thing by opening up trade doors with China because that is when we quit killing each other and that we are more at peace because we better be because they have become our banker.

So noninterventionist is quite a bit different is what the founders advised to get along with people, trade with people and to practice diplomacy rather than getting, having this militancy of telling people what to do and how to run the world and building walls around our own country. That is isolationism. It's a far cry from what we believe in.

BLITZER: And just to be precise, you want to bring all U.S. troops home. Not just from Iraq and Afghanistan, but from Germany, Japan, South Korea, every place else around the world, is that right?

PAUL: Yes, because I believe in national defense and our first responsibility, probably one of the major responsibilities of the federal government is a national defense and fighting these wars does not help us.

I mean, getting bogged down in Afghanistan brought the Soviet Union to its knees and is bringing us to our knees, too. We've been there 10 years and it's contributing this huge deficit that we have.

Those wars over there have contributed $4 trillion worth of debt in the last 10 years. So yes, I want to bring them home and I think we'll be stronger for it.

I think we'll have a stronger national defense and we'll have a lot stronger economy. If we're serious about straighten up this mess, we have to deal with foreign policy as well as fiscal policy and tax policy.

BLITZER: Ron Paul is running for the Republican presidential nomination. Congressman, good luck.

PAUL: Thanks a lot.

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