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WALLACE: The big story in Republican politics this week wasn't Mitt Romney's foreign trip or speculation over his vice presidential pick. No, it was the upset victory in the Texas Senate primary by first-time candidate and Tea Party favorite, Ted Cruz, who has flown in from Texas to join us here on set today.
Mr. Cruz, welcome to "Fox News Sunday."
TED CRUZ, TEXAS SENATE CANDIDATE: Thank you, Chris. It's great to be here.
WALLACE: All right. This week, we were saying what an extraordinary week it's been for you. You have been called the rising Republican star and great conservative hope.
Why do you think your victory in a primary has resonated so strongly inside the GOP?
CRUZ: Well, I think it is part of a tidal wave that's sweeping the whole country, which is that voters are tired of career politicians in both parties. I mean, our country is in a crisis point right now and we're saying -- and this is true all over the country -- that the American people are looking for new leader to step up and stop spending money we don't have.
And I think this was part of a tidal wave that began in 2010 and I think that tidal wave is only stronger in 2012.
WALLACE: Well, let me ask you about that, because the conventional wisdom in this town, and for what's that worth, had been -- what happened to the Tea Party, that it wasn't out in the streets, and that it didn't have the power, and yes they've won some victories in a few states like Indiana against Lugar but -- and Nebraska -- but not so many.
In Texas, you ran against establishment candidate, Lieutenant Governor David Dewhurst. You beat him by 13 points. What do you think your victory says about the state of the Tea Party at this point?
CRUZ: Well, I think it's emblematic of where the Tea Party is nationally, which is in 2009, 2010, the movement was just beginning. And you had thousands and thousands of people out in the blazing sun protesting. And as we got forward to 2011 and 2012, those protest died down and I think the reason is the Tea Party went to work. They began rolling up their sleeves, going to work in campaigns, getting involved.
And in our race in Texas, what we saw was incredible. I mean, it was a victory for grassroots conservatives all over the state. And it was -- it illustrated at the end of the day, the way elections are supposed to be decided, they are supposed to be decided not by a handful of people in the dark room writing checks and picking the next nominee. But they are supposed to be decided by we the people and it was thousands and thousands of Republican women and Tea Party leaders and grassroots activist that generated our victory.
WALLACE: All right. Let's take a look because a lot of people don't know who you are or what you stand for. So, let's talk about that. Let's look at where you stand on the issues.
You want to abolish Education, Commerce and Energy Departments, TSA and the IRS. You support a flat tax and you serve Chick-fil-A at your victory party.
You are pretty conservative?
CRUZ: Without a doubt. And I think the American people are pretty conservative and I'm certain the people of Texas are pretty conservative.
But I'll tell you -- look, at the end of the day, there are sort of twin worlds. There is the world of Washington and the Beltway and then there's the rest of the country. The spectrum in Washington -- you've got career politicians in both parties that have been going along to get along a long, long time. And that's how we've gotten a national debt of $16 trillion, larger than the gross domestic product.
All across the country, the rest of Americans are looking at Washington and saying, what's wrong with you people?
The principles that I think voters are looking for are not that complicated. It's live within your means, follow common sense principles, don't spend money you don't have. And that's what American people are standing up and demanding right now.
WALLACE: OK. You attacked your opponent, Lieutenant Governor Dewhurst, as too quick to compromise. And here is what you said about the Senate club, as it is called. Let's put it up on the screen.
"We need to kick in the doors of the club, rip down the shades ands auction off the silverware."
Mr. Cruz, doesn't just that mean more gridlock? You're going to have the conservatives on one side, the liberals on the other side, and nothing gets done about any of the big problems here?
CRUZ: What it means is we need to step up and solve the problems. Look, my view on compromise --
WALLACE: That means compromise?
CRUZ: Well, my view on compromise is exactly the same as Ronald Reagan's. President Reagan said, what do you do if they offer you half a loaf? Answer: you take it and then you come back for more.
I am perfectly happy to compromise and work with anybody, Republicans, Democrats, libertarians, I'll work with Martians, if -- and the "if" is critical -- they are willing to cut spending and reduce the debt.
The problem so many Republicans are falling into is they compromise going backwards. They compromise in the way that makes the situation worse, that grows government, that grows the debt. And I think the American people are fed up with deals that just empower politicians and put this country further and further on the road to where Greece is.
WALLACE: All right. Well, let me ask you about that, because that raises a question Washington has been roiling with for the last few years. Reduce the debt, cut spending -- more revenue?
CRUZ: I don't think so at all, at least not for higher tax rate.
WALLACE: But that's the deal.
CRUZ: The reason I don't think so is I don't think the problem in Washington is too little taxes. I think the problem in Washington is too much spending. If you look historically, federal tax revenue historically have been roughly 18 percent of GDP. Federal spending has been roughly 20 percent of GDP. In the last three years, it's gone from 20 percent of GDP to 25 percent of GDP.
WALLACE: Yes, but revenues have gone down to 15 percent of GDP.
CRUZ: Well, and part of that has been the policies of this administration, the Obama administration, has waged a war on jobs and a war on small business.
I listened to David Axelrod a few minutes ago talking about wanting to get the economy going and why there were no jobs, without taking any blame for the fact that their policies had killed thousands and thousands of jobs -- whether it's Obamacare or Dodd-Frank or pushing cap and trade or the offshore drilling moratorium.
At the end of the day, two-thirds of all new jobs in the economy come from small business. And we need the boot of the government off the back of the neck of small business.
WALLACE: You talk about the key to the Republican energy is to tap into the grassroots.
WALLACE: Do you think that Mitt Romney is tapping into the grassroots, Tea Party wing of the Republican Party?
CRUZ: I think conservative grassroots in the Republican Party are going to be overwhelmingly behind Romney. I mean, listen, I have spoken to thousands and --
WALLACE: But he is not doing a grassroots campaign.
CRUZ: Well, but the grassroots are energized because I think the absolute highest priority in the country in November is to defeat Barack Obama. And I have spoken to literally thousands and thousands of Tea Party activists. I have yet to meet a single Tea Party leader that is not going to vote for Mitt Romney and work for him because our country is in crisis. And we've got to stop this Obama agenda if we're going to preserve opportunity for our kids and grandkids.
WALLACE: Would you like to see Mitt Romney pick a harder edge, more Tea Party-like conservative like Marco Rubio or Paul Ryan, than a safer, blander candidate?
CRUZ: Look, I think both Marco Rubio and Paul Ryan would be terrific choices. I am big fans of both of them. At the end of the day, Governor Romney is going to make his choice on vice president.
And what I think is important in the next few months is that the country have a clear choice about the economic agenda of Barack Obama, more and more government spending, more government control, more debt. And Romney agenda, which is more free markets, more liberty, getting back to the principles of our Constitution.
WALLACE: All right. We are running out of time and there are a couple of more questions I want to ask you.
You are a Cuban-American. Right now, according to the polls, Romney is trailing Obama badly among Hispanics. What does he need to do to reach out to Hispanics without doing what you called Democrat lite?
CRUZ: Look, I think Hispanic community -- the values that resonate in our community are fundamentally conservative. They are faith, family and patriotism. Do you know the rate of military enlistment among Hispanics is higher than any demographic in this country? And they are also hard work and responsibility.
A friend of mine, a Hispanic entrepreneur asked me a question sometime ago, he said, "When is the last time you saw a Hispanic panhandler?" I think it's a great question. I'll tell you, in my life I've never once have seen a Hispanic panhandler, because in our community, it would be viewed as shameful to be out on the street begging. Those are all conservative values -- faith, family, hard work, responsibility.
And I think what Governor Romney needs to do and I think what he is doing is defending those values and making the case that the Obama agenda has been incredibly destructive to the Hispanic community.
Hispanic unemployment is higher than the national average and when the federal government is killing small businesses and killing jobs, it is hurting the future of the Hispanic community and we need to carry that message.
WALLACE: Finally, let's talk about Ted Cruz. As a teenager, I read, you used to travel around the state, in high school, giving speeches around the state on conservative values. You weren't exactly your normal teenager, were you?
CRUZ: I don't disagree with that at all. I was blessed to have a lot of opportunity. And I -- look, when you are a child of a immigrant who was tortured and imprisoned in Cuba, who fled here as a teenager with nothing, with $100 sewn into his underwear, washed dishes making 50 cents an hour, to pay his way through college and start a small business, you appreciate how precious and fragile liberty is.
And I think liberty has never been more threatened than it is right now.
WALLACE: Is it true that you memorized the U.S. Constitution, as a teenage, the whole thing?
CRUZ: I memorized a shortened mnemonic version. So we go speak at Rotary Clubs and write it all on easels and then speak about it.
WALLACE: Do you have still have a favorite passage that you can recite? CRUZ: Well, Article I Section 8 which enumerates the power of Congress. The way we memorized it was TCCNCCPCC Pawn momma run. Taxes, credit, commerce, naturalization, coinage, counterfeiting, post office, copyright, courts, piracy, Army, war, Navy, militia, money for militia, Washington, D.C, rules, unnecessary and proper.
WALLACE: Mr. Cruz, I'm going to thank you so much for coming in, interrupting your vacation to talk with us. We're going to follow the race closely this fall in Texas and I suspect we'll be talking to you again, sir.
CRUZ: I look forward to it. Thank you, Chris.
WALLACE: Thank you.
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