CNN "The Situation Room" - Transcript

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BLITZER: President Obama is taking another shot today at connecting with voters who are scraping by in this bad economy and who might -- who might just vote his party out of power in Congress 55 days from now. We heard the president once again blast the House minority leader, John Boehner, during his remarks today in Ohio. And he accused Republicans of holding middle class tax cuts hostage by insisting that Bush era tax breaks be extended for wealthier Americans.

Joining us now is a Republican who comes to this debate with his always unique and outspoken point of view, Congressman Ron Paul of Texas.

Congressman, thanks very much for coming in.

REP. RON PAUL (R), TEXAS: Thank you, Wolf.

BLITZER: When it comes to the president's economic policies, his tax policies, is there anything in there you like?

PAUL: Well, I understand there will be some tax credits and that means there will be lower taxes for businesspeople and encourage investment, although they're short-term and we don't know what would happen after a couple of years.

No, anything that will cut taxes I'm for. The idea -- the fact that he'll be raising spending, but also because he hasn't and he doesn't plan to raise taxes on the lower income people, under $200,000 or $250,000, I think that's good.

I mean it would be horrible if he did raise the taxes the first year on all those. So I'd have to say that is, you know, a little bit of relief to know that those taxes won't go up.

BLITZER: Because you're a deficit hawk. You hate this huge national debt, the annual budget deficit. The White House says if you reduce the -- if you eliminate the tax breaks for the wealthier Americans, those families making more than $250,000 a year, about 3 percent -- 2 -- 2 or 3 percent of all Americans out there -- you're going to save $700 billion over the next 10 years -- $700 billion.

That would be good to have that -- a reduction in the national debt, wouldn't it?

PAUL: Well, it would be, but that would be a horrible way of doing it. That means taxes are going up $700 billion. You know, I could think of a much better thing to do and that would be to read that article by Stiglitz this morning. He said he made an error last year when he did that report, that he said the Iraq War is going to cost us over $3 trillion -- or $3 trillion. He says it's going to be much higher than $3 trillion.

Why don't we stay out of these wars and save this money?

That's what we need to do. We need to cut the spending and we don't have to tax people and we could solve this problem. But nobody wants to give an inch on these overseas expenditures. The Republicans don't want to cut overseas expenditures in war. Neither does Obama. So -- but the American people -- the ones I talk to, at least, are all for it.

BLITZER: I know you --

PAUL: So that's where it should go and we should cut the spending overseas.

BLITZER: We had you on recently with Congressman Barney Frank. You guys have some ideas to save hundreds of billions of dollars in defense related spending. We discussed that.

The president also went after some Republicans for wanting to privatize Social Security.

Listen to what he said.

(BEGIN VIDEO CLIP)

OBAMA: As long as I am president, no one is going to take the retirement savings of a generation of Americans and had it over to Wall Street. Not on my watch.

(END VIDEO CLIP)

BLITZER: Do you agree with the president on that?

PAUL: Well, I have to know what he is thinking about on privatizing and what others think about privatizing, because (INAUDIBLE) --

BLITZER: He doesn't want to privatize it. He wants to keep it --

PAUL: -- you would think --

BLITZER: -- the way it is now.

PAUL: Well, yes, but I want to know what privatize means. If we could turn this money over and give the individual the money, like an investment retirement fund that they manage, there's a little bit different. But I think most people, what they think about privatizing -- and I'm not for this type of privatizing -- that's when the government manages accounts and gets involved in the stock market.

I -- if that's what he's thinking about, I don't want any part of that. But I want to privatize the retirement funds and put the responsibility on the individual. That, to me, is a lot different type of privatization. But for government bureaucrats to get involved in the stock market, I -- I don't like that.

Besides, if you're -- if you truly have privatization, you can make and pi -- in your own -- make your own choices. But it's when the -- the way we have it now, you only can buy government debt. That's really not a very good investment.

But I think this is -- these are academic arguments, because, you know, talking about five or 10 years from now, we're -- we're facing such a serious crisis with our dollar and our financial situation. The next two or three years, this is going to resolve -- be resolved because we're going to have a financial crisis based on a dollar devaluation. And that, to me, is going to change all the rules in the game. And talking about the tax code for a year or two out --

BLITZER: All right --

PAUL: -- won't have a whole lot of meaning.

BLITZER: I'm curious what your reaction is to this pastor in Florida who wants to burn copies of the Koran on Saturday.

PAUL: Well, I put a little statement out about that, because it -- everybody was talking about it. It's a shame he's getting this much attention. And Petraeus made the statement that I agreed with. He said, you know, this could endanger our troops and I agree with that.

But I also went on to add the point, as much danger as burning the Koran might be, what about our invasion, our bombing, collateral damage, arrests and -- and secret prisons and pictures of torture, drone attacks?

Do you think that isn't, you know, a -- an incitement to violence overseas?

I mean they already have so much. Yes, we -- we should recognize that this is not good for us. It's a bad image. Of course, nobody is challenging, you know, his right to do this thing. I mean we don't -- we're even allowed to burn flags in this country. So that isn't the issue, as much, for me it was the issue of --

BLITZER: All right --

PAUL: -- of saying what kind of a reaction would this be?

And I say our foreign policy has a much, much more negative reaction than burning a Koran would.

BLITZER: Very quickly, because we got this new CNN/"Time" magazine poll in on the race for the Senate in Kentucky. Your son, Rand Paul, is running right now. And we have it as a dead heat among registered voters -- Rand Paul, 46 percent; Jack Conway, the attorney general there, 46 percent.

Are you surprised by this poll, how close it is?

PAUL: No, I think that's pure fiction. That's the biggest surprise of my life. If that happened, it happened within the last 12 hours. I think we'd better check that one out.

But no. The race will be hard fought and hard won and he will run as if it's tied. But there's quite -- those aren't quite the accurate statistics that I've been hearing about.

BLITZER: Yes, I've heard other polls that had your son way ahead. But this is among registered voters, a CNN/"Time"/Opinion Research Corporation poll.

We'll stay on top of this race and all the other races.

Always good to have you in THE SITUATION ROOM.

Congressman, thanks for coming in.

PAUL: Thank you, Wolf.

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