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SEN. LINDSEY GRAHAM (R-SC): Thank you for having me. Happy new year .
MR. GREGORY: So the president talks about a new year's resolution to get the economy back on track. He will face a more Republican Congress . Will he find a partner in the new Congress with more Republicans there?
SEN. GRAHAM: I hope so. I -- well, why did the economy get off track? The policies the president has pursued over the last couple of years with his Democratic colleagues -- the stimulus bill, Obama health care -- I think has made economic recovery more difficult. He'll find a partner if he'll come our way when it comes to creating jobs and controlling spending. The mandate of the last election was pretty clear to me that the Democratic policies from 2008 to '10 were rejected by the American people because they created too much debt and they grew the government too much. So if you want to reduce the size of government , I think you'll find a willing partner in the Republicans .
MR. GREGORY: Well, where do you see the economy right now? You know, holiday spending was pretty good in terms of shopping. But you look at the housing market , it's still a mess.
SEN. GRAHAM: Right.
MR. GREGORY: Prices coming down, interest rates going up.
SEN. GRAHAM: Right.
MR. GREGORY: Do you think economic recovery is still going to be stalled?
SEN. GRAHAM: I think what got us into this mess was the collapse of housing , and it's very -- some bad numbers came out recently about housing . The one thing with extending the tax cuts for two years helped a bit, but the Obama health care is a real burden to small businesses and large businesses. There's been 200 and something waivers. I think one of the best things Republicans do to help the economy is give business certainty, really go after, hard, the Obama healthcare bill, redesign the stimulus bill to make sure it goes to the economy , not to the government . I think it's going to be a, a slow recovery . And 2011 will be a continuation of 2010 , probably unemployment still above nine percent.
MR. GREGORY: Let me break that down a little bit. You mentioned housing . You know, back in 2008 , Republicans , including Senator McCain and yourself...
SEN. GRAHAM: Yes.
MR. GREGORY: ...were talking about Fannie Mae and Freddie Mac , the big housing giants...
SEN. GRAHAM: Yes. Right, right.
MR. GREGORY: ...that now the government took over as being responsible for the crisis. That's a debatable point. But they now basically support the housing market in this country . Are you with the same Republicans , including your own views, that those should be wound down and privatized?
SEN. GRAHAM: Yeah, they should certainly be reviewed and reformed because they pushed mortgages out to people who couldn't pay their mortgages. The mortgages became exotic, security interests -- instruments sold all over the world . And the financial regulation bill really left unattended Fannie Mae and Freddie Mac . And when you have government entities this large who own this much of housing , who've been pushing mortgages on people who can't afford to pay them, and you do nothing about it, it's pretty hard for me to say you've reformed the, the problem that got us into this mess. So yes.
MR. GREGORY: Well, what's the Republican solution? But what's the Republican solution to housing ?
SEN. GRAHAM: To me, is to get Fannie Mae and Freddie Mac in a, in a more privatized environment where risk/reward is, is, is more traditionally accepted. That -- the American dream is to own a home you can afford. And to look at these entities and get more private sector involvement and control who they lend money to and basically wind them down and make them more private.
MR. GREGORY: OK. Let me move on to health care , which you also raised. Is there a chance for actual healthcare repeal, or do you see room for compromise ? All this talk about the individual mandate making individuals buy insurance...
SEN. GRAHAM: Right.
MR. GREGORY: ...you had talked about compromise on that early on.
SEN. GRAHAM: Right.
MR. GREGORY: Do you disagree that it's unconstitutional? A lot of Republicans believe that.
SEN. GRAHAM: I think the problem with the individual mandate is that everybody's going to be in a government -run plan. I was with seven Republicans and seven Democrats that required everybody to be covered. You did away with employer deductions and you allowed individuals to buy health care in the private sector across state lines and it was revenue neutral. I think you're going to see the fight on Obamacare across the board in the House and the Senate to try to defund the Obamacare bill and to start over. One thing I'm going to do with Senator Barrasso is allow states to opt out of the individual mandate, the employer mandate, and expansion of Medicaid . The expansion of Medicaid under the Obama healthcare bill is going to bankrupt South Carolina . So I think this fight is going to continue to 2012 and it's going to move from Washington to the States . It will be one big fight over the role of health care and should Obama health care be in existence in 2012 the way it is today.
MR. GREGORY: Senator , we talk about what kind of a relationship this White House is going to have with a more Republican Congress or a Republican House ...
SEN. GRAHAM: Right.
MR. GREGORY: ...more Republicans in the Senate . The lame-duck session was where the president finished pretty strong, a lot of bipartisan accomplishment. This is what you said, however, just before Christmas , reacting to the lame duck. You weren't very pleased. Let's listen.
SEN. GRAHAM: When it's all going to be said and done, Harry Reid has eaten our lunch. This has been a capitulation in two weeks of dramatic proportions of policies that wouldn't have passed in the new Congress .
MR. GREGORY: So to your way of thinking...
SEN. GRAHAM: Yeah.
MR. GREGORY: ...the kind of bipartisanship we saw is not what you want to see in the new year?
SEN. GRAHAM: Yeah. I don't want to see bills passed in a lame-duck Congress where you can't amend the bill. "Don't_Ask,_Don't_Tell" was repealed in the lame-duck Congress . No one- -not one amendment was allowed to the bill. We had six versions of the Dream Act brought up in the lame-duck Congress ...
MR. GREGORY: That's the immigration bill .
SEN. GRAHAM: ...to make political points. Yeah, that's right. The START treaty could've been made better if it came into the new year. I don't understand why Republicans were pushing through policies in the lame duck that could've been made better in the new Congress . But it's not about us and the president, it's about us and the American people . Will the Republican Party learn from the mistakes of the Democratic Party ? If in 2012 we can show the American people we spent less of their money , we went to the heart of our debt problem by reforming entitlements, and we reduced the size of government , I think we will fare well with the American people . If we don't do those things, we're going to be in trouble ourselves.
MR. GREGORY: Well, you've talked about the tea party influence, and you've been skeptical about whether tea party activists who become candidates who become legislators now are actually willing to compromise , actually willing to legislate. Where do you find yourself then?
SEN. GRAHAM: Well, I...
MR. GREGORY: Closer to the tea party after the lame-duck session or closer to the moderates?
SEN. GRAHAM: Well, I hope I'm, I'm enthusiastic about new people coming in because God knows this Congress coming into being needs to learn from the mistakes of the past Congress . So tea party people could provide energy to do something about our spending problems by getting us back to 2008 spending levels. Pat Toomey 's on your panel. He's been a real leader on entitlement reform . The debt commission is a bipartisan document that we all should look at about flattening our tax code , increasing the age eligibility for Medicare and Social Security , upper income Americans should have their Social Security benefits means tested simply because we don't have enough money to keep Social Security solvent without change . So I hope the tea party will come to Washington and change the whole dynamic that led to this fiscal mess we're in, starting with spending in the 2011 year, but also in reforming entitlements. And I think a guy like Pat Toomey will be a breath of fresh air for the, for the next Congress .
MR. GREGORY: Let me break a few of those things down because it's an important level of detail . But let me start with this.
SEN. GRAHAM: Yeah.
MR. GREGORY: You talk about the budget , you talk about spending. How will you vote on the debt ceiling ? Will you vote to raise it? Which is, which is a vote that'll come up in relatively short order.
SEN. GRAHAM: Right. Well, to not raise the debt ceiling could be a default of the United States' bond and Treasury obligations. That would be very bad for, for the position of the United States in the world at large . But this is an opportunity to make sure the government is changing its spending ways. I will not vote for the debt ceiling increase until I see a plan in place that will deal with our long-term debt obligations, starting with Social Security , a real bipartisan effort to make sure that Social Security stays solvent, adjusting the age, looking at means tests for benefits. On the spending side, I'm not going to vote for debt ceiling increase unless we go back to 2008 spending levels, cutting discretionary spending .
MR. GREGORY: All right, but let me stop you for a second, Senator .
SEN. GRAHAM: I think it's an opportunity ...
MR. GREGORY: That's a big condition...
SEN. GRAHAM: Yes.
MR. GREGORY: ...just on Social Security alone.
SEN. GRAHAM: Yeah, it is.
MR. GREGORY: Do you think Republicans are prepared to follow you in two things you said: Raise the retirement age , and means test benefits for older Americans ?
SEN. GRAHAM: I would suggest that if we're serious about taking America in a new direction, and you're not putting entitlement reform on the table, you've missed a great opportunity to change the course of America 's future. And the last election was about change , Change that really will make us something other than Greece . I think Pat Toomey , Rand Paul , and other candidates who are new to the Congress have said during the campaign, "Everything's on the table when it comes to making America fiscally sound." Let's see if we can find bipartisan reforms in Social Security before we raise the debt limit.
MR. GREGORY: But do you think Senator McConnell , the, the leader of the Republicans , is going to go along with that?
SEN. GRAHAM: I hope so. I know that Speaker Boehner is going to produce spending limitation bills every day. But the question for the Republican Party , for the tea party , for the Democratic Party , beyond discretionary spending , are we willing to look at the debt commission's suggestions in entitlement reform and begin to enact those reforms before it's too late? I hope the -- that, that this new Congress will do something the other Congresses have never done, and that is seriously look at entitlement reform by adjusting the age and means assessing benefits, including Medicare Part D. Obama health care needs to be repealed and replaced. But the Republican Party created Medicare Part D , a prescription drug entitlement that's already gotten out of control . I hope we'll put that on the table for reform .
MR. GREGORY: Would you vote, would you vote to actually scrap that, to take it away?
SEN. GRAHAM: I would vote to means test it. I would vote to make sure that people in my income level and your income level don't get their benefits, prescription drug bills paid by the federal government because we can't afford it. I would vote to make sure that someone in my income level would have their Social Security benefits renegotiated if they're under 55, not in a Draconian way but changes that we can make now for people 55 and under to avoid a fiscal collapse that's surely coming if we do nothing. The president said in his speech he wants to work with us. This is a good opportunity to find common ground; entitlement reform starting with Social Security .
MR. GREGORY: You talked about the president, his leadership style and your own assessment of him. I want to put up on the screen something you said to the National Review last month. "President," -- this is about the government shutdown , but what you talked about was President Obama and his experience. And you said, "I think he's adrift. His instincts, I think, are to be more centrist, since that's the political future for him. But he doesn't feel comfortable taking on his own party . And he sure doesn't know how to cut a deal and sell it. That goes back to experience."
SEN. GRAHAM: Right.
MR. GREGORY: "He's never done this stuff before. I hope the message is, before you elect someone president of the United States , the more experience they have in the real world , the better. He's never sat down with a group of Republicans and Democrats hard-headed right and hard-headed left and hammered out a deal." You don't think what happened in the lame-duck session qualifies?
SEN. GRAHAM: Well, what happened in the lame-duck session was that you had policies that were passed that were sort of liberal agenda policies that got votes or passed that really didn't change the job situation. The president did agree to an extension of the tax cuts , but his initial entry into the agreement was whining. He accused us Republicans of being hostage takers, but he did change . When President Clinton was allowed to talk about the tax extension deal, I think that was a moment of change for President Obama . I hope he will continue to embrace the middle when it comes to spending and entitlement reform .
MR. GREGORY: What about spending and the budget ? Back in '95 you defended a decision to, to shut down the government . You said nobody was angry about that. You held to principle.
SEN. GRAHAM: Yeah.
MR. GREGORY: Do you think it would be a mistake for Republicans to pursue that path this time?
SEN. GRAHAM: I think it's smart for Republicans to learn from our mistakes. At the end of the day , the American people do not like the direction that the, the country has been taking the
last two years. We have a chance to go a new way: Control spending, do something about long-term entitlements. You don't need to shut the government down to accomplish those goals, but you need to lead. And at the end of the day , will the Republican Party , with this new lease on life, lead? Will we put a budget together? Will Paul Ryan put a budget together that not only starts reducing the deficit but addresses long-term debt? I think he will. I'm optimistic about the new members of the Republican Party coming in to the House and the Senate . I think we got a second chance on life, and we're going to take full advantage it. And to my Democratic friends out there, if you want to do something about spending and debt, you're going to find willing partners on the Republican side , but it has to be meaningful change .
MR. GREGORY: Final area, with just a, just a moment left. I want to talk about Afghanistan . You've traveled there extensively and you think a lot about the war. Vice President Biden was on this program in the last couple of weeks...
SEN. GRAHAM: Yeah.
MR. GREGORY: ...was emphatic in talking about the endgame for the United States . This is a portion of what he said.
VICE PRES. JOE BIDEN: At the recent Lisbon conference, the NATO conference where we said we're starting this process, just like we did in Iraq . We're starting it in July of 2011 , and we're going to be totally out of there, come hell or high water , by 2014 .
MR. GREGORY: If that holds, that means there's a level of confidence that the primary challenge can be overcome. Which to you is what?
SEN. GRAHAM: Well, at the end of the day , I think the vice president has walked back that statement. The president rightfully has said, "We're going to start transitioning this year. By 2014 , the Afghan security forces will be in the lead." I want an enduring relationship with Afghanistan past 2014 , politically, economically, and militarily, so that country never goes back into the hands of the Taliban or al-Qaeda . The two words that will be talked about in 2011 with Afghanistan are "corruption" and " Pakistan ." I am hopeful the Pakistani army will be more bold in attacking safe havens across the border that lie in Pakistan . I hope the Karzai government will better address corruption. I hope we can find an enduring relationship with Afghanistan that will make sure that country never goes back in the hands of terrorists. And the idea of putting permanent military bases on the table in 2011 , I think would secure our national interest and tell the bad guys and the good guys we're not leaving, we're staying, in a responsible way if the Afghan people want us to stay.
MR. GREGORY: But that's important. You believe a permanent U.S. military presence in Afghanistan is required in order to head off a potential failed state in the future?
SEN. GRAHAM: I think it would be enormously beneficial to the region , as well as Afghanistan . We've had air bases all over the world . A couple of air bases in Afghanistan would allow the Afghan security forces an edge against the Taliban in perpetuity. It would be a signal to Pakistan that the Taliban are never going to come back in Afghanistan . They could change their behavior. It would be a signal to the whole region that Afghanistan is going to be a new and different place. And if the Afghan people want this relationship, they're going to have to earn it. But I hope they will seek a relationship with the United States of where we can have an enduring relationship, economic and militarily and politically. And a couple of air bases in Afghanistan will give us an edge militarily, give the Afghan security forces an edge militarily, to ensure that country never goes back into the hands of the Taliban , which would be a stabilizing event throughout the whole region . That has to be earned by the Afghan people , and it has to be requested by them.
MR. GREGORY: Before I let you go, Senator , do you have a candidate yet for -- a Republican candidate in 2012 ?
SEN. GRAHAM: Yeah, the most electable conservative.
MR. GREGORY: Who do you think...
SEN. GRAHAM: Whoever that is.
MR. GREGORY: Who, who's the leading contender in your mind?
SEN. GRAHAM: Probably Romney . Mitt Romney has got his problems as a candidate, but so does everyone else. But it's a changing environment . And the one thing you got to prove to the people of South Carolina , not only that you're a conservative, but you can carry the day. That's why we need to be talking about immigration and energy policy as a party . What will we do to break $4 a gallon gas, foreign oil dependency? The one issue we haven't talked about that needs to be talked about is $4 a gallon gas is coming, and we've done nothing to become energy independent. And I want to work with the president and Republicans and Democrats to get a rational energy policy to break our dependency on foreign oil , to create jobs here in America from a renaissance and nuclear power , and try to clean up the air as a noble pursuit of the Republican Party .
MR. GREGORY: Well, we'll start there and on immigration in our next conversation. Senator Graham , thank you, as always.
SEN. GRAHAM: Thank you. Happy new year .
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