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GOV. RICK PERRY (R-TX), PRESIDENTIAL CANDIDATE: I think we're standing in good place at this particular point in time. Iowa is the real focus. Obviously, we're going to be in South Carolina a good bit over the course of the next two weeks. But Iowa is the real focus.
BLITZER: Do you believe all these polls that show you in a distant third or fourth?
PERRY: Actually, we got our own internal stuff that shows us, you know, with a nice path to victory in Iowa.
BLITZER: Is it do or die for you in Iowa?
PERRY: Oh, not at all. Not at all.
BLITZER: If you come in third or fourth in Iowa, what happens?
PERRY: Look, we're campaigning -- we're campaigning away. So, you know, they'll be seeing us in Florida. We'll be working there.
So, I feel pretty good about it. I mean, this is a very fluid race. You think about it, we've had four different front runners at least. And, you know, it's Newt's time in the barrel now. So, you know, we'll see how that works out.
And I just saw a poll as we were coming in that had me in second place. So --
BLITZER: For where?
PERRY: It was one -- it was off the Internet. I think Hot Gas was --
BLITZER: Was it a national poll?
PERRY: No, it's just Iowa.
BLITZER: Just in Iowa.
PERRY: It's just in Iowa. So -- but, you know, again, polls are fun and interesting things. But Iowa caucus is really different.
BLITZER: You have a pretty good relationship with Newt Gingrich?
PERRY: Oh, I got a great relationship with Newt. We've known each other a long time.
BLITZER: He wrote the introduction to your book.
PERRY: He wrote the introduction to my book. And --
BLITZER: Do you think he can implode in these last few weeks?
PERRY: By watching the last four of us that were at the top of the polls, I would suggest to you that it's possible for anyone. So, it is a very, very fluid race in Iowa in particular.
So, you know, the evangelical Christians are waiting, you know, find that individual that they're really comfortable with, that they think can win, that has their values. And I think, you know, I fit their mold quite well.
BLITZER: Let's go through some issues right now.
BLITZER: The payroll tax cut that the president wants to extend for another year -- 150 million, 160 million Americans would be affected. If you are making $50,000 a year, you could save, let's say, $1,000 or $1500 a year. Are you for that?
PERRY: No, temporary tax cuts, long term tax hikes are bad for the economy.
BLITZER: But that would effectively be a tax increase on the middle class.
PERRY: Look, he needs to be working on getting rid of the impediments to job creation. And that is the tax burden. That is the regulatory climate that we've got.
If you want to get Americans back working, they won't mind paying a payroll tax if they've got a good job. And that's what we need to be focused on.
This president is focused on a lot of different things, but he's not focusing on how to create jobs.
Over the decade I have been governor of the state of Texas, we created a million net new jobs while this country has lost over 2 million. I know how to create jobs and it's not by giving temporary tax cuts that are going to end up being permanent tax hikes. And that's exactly what this payroll tax cuts --
BLITZER: Why will they be permanent tax hikes?
PERRY: Because they won't get -- they won't go away. It's the reason I didn't take the unemployment dollars that he tried to send us back in '09. I said no, because he wanted to change our program. And it would left in place a permanent tax hike.
I know how Washington functions. They bait and switch on you.
BLITZER: Well, for the argument he makes, and a lot of Democrats and even some Republicans make, is $1,000 for a middle class family, or $1,500, that's a lot of money if you're going to tell them the government is taking more money from you next year than this year.
PERRY: Look, Americans don't trust Washington any more. They are looking for an outsider that will come in and really shake this place up. I mean, the idea that somehow or another, this president is telling people, hey, trust me, this time, I'm going to get it right is on deaf ears.
BLITZER: So, you would rather make sure that millionaires don't pay even a little bit more, 1 percent or 2 percent, next year.
PERRY: What I'm looking for -- what I'm looking for, Wolf, is a president that will get this country back working. And that temporary tax hike, and on that payroll tax is not even close to get us started.
BLITZER: So, you would vote against
PERRY: Absolutely, I'd vote against it.
BLITZER: What about extending unemployment benefits?
PERRY: No. That is giving incentives for people to be unemployed. Giving incentive to a job creator to create a job, that's we've done again in the state of Texas. You know, I'm going to go back to it because it's worked.
It's one of the reasons I've called for a part-time legislature, part-time Congress up here. We only meet for 140 days every other year in Texas. We're the 13th largest economy in the -- I mean, in the world, excuse me.
And we come in. Our legislators are part time. They are citizen legislators. They go back home. They have a real job. They live under the laws that they pass and it works really well.
And we need to do that in Washington, D.C. That's what our Founding Fathers in that was their insight to begin with, and then when they changed it. And we have seen Washington now become the centralized, all powerful, one size fits all.
And Americans don't trust them. They don't trust Washington. They don't trust Wall Street.
BLITZER: Let's talk about this new ad that you have. And you call it President Obama's war on religion. All right? We're going to play a clip from it.
(BEGIN VIDEO CLIP)
PERRY: I'm not ashamed to admit that I'm a Christian. But you don't need to be in a pew every Sunday to know that there is something wrong in this country when gays can serve 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, and I'll fight against liberal attacks on our religious heritage.
Faith made America strong. It can make her strong again.
(END VIDEO CLIP)
BLITZER: What is President Obama's war on religion?
PERRY: When you talk to the bishops of the Catholic Church, there is clearly an agenda by this administration to go after those Catholic charities that are offering health care, doing work for trafficking of individuals.
The administration is clearly sending messages to people of faith and organizations of faith. We're not going to support you with federal dollars. I mean, that's one of the examples right there.
So, I'm very comfortable with that ad for one thing. My faith is part of me. The values I learned in my Christian upbringing will affect my governing.
I mean, I asked people, I said, which one of the Ten Commandments do you not like? I mean, why are our children not allowed to pray in school? Why can they not celebrate Christmas?
Those are I think traditional and solid American values that we're seeing trampled upon by this administration.
BLITZER: But separation of church and state. Does that mean anything to you?
PERRY: Sure. But it means that we are supposed to have freedom of religion, not freedom from religion.
BLITZER: But everybody is free to practice their religion.
PERRY: But we've got a federal judge for instance in San Antonio that said these kids couldn't say an invocation in school. I mean, they say you can't eve use the word invocation at their commencement. I mean, that's --
BLITZER: Is that President Obama's war on religion?
PERRY: I'm just giving you suggestions after what we are seeing from the left of which I would suggest to you, President Obama is a member of the left and substantial left of center beliefs that you can't even have a Christmas party. You can't say a prayer at school.
BLITZER: So, when President Obama lights the national Christmas tree --
PERRY: Good for him.
BLITZER: -- and they sing Christmas songs, Christmas carols is that part of his war on religion?
PERRY: Listen, I'm not saying that everything he does is not associated back to his faith. What I'm saying is his administration and the people he's associated with -- and when you start seeing the Catholic bishops with their great concern about this administration, then I think that is a war on our religious traditions in this country.
BLITZER: I think the argument on that specific issue that if some of these Catholic organizations discriminate against gay Americans, they might not be eligible for federal funding. Do you have a problem with that?
PERRY: I think that's their choice. I mean, it's like -- I'll be real honest with you -- it's like the Boy Scouts. The idea that the Boy Scouts spend millions of dollars defending themselves from the ACLU who have sued them because they will not allow openly Gay Scout masters is they are a private organization. This is a church.
BLITZER: But do gay Americans have human rights?
PERRY: Well, sure. I mean, the issue is this. A private organization has the right to decide who they're going to --
BLITZER: Should the private organization get federal taxpayer dollars?
PERRY: If those dollars are being used in an appropriate way. But the Catholic Church is basically being discriminated against because of their anti-choice, if you will, their pro-life position on the issue of abortion. That's what that issue is being addressed from.
BLITZER: If you were president, would you go back and not allow gays to serve openly in the United States military?
PERRY: Absolutely. I think "don't ask, don't tell" worked fine. Listen, I wore the uniform. I was a pilot in the United States Air Force. And I think the "don't ask, don't tell" policy was working fine.
And this president, to use the military -- and he's used the military twice, Wolf. Once with this issue to -- and both times, I think to get support from his base, but particularly on the gays in the military issue. He made the decision that he was going to respond to his base by pushing through and pushing through Congress when he had the votes to allow for individuals to openly serve as gay members in the military.
I don't agree with that. We got two wars going on. The unit cohesiveness, the problems that that can cause, those are real.
BLITZER: Military commanders tell me in the past few months since the policy has changed, they've had no problems.
PERRY: I'm suggesting --
BLITZER: Including the commandant of the Marine Corps who was originally opposed.
PERRY: Well, I'm just telling you, the members of the military I talk to, when this was being talked about -- I didn't talk to anybody who was for it.
BLITZER: All of the NATO allies, they allow gays to serve openly.
PERRY: Well, you know what? That's the NATO allies. This is the United States of America.
BLITZER: The Israel military is pretty good, too, right?
PERRY: I'm telling you that I think "don't ask, don't tell" was the right policy. This president wanted to use our military as a political tool and he did.
BLITZER: But the Israelis let gays serve openly in the military.
PERRY: The other issue is the $60 billion being cut out of the military budget. Again, a president that is showing no leadership. He should have been sitting here working with these members of Congress.
To -- if we allow this super committee, because of the president's lack of leadership, to pull a half a billion dollars -- excuse me -- half a trillion dollars away from the United States military, you can see another Pearl Harbor.
BLITZER: The super committee failed. You know, there's going to be sequestration, automatic cuts, unless Congress takes some specific action. But that super committee --
PERRY: But the president said he would not allow them to take specific cuts so that's on the president.
My point is this: if we allow our military to get cut as much as this president is talking about, allow it to be cut, you could have another Pearl Harbor in this country.
BLITZER: What does that mean?
PERRY: Well, that means a North Korea or Iran or Syria could attack the United States. I mean, we've got an Iran that is working towards having a nuclear weapon. They have clearly said that Israel is first and the United States is second.
BLITZER: But don't you think if Iran or North Korea or Syria attack the United States, they'd be obliterated by the United States? We have thousands of nuclear warheads.
PERRY: But my point is why have that -- I mean, why give it -- we're sending messages that we're weak.
BLITZER: All right. We have much more of my far-reaching interview with Rick Perry coming up. Just ahead: his strong feelings about a vice presidential run. Is that possible if he loses the battle for the Republican presidential nomination? More of the interview with Rick Perry.
And later, Newt Gingrich, my special interview with him here on THE SITUATION ROOM.
BLITZER: Let's get back to part two of my interview with Republican presidential candidate, the Texas Governor, Rick Perry.
BLITZER: I want you to switch subjects for a second about immigration because there is still some confusion where you stand. I know where Newt Gingrich stands on a lot of these immigration issues.
But where do you stand on in-state tuition for children of illegal immigrants who have grown up in the United States and lived here their entire lives. Should they be eligible to go to the University of Texas as in-state students?
PERRY: The people of the state of Texas said this is how we want to do it.
BLITZER: Do you still support that?
PERRY: I support the people of the state of Texas as they send their legislators to town.
BLITZER: So you have not had any reconsideration?
PERRY: Here's the consideration. We have got a federal government that has absolutely failed in securing the border whether it's Arizona having to deal with their immigration problems.
Whether it's Alabama or whatever states having to deal with immigration, it's because of the absolute abject failure of the federal government doing their constitutional duty.
Sheriff Arpaio has endorsed me. If there is anybody tougher on immigration than Sheriff Joe, I don't know who it is.
BLITZER: Michele Bachmann and others say you are creating a magnet that will encourage further illegal immigration.
PERRY: Listen, I am looking still for the kid who came to the United States to go to a Texas college. They came here for jobs. That's the magnet. Jobs are the magnet.
You have got secure the border and this thing is not just about illegal immigration. The terrorists are now using Mexico as a launching pad. We know Hamas, Hezbollah and then we saw a month ago, the Iranians working with the cartels to put together a plan to come in and assassinate a Saudi diplomat on U.S. soil.
So I think in one of the debates I talked about it's time for a new Monroe Doctrine in the western hemisphere and it is. You know, we used it in the 60s with the Soviets. I think it's time again our friends in Brazil and Columbia certainly would like to see the United States have a substantially stronger influence. When you have Hugo Chavez in Venezuela and what is going on in Bolivia and the terrorists using Mexico. We have got spend a substantial amount of time, Wolf, here in the western hemisphere and it starts with securing that border.
I know how to do it. You put the boots on the ground, strategic fencing in place and aviation assets where you got realt ime information. You can stop the movement of weapons and drugs.
BLITZER: Are you with Newt Gingrich when he says that illegal immigrants who have been here 20 or 25 years, have families here, have roots here, paid their taxes, go to church, they should be allowed to stay?
PERRY: Listen, I'm not going to get involved in how we're going to address immigration reform until the border gets secured. We have had these conversations before. We had them in the 80s and in the 90s.
There was always the promise that the border was going to be secured. It's not. Until the border is secured, having conversations about are you going have this policy or that is nothing more than an intellectual engagement.
I'm not going to do that until we have clearly secured that border and I know how to do it. I have dealt with it for almost 11 years now.
BLITZER: You're here to address the Republican Jewish Coalition. Let's talk about Israel for a moment. A subject obviously on the minds of a lot of people you're going to be talking to.
Since 67, every U.S. president, Democratic and Republican have called Israeli settlement activity in the west bank of the occupied territories illegal under international law. If you were president, would you continue that policy?
PERRY: You're talking about the Israeli settlement?
PERRY: No, I wouldn't. I consider the Israeli settlements to be legal from my perspective and I support them.
BLITZER: Even if they are on the west bank?
PERRY: Where there are arrangements that have been made, where the Israelis are clearly on Israelis land that they have hard fought to win and to keep, absolutely.
BLITZER: But this is seen by the State Department as occupied Palestinian territory.
PERRY: I don't always agree with the State Department. I think out State Department from time to time get its wrong. I happen to believe that Israel spends way too much time defending themselves against people who want to have terrorist acts against them. Whether it's Palestinians, whether it's Hezbollah, whether it's Hamas, the United States needs to be standing with Israel strongly standing with them and supporting them.
BLITZER: Would you move the U.S. embassy from Tel-Aviv to Jerusalem?
PERRY: As soon as I could. I would clearly say if you want to work with the State Department of the United States, you need to be packing your bags and move in Jerusalem.
BLITZER: Would you fear negative reaction?
PERRY: No, listen, how many other countries do we have our embassies in that is not in the capital of the country?
BLITZER: We're going back to 1948. No American president has recognized Jerusalem as being the capital of Israel.
PERRY: There may not have been a president of the United States that feels as strongly about Israel as I do.
BLITZER: Ronald Reagan didn't feel strongly or George W. Bush or George H.W. Bush?
PERRY: As strongly as I do.
BLITZER: So you would move it right away?
PERRY: I would move it, yes, sir.
BLITZER: All right, more of the interview coming up with Rick Perry. Just ahead, is he planning to tell Donald Trump you're fired when it comes to the upcoming Republican presidential debate? He says he just spoke to Donald Trump. Has he made his mind up? Will he participate in the Donald Trump debate at the end of the month? Standby.
BLITZER: Here is a question. How does Rick Perry feel about potentially riding shotgun on a presidential ticket? Let's get to the final part of my interview with the Texas governor, the Republican presidential candidate.
BLITZER: Took a question from Facebook. Who would you consider for vice president, any thoughts yet?
PERRY: None. No thoughts at all. I'm running for the presidency. There is plenty of time in the late summer and fall to think about that.
BLITZER: If there were somebody else that got the Republican nomination -- I know you think that is unlikely, but let's say Newt Gingrich or Mitt Romney got it. Would you consider being a running mate?
PERRY: Why would leave being governor of the state of Texas to be vice president?
BLITZER: You're just in next line to be president of the United States?
PERRY: -- very powerful statement about that. Being vice president is not worth a bucket of warm spit.
BLITZER: All right, let me ask you a quick question before I let you. I know you got a pain medication. I know you have some back issues. Tell our viewers what exactly was the issue with your back.
PERRY: I had a spine surgery on the first of July and had -- my adult stem cells actually were extracted and used and incredibly successful surgery. Absolutely, I'm back running again, 3 to 4 miles, 4 to 5 times a week.
And I was off for 10 weeks. I probably took pain medication for the first 10 days, two weeks and after that, the surgery has been awesome.
BLITZER: Here's the question.
PERRY: These guys are a bigger pain than the back surgery.
BLITZER: Yes, because we had a question from -- I can understand. A question from a Facebook, how was your health? I heard you had some orthopaedic surgery not long ago. Did any of that pain medication -- we know that highly publicized brain freeze. Do you think you could blame the pain medication or any drugs for causing that?
PERRY: That was probably too many days on the road. It had nothing to do with medication.
BLITZER: You were just working really hard.
PERRY: Seven weeks and raised $17 million. We were on the road a lot so -- but, I want to get back out on the road and campaign. Retail campaigning is what I love. You know, debating is -- is some great reality TV, but the Americans want to see their candidates out talking about the issues and really important to them.
BLITZER: Have you made the decision on the Donald Trump debate?
PERRY: I haven't. We're right in the middle of a very, very important bus tour when that was planned and this bus tour has been --
BLITZER: Your bus tour is in Iowa.
PERRY: Right it is, but -- BLITZER: Because this debate is in Iowa.
PERRY: I don't want to tell people that I promise that I'm going to be in their town doing an event with them. Sorry, I got to go run in and do -- you know, in the preparation and what have you. So we're still giving it consideration, but the people of Iowa come first.
BLITZER: And you've spoken to Donald Trump about this?
PERRY: I called him yesterday.
BLITZER: How did that conversation --
PERRY: Good. You know, I got along great with him.
BLITZER: He obviously wants you to come.
PERRY: Yes, big time.
BLITZER: Are you surprised Mitt Romney said he wasn't going to go?
PERRY: Look everybody has got to make their own decision about whether you're going to be a particular place or not. So I respect their decision making process. I hope whatever we decide, people will respect ours.
BLITZER: I'm sure they will. Governor, thanks very much. Good luck to you. Appreciate it.
PERRY: Always, thank you, Wolf.
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