• With: Newt Gingrich, former speaker of the House

    This is a rush transcript from "Hannity," July 12, 2011. This copy may not be in its final form and may be updated.

    SEAN HANNITY, HOST: GOP presidential hopefuls are in key primary states making their case as to why they think they're the best candidate to take on the president in 2012.

    They all have one key focus, that's the economy. Newt Gingrich says this is the Obama depression. He's urging Republicans to stand strong against the government establishment and not raise any taxes when it comes to the debt ceiling deal.

    Here to explain the man himself, author of "A Nation Like No Other, Why American Exceptionalism Matters," former speaker of the House, presidential candidate Newt Gingrich. Mr. Speaker, good to see you.

    NEWT GINGRICH, PRESIDENTIAL CANDIDATE: It's good to be with you. We had a great Tea Party town hall meeting in Charleston, South Carolina tonight. Very, very strong opposition to any tax increase and to any giving in on the debt ceiling fight.

    HANNITY: This is now key. First of all, do you buy -- I was asking Governor Kasich this -- do you buy into this deadline issue that August 2nd comes, there's no deal and the world as we know it comes to an end. Because I don't believe that's the case. There's still money coming into the government. We can still payoff our debt.

    GINGRICH: I think the House Republicans should call President Obama's bluff. President Obama said today that he couldn't guarantee that Social Security checks would be paid on August 2nd or August 3rd.

    The House Republicans ought to go in tomorrow or the next day, pass a $100 billion cut in spending and a $100 billion increase in the debt ceiling so it is exactly balanced. That takes us all the way through to September. They should call that the Social Security payment guarantee bill.

    Then they should say to the president, here we've taken care of August. All you have to do is get Harry Reid and the Senate Democrats to pass it. You sign it. We can guarantee every senior citizen their Social Security check. Now, Mr. President, are you prepared to stop senior citizens from getting their check?

    Put the shoe back on his foot. Make him responsible. You can do that once a month for the next 18 months. You can find $100 billion a month to do it.

    HANNITY: Thank you. That's what I've been saying. Now Mitch McConnell came up with this idea, three increments where the president would have the authority to raise the debt ceiling by as much as $2.5 trillion and make decisions as to what cuts are made. I don't want him making that decision. I think that's Congress' responsibility.

    GINGRICH: I'm deeply opposed to Senator McConnell's plan. First, it transfers enormous power to the president. Second, in the real world, it will be easy for the president to get 34 Democratic senators to sustain his veto. So there will be no real cuts.

    The way it is written I think is basically a surrender by the Republicans. Now is the time to be calm, courageous, creative and clear. To be calm, first I want you to understand. Obama is under as much pressure as the Republicans are. Does he want to be the first president in American history to default? Is he really going to go out to the world and say I can't do my job and I can't get Washington to work? I don't think so. I think in the end he's going to have to reach an agreement.

    Second, I think that they have got to be courageous because this is a hard business. This is history. This isn't politics. This isn't 30-second attack commercials. This is a power struggle between the 80 percent of the American people who believe in a citizen-centered government and the 20 percent who believe in a Washington-centered government. That power struggle is as deep and as real as anything since the civil war. You have to have the courage to stand there and take the heat.

    They've also got to be creative that's why I suggested just now, pass a one-month debt ceiling increase and pay for it with the same number of dollars in savings and be prepared to come back a month later and do the same thing. And do it once a month until we win the presidency.

    And finally, I think you have to be clear so the American people understand it.

    HANNITY: I've been arguing this with Stuart tonight, now with Governor Kasich tonight. They have the power to do that. All the responsibility is then shifted on the president. I don't like the idea that he unilaterally would get to decide what gets cut. Because I don't know if we'd have a defense department at the end of this period of time when he made his cuts, which as you point out, he would be able to sustain a veto. So it seems to me they've got an easy out here.

    Look, I want to ask you this question. You're speaking to Tea Party people. You are out on the road. The one thing I hear over and over again is this is why you were elected. Don't let us down. Are you hearing it as loudly as I am?

    GINGRICH: Yes, I think it is true. I think as you did when you were with me in 1994 and we became a majority. We got to four consecutive balanced budgets, paid off $405 billion in debt, because we didn't flinch.

    People tend to forget the government closed for five days in November of 1995. It closed for 21 days between December and January. Those 26 days convinced Bill Clinton that we were deadly serious. We were not playing a game. We weren't posturing. We were determined to balance the federal budget.

    By the way, we did balance it for four years, while cutting taxes not raising them and brought unemployment down from 5.6 percent to under four percent, while reforming welfare, the largest entitlement reform in our lifetime.

    So people have to have a sense of commitment to what they're doing. I very much am opposed to Republicans backing off. They have to win the argument with Obama and they can win the argument if that's what they'll focus on doing.

    HANNITY: All right, last question, do you think America is in a depression? You said, the Obama depression.

    GINGRICH: Yes.

    HANNITY: Explain.

    GINGRICH: Yes, you have the lowest participation rate since 1984. You had a quarter million people dropout of workforce last month. While the workforce was shrinking, unemployment went up to 9.2 percent. We created last month 18,000 jobs net. That's one job for every 1,000 unemployed Americans.

    And you have housing prices dropping by more than they did in the great depression this is the Obama depression. He is the most successful food stamp president in the history. And we need to replace him with somebody dedicated to being a paycheck president not a food stamp president.

    HANNITY: I hope they are listening. I think this once a month plan of yours is how to deal with it. They can't be blamed for seniors not getting social security checks. They will be cutting significantly large amounts of the debt and spending, good plan. Mr. Speaker, thank you.

    GINGRICH: Good to be with you.

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