• With: Nicolle Wallace and Sandra Smith

    This is a rush transcript from "Hannity," November 10, 2010. This copy may not be in its final form and may be updated.

    SEAN HANNITY, HOST: Just hours ago, President Obama's own deficit reduction commission dropped a bombshell on the administration.

    Now if you thought Obamacare was controversial or the stimulus or TARP or the auto bailout, wait until you hear what your government is considering now.

    Now at a press conference today in Washington, the commission unveiled its plan to show us how we're going to slash the nation's deficit. Take a look.


    ERSKINE BOWLES, DEBT COMMISSION CO-CHAIR: Every member of the commission today, when we were meeting said they thought this was a serious plan. And -- but nobody I think likes everything in it or dislikes everything in it.

    And so what we need to do now is debate it, try to come up with the reasonable compromises, modify those things that need to be modified, change those things that need to be changed, but this is a really strong starting point.


    HANNITY: All right. So what exactly is the so-called starting point? Let's take a look at some of the recommendations.

    First, they want to increase the Federal Gas Tax rate starting in 2013 by 15 cents per gallon. Next they propose increasing the Social Security retirement age. Now third, the commission is calling for cuts in both Social Security and Medicare benefits.

    They want to end tax breaks like the Mortgage Interest Deduction that so many Americans rely on. And over $200 billion in discretionary spending cuts. By the way, half have been proposed and half of those come from slashing the Pentagon's budget.

    Now that's the game plan that was announced today. Now the question is, will President Obama take his own advice of his own commission?

    And here in studio to help break down all of this, former White House communications director, author of X-rated brand new book, "Eighteen Acres," Nicolle Wallace is back with us, along with Sandra Smith from the Fox Business Network.

    Well --



    HANNITY: All right.

    WALLACE: You just drop me off the New York Times best seller list.


    HANNITY: It's not real. But you have -- the first female president whose husband is having an affair with a reporter.

    WALLACE: It's a very -- it's a very PG-rated affair.

    HANNITY: OK. It's PG-rated affair. You heard that.

    WALLACE: Come on.

    HANNITY: Now that's as Clintonesque as anything that I've heard.

    All right. I got to tell you. I'm looking at this. I mean, if people thought the stimulus, TARP and the auto bailouts were bad, we have a deficit commission. They want to gut the Pentagon, raise taxes.

    And I don't hear -- I don't hear anything about economic growth in this.

    SANDRA SMITH, FOX BUSINESS NETWORK: That's the biggest problem. There is nothing showing -- promoting economic growth, job growth, anything that corporations are going to look at this and say, this is going to make things better in the future.

    Yes, it talks about the tax hikes, spending cuts. But most of those spending cuts coming from defense spending --

    HANNITY: The Pentagon.

    SMITH: There's no --

    HANNITY: They don't realize there is a war. This is what's infuriating. They don't realize there is a war.

    SMITH: First of all, this is going to go nowhere. This is going nowhere. There's 18 members of this commission, 14 of them have to approve these recommendations. One of them has already said he won't vote for it. Another has already said that he doesn't like any of the ideas in here.

    So really, this is just a menu for everybody to look at and everybody to hate because nobody likes what's in this.

    WALLACE: Well, let's remember why we're talking about deficits. We have at many points in this country the government has operated with deficits, but they haven't created the sort of anxiety that they create right now. Particularly among Tea Party --

    HANNITY: We've never had a president accumulate more debt --

    WALLACE: Right.

    HANNITY: -- than every president from Washington to Reagan in three years.

    WALLACE: The anxiety coupled with the deficit is because there's nothing happening in our economy that's giving corporate America, the people who hire people, confidence. And if these proposals don't increase the confidence in the American economy, that we need to start adding jobs, then there will be no political will.

    Because the only reason that there is added pressure on Washington and on politicians to do something about the deficit right now is because we're in such dire straits with our economy.