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HANNITY: Welcome back. Gary Johnson says he has big plans to overhaul America's fiscal and entitlement programs. Will you the voters, will go along?

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HANNITY: Well, you have 47 percent of Americans that don't pay a penny in income taxes. Now one said, and they think the system is fair. You have more people dependent on government for some assistance.

How do you get the people that have been, let's say mentally conditioned to look to government to now say, Gary Johnson is right. We're going cut all these services. We're going to restructure how we use them and they say, wait a minute, you're taking away my benefit, my, my. How do you get people to buy into it?

JOHNSON: And Sean, you play a role in this every single day, talking about it every single day on your show. And that is, is that there's an awareness in this country right now that has never existed before in my lifetime.

In my lifetime I've watched us spend more than what we've taken in for my entire lifetime and I've always thought there would be a day of reckoning. That day of reckoning is here and it is now. Does this get us all to act this? I'm under the belief first of off, we are gonna have this financial collapse. And I'm under the belief that we do have to take this on. Maybe, maybe there's an appetite to actually do that. Now, to do this, this would take Republicans to be in control of the Senate and the House and the presidency. Why the American electorate would give Republicans back control of this, given a few short years ago they did this and Republicans passed a prescription health care been fit and ran up record deficits at that time, I'm not sure why American citizens do that. But I'm under the belief that only the Republican Party can solve this. I'm trying to grow the Republican base to get Republicans in a position to do this.

HANNITY: Do you think they've shown enough strength, for example, on the 11 budget. Do you think they're showing enough resolve on the debt ceiling debate?

JOHNSON: Well, it is moving in the right direction, but it is not nearly enough. And it is not getting there fast enough. I don't think we have eight years, I really don't. This is going to be a bond market collapse.

HANNITY: Do you think America's bonds will collapse?

JOHNSON: Well, there won't be an -- federal reserve, as you know is buying up our debt right now. Come June, that's going to expire. They say they are not going to do that anymore. What happens when there is no appetite for the debt and they have to step back in with --

HANNITY: I'm not disagreeing with you. Sadly, I say this, I think America under Obama, Pelosi, Reid is in a steep decline. As a consequence the world is in decline.

I agree with you. I think the political resolve has to be there. There's not one thing that you have said so far that I disagree with.

JOHNSON: From my standpoint here, I'm putting myself into this contest to be -- if you will, talking the truth on these issues and it wouldn't be just this issue, I with would argue that it is going to be across the board. Whether or not this flies or not, that will remain to be seen. This is what I think I'm offering up.

HANNITY: Now this is where I think your libertarian leanings going to hurt you in some primaries. I think the same thing for Ron Paul or any libertarian on the war. You don't think we belong in Afghanistan, Iraq?

JOHNSON: Well, initially, Afghanistan was totally warranted. We were attacked. We attacked back. That's what our military is for. We should remain vigilant to the terrorist threat.

But after being in Afghanistan for six months I think we effectively wiped out al Qaeda. And here it is, we are there 10 years later. We're building roads, schools, bridges, highways and hospitals and borrowing 43 cents out of every dollar to do that.

HANNITY: I agree with that aspect, but the argument being, of course, though they have a better society when we leave the chances are -- I don't buy it. History have shown that you are not going to be able to do this.

But I disagree with this aspect and that is that Iraq and Afghanistan were warranted because we had a whole series, you know all the incidents leading up to 9/11. People really at war with us. Wikileaks even proved recently the depths to which they were planning after 9/11, future acts and we need to go on offense.

JOHNSON: What we don't argue about is the need for a strong national defense. We don't argue that at all. What we might argue about is the actual threat to our national security.

When it came to Iraq, I would have argued at that time this isn't a threat to our national security. But if they do have weapons of mass destruction, we have the military surveillance capability to see that happen and we could go in and strike at that point.

HANNITY: I don't want to reargue the Iraq war.

JOHNSON: Fast forward to Libya.

HANNITY: Libya, I think if you say that Qaddafi has to go as the United States president, you better take him out because I think this president, it all goes to this decline in America.

I think he's timid, weak, indecisive and I don't think he really has the moral courage to make a tough decision and he always pulls back to his radical ideological base. But on the issue of Iraq, we knew he use of weapons of mass destruction. We had images of dead children, Kurds in the north because chemical weapons were used. The way he was acting made everybody and anybody including most Democrats conclude that he had them.

JOHNSON: Well, and under the umbrella of a no-fly zone, did this occur?

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HANNITY: And up next, the Hannity primaries get a little heated as my discussion with Governor Johnson returns to the topic of legalizing all drugs in America. That debate, straight ahead.

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HANNITY: Welcome back to the Hannity primaries. We continue now with former New Mexico Governor Gary Johnson.

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HANNITY: You run into I think problems with the base, legalizing drugs, a couple of other positions --

JOHNSON: Legalizing marijuana, talking about harm reduction strategies regarding all the other drugs, so talking about legalizing marijuana. I came at this issue from a cost-benefit analysis standpoint.

Sean, I'm not telling you anything that you don't recognize. Half of what we spend on law enforcement, the courts and prisons is drug-related and to what end? Well, $70 billion a year. We're arresting 1.8 million people a year in this country. We now have 2.3 million people behind bars. We have the highest incarceration rate of any person in the world, America.

HANNITY: Marijuana is a different category. What do you do when people are in a crack induced state of psychosis? If it's decriminalized or legalized, what do you do with people so needing a fix for heroin that they would kill their own mother? Predictable results of hard drug use, what do you do then?

JOHNSON: Well, first of all there's an educational process in all this.

HANNITY: If you are too stupid not to stick a needle in arm or a crack pipe in your mouth, you have lost it. There is no educating somebody that crack is bad for you.

JOHNSON: Sure, Sean. But you treat it first as a health issue, rather than a criminal justice issue. You don't treat it first as a criminal justice issue. These are the people that we know. These are people -- people that we care about.

HANNITY: Are we going to provide free health care for them? Are we going provide free heroin, crack?

JOHNSON: Let's differentiate between marijuana though and harder drugs. What I'm advocating is the legalization of marijuana and having drank alcohol and having smoked marijuana neither of which I do today, because I think they are both handicaps.