• With: Mitt Romney, GOP presidential candidate

    This is a rush transcript from "Hannity," June 2, 2011. This copy may not be in its final form and may be updated.

    SEAN HANNITY, HOST: nd the GOP field got bigger today as former Massachusetts Governor Mitt Romney officially threw his hat into the ring and declared that he has set to challenge "The Anointed One" in 2012.

    And I sat down with him for an interview about that earlier today, and we'll get to that in just a moment. But first, take a look at the governor's big announcement.

    (BEGIN VIDEO CLIP)

    MITT ROMNEY, FORMER MASSACHUSETTS GOVERNOR: The principles that made this nation a great and powerful leader of the world, have not lost their meaning. They never will. We know we can bring this country back. I'm Mitt Romney. I believe in America. And I'm running for president of the United States.

    (CHEERING AND APPLAUSE)

    (END VIDEO CLIP)

    HANNITY: Now, Governor Romney made his announcement in the key primary state of New Hampshire, where we sat down for our interview.

    (BEGIN VIDEO CLIP)

    HANNITY: Governor Romney, good to see you, thanks so much for doing this.

    ROMNEY: Thanks, Sean. Good to be with you, again.

    HANNITY: All right. Big day for you?

    ROMNEY: Yes. Absolutely. Announcing I'm running for president today.

    HANNITY: Barack Obama has failed America, you said that.

    ROMNEY: No question about it. He came into office and there was one job front and center. And that was to keep the economy from going off a cliff. To make sure that Americans got back to work, that home values came back. And look, we are into his third year of his presidency. And we're in the third year we are seeing continuing high levels of unemployment. We see home values declining, foreclosures remain at record levels. He has not turned the economy around. He has failed in the job he was elected to do. And that's why in my opinion, he's not going to be reelected.

    HANNITY: You know, it was interesting, I was reading an article yesterday. A financial adviser, he actually made this statement and it became the front page of the Drudge Report, The Coming Depression. Do you think it can get that bad?

    ROMNEY: Well, if it's terribly managed. If you have an economy where the leaders do everything wrong, anything is possible. The right course for America is to basically reverse almost every single action he's taken as president. Everything he did was what the faculty lounge members have been talking about for years, which you hear Europeans doing. And what Europeans have done has lead to stagnation, high levels of unemployment and declining competitiveness for Europe.

    In this country we have a different course. I believe in the way we do it. We belief in individual initiative, personal responsibility, opportunity, freedom, small government, Constitution. These principles, these American principles are key to getting our economy back to being successful and leading the world.

    HANNITY: You even said that we are inches away from not being a free market economy. What did you mean by that? Do you think America -- would you define America now as on the verge of socialism or how would you define where we're headed?

    ROMNEY: Well, look where we are. We are at a point where almost 40 percent of all economic activity in America is accounted for by government. Government is taking 40 percent of the GDP. And that's at the state, local and federal level. President Obama has taken government spending at the federal level from 20 percent to 25 percent. Look, at some point, you cease being a free economy, and you become a government economy. And we got to stop that. America ceases being America. We cease being able to provide to our people. High incomes, and good job opportunities and rising standard of living, if we have government running our lives.

    And so, we're going to have to shrink the steel of government. I would cap the amount of federal government can spend at 20 percent of the economy. Bring it back to 20 percent or lower. And say, we are not going to spend above that level. Democrats, they want to raise your taxes and spend more and more and turn us into an economy which is no longer driven by the private sector.

    HANNITY: You talk about this, and you talk about kicking the can down the road and passing the bill on to future generations.

    ROMNEY: Yes.

    HANNITY: And you have been discussing this a lot on the road and you talked about it today. How do you then balance the budget? You want to go from 40 percent to 20 percent GDP. And you talk about specifically balancing America's budget. We're now for three consecutive years have had at least a trillion and a half -- billion dollar -- trillion and a half dollar budget deficit. That's almost five trillion more dollars. They want to raise the debt ceiling from where it is to 14.3 trillion, how do you get that budget in balance and still provide the services that maybe America wants and maybe they don't need?

    ROMNEY: Well, some classic Democrats only think the way to balance the budget is raising taxes. But the problem with that is, not only is it unfair, but you also slow down the economy which becomes self-defeating if you are trying to balance the budget. A lot of Republicans just say, just cut our way to balancing the budget. Well, cutting helps. And we need to do a lot of cutting and reshaping programs to make sure they are sustainable. But there's a third way. Combined with reducing federal spending is growing the economy. And you need to have a president who understands how to get the economy growing so we can add jobs, more people are paying taxes. Companies are profitable, so they are paying more taxes. You balance the budget by restraining the growth of government and encouraging the growth of the private sector.

    HANNITY: You talked a lot about this. And I want to, as we move forward here, you talked about the president when he ran four years ago, or three years ago, that he ran on slogans and platitudes. And now you say this election is different. That now Barack Obama has a record. You graded him as a failure. Is it also in foreign policy, that he's a failure? What is the difference between 2008 and 2012 in terms of running against this president?

    ROMNEY: Well, you know, we did kind of an American thing in electing Barack Obama. We had a guy who was young. We didn't know much about him. He hadn't shown much of a track record at that point. But Americans said, you know, he's saying he's going to take us to a better place. Let's give him a chance.

    Well, now we've watched what happens if you select someone that doesn't have experience. And it hasn't been a pretty picture. He has failed. He's failed with the economy. The economy is still -- we're seeing shedding jobs in some parts of the economy. We have home values declining. Foreclosures continue to be at record levels. He has failed, and internationally, he's also failed. He really doesn't have a foreign policy. He reacts to events as they occur.

    So, sometime he reacts well like getting Usama bin Laden. And sometime, he reacts very poorly, the Arab spring is an opportunity we've missed. Him throwing Israel under the bus is something which has shocked our friends around the world. He announced our withdrawal date from our troops in Afghanistan, that is not something you share with the Taliban. They don't have watches, but they have calendars. And they know what the implications are of America announcing a withdrawal date. So, he's made some monumental errors internationally. And of course, his errors domestically add up to a failed presidency.

    HANNITY: You say, from the beginning, he focused on the wrong things. So, I want to get into the Arab spring.

    ROMNEY: Yes.

    HANNITY: And I want to talk to you about Egypt a little bit and foreign policy. But you said from the time he took office, he focused on the wrong things. If you were elected in 2008, got pretty close. If you had been elected, and he was saying it was the worst economy since the Great Depression, what would you have done? What would the steps have been that you would have taken?

    ROMNEY: Well, his first job had to be to get this economy going again and to stop the decline of America's productive sector. That's what his first job should have been. Instead, he just delegated his stimulus over to Nancy Pelosi and Harry Reid. And they crafted a new spending program that protected union jobs for government workers but didn't create the kind of employment opportunities that were needed in the private sector. So, the stimulus didn't work.

    And then number two, he went out for the things he really cared about, which was Obamacare, and cap-and-trade and card check and stacking the national labor relations board with labor stooges. Just one thing after the other. The liberal agenda he had been pining for for years, he put in place and it had the impact that could have been predicted. It just put the economy on the skids.

    HANNITY: You said that this campaign is going to be different from when you ran in 2008. And I think one of your advisers was quoted in The Washington Post as saying, we are not going to be chasing tennis balls this time. I think, meaning reacting to everything.

    ROMNEY: Yes.

    HANNITY: You've been a little more low profile than perhaps you were, your name recognition obviously this time is higher. What is the difference in this campaign as you now launch today, versus the campaign that you ran in 2008?

    ROMNEY: You know, when I ran in 2008, the issue people were most concerned about, during the primaries was Iraq. And the surge in Iraq. And John McCain ran a very good campaign. He focused on his experience as a military leader, as a senator. He focused on Iraq and the surge. And that worked very well. Today, the issue people care about is the economy. And not just thinking about next week, or even next year. They are wondering whether 10 years from now, their kids will enjoy the America that is as prosperous as the America we've enjoyed? And the answer is, this president has failed to deliver on the issue people care most about. And what people care most about, which is the economy, is in my wheel house. I spent my life not in politics. I've only been in politics four years, I was governor, four years. I didn't inhale. My life has been as a private sector guy.