This is a rush transcript from "Hannity," April 25, 2011. This copy may not be in its final form and may be updated.
SEAN HANNITY, HOST: He is a possible 2012 contender and is the author of the brand new book which seeks to bring clarity to a concept that is much lost, in terms of the meaning in the Obama  administration. The book is, "Liberty Defined: 50 Essential Issues That Affect Our Freedom." The author, Texas Congressman Ron Paul  is with us in the studio. How are you, it's so good to see you.
REP. RON PAUL, R-TEXAS: Very well, thank you.
HANNITY: I'm going to show video of your supporters throwing snowballs at me in 2008. I had nothing to do with it.
PAUL: And we believe in nonviolence.
HANNITY: Apparently not.
PAUL: Did you get hurt?
HANNITY: We'll talk about it. We'll get to that.
Good to see you. Thank you for being here.
HANNITY: First of all, I like your book. I've gone through it. It's -- you talk about a lot of topics in this book. I think -- would you say you are more libertarian than conservative? Or is that a fair statement? Because that's how I interpret it.
PAUL: Words are very tricky, because sometimes libertarian means one thing to a person -- a libertarian means something -- if you are a good libertarian conservative, you are a constitutionalist. And I believe all the writers in the Constitution were very libertarian in the conventional sense. They wanted less government in all areas. They don't want government involved in our economic life or in our personal lives, you know, our religious lives or whatever. But it also -- it was advised by the founders to have a certain foreign policy that we ascribe to.
HANNITY: This is probably an area you and I disagree on, but we'll get to that in a minute. You have an announcement tomorrow in Iowa?
PAUL: I do. Were you interested?
HANNITY: Yes, I'm very interested.
PAUL: We're going to announce that I'm going to start an exploratory committee.
PAUL: Yes. And I'll stop by in Iowa on my way home, and that might lead to the next decision. It depends on what kind of reception I get on your show tonight. You know, if I get booed or something, I'll say, well, maybe I shouldn't do it.
HANNITY: You know, the funny thing is, I wrote a book "Conservative Victory." I didn't write a book about Republican victory. I'm a -- I like to view myself as a conservative. There are certain things happening in Congress right now I don't think the Republicans are fighting hard enough. For example, the 2011 budget. I think they could have gotten a bigger deal. I would have preferred they shut the government down.
PAUL: I'm with you on that. But still, you know, it is not easy to vote against the budget when all the Republicans are voting, you know, for a budget. But I agree with you. I think it should close down -- it should have closed down a long time ago. But I thought it should have been closed down 15 or 20 years ago and change our ways. But because of this system and the monetary system and the desire for entitlements, I mean, it is sort of endless.
HANNITY: 14.3 trillion in a debt that we have, and now we are going to raise it how much? What do you think, if the Republicans are going to make a deal, which it appears they want to, because everyone is afraid to say that the full faith and credit of the government is not in play -- what should the deal be, if any?
PAUL: I don't believe in the deals. What did they say -- you know, one time in the '80s, there was an agreement that we would cut so much as - - we would raise taxes if we cut twice as much in spending. And the Republicans got tricked into that. There was no cuts in spending.
So I don't like these deals. What kind of thing can you pass when you pass the debt increase that you can trust? And I can't imagine anything that would talk me into voting for it. I think we should face up to it.
HANNITY: Your son Rand says a balanced budget amendment would do it for him, if we could get that.
PAUL: Yeah, and I guess I probably would have a little disagreement on that. I would, you know, vote for that, but that wouldn't make me satisfied to raise the debt, because when are you going to get the amendment passed? You have to pass it through the House and the Senate and pass it through the states, five or 10 years from now. That is what is wrong with all these budget proposals. It does nothing until, you know, many years out. But the amount of deficit difference, national debt difference in 2016 between Republican and Democrats is $19 trillion for the Republicans and $20 trillion for the Democrats. I mean, that's all fiction. It doesn't mean anything.
HANNITY: So you are starting this exploratory committee. Let's say the country was ready for your more libertarian message, as you define libertarian. How do you balance the budget and how short a time do you think you could do it? And do you think the country would be ready to say, OK, we are going to give up Social Security and Medicare and all these other things? Because I believe you would support that.
PAUL: Yes, we would. I don't think anybody could get that through, because I think we'll have an economic collapse and then we'll have to start over again, that's a bigger story. But if we had our ability to do it, I would address one subject that we agree to disagree on. And that is, I would cut a lot of the spending overseas. I mean, we have too much stuff. And why do we support Obama going into Libya and all this stuff? It is just way too much. You could cut a lot.
HANNITY: We have a war on terror, though. Is that real in your mind?
PAUL: Yes, but you have to understand where the terrorism goes. I know Michael Scheuer comes on Fox at times -- I don't know whether you've had him on.
HANNITY: I had him on, sure.
PAUL: I read him very seriously. I consider him the most intelligent person and most knowledgeable person about Usama bin Laden. And he has a new book, you know, out of that. So I think looking at that means that our foreign policy does have something to do with our problems and our dangers that we face here.
But I don't see --
HANNITY: But when you say that, I think people interpret that, that we incite the attacks against us. The conclusion of the 9/11 Commission was they are at war with us, but we are not at war with them. So in other words--
PAUL: Yes, but the 9/11 Commission also recognized that there was a blowback phenomenon, the fact that we were over there and had a base in Saudi Arabia was part of it, and Usama bin Laden said that. And we immediately after 9/11 removed the troops from Saudi Arabia. We closed that base down. But the 9/11 report recognized that.
HANNITY: But isn't that -- but if they were at war with us for a decade and we're not at war with them, do you not agree that there is a desire among Islamic extremists to have an Islamic caliphate, Sharia law, and conquering the world? Because that's their stated goal. That's what they say they want.
PAUL: But I think there would be this many, but because we are over there, their numbers grow. That is what -- you have radicals in all religions. And if there is some way to incite them, their numbers will grow. So their numbers have grown, but they use us to do that. And they say, oh, they are over here. We support all these dictators.
HANNITY: I think they hated us already. I think -- but we'll continue this. We'll pick it up there. We're going to have much more with Congressman Ron Paul, making a big announcement on this program. He's starting an exploratory committee that he will announce in Iowa tomorrow. We're going to ask the congressman why his supporters, his loved ones, heckled little old me and threw snowballs at me back in 2008. And we'll see if he condemns his own supporters, coming up.
HANNITY: Welcome back to "Hannity." Tonight I'm joined by the man who just revealed right here on this program that he plans to form an exploratory committee for a possible 2012 White House run. That announcement will come tomorrow at an event in Iowa. He's Texas Congressman Ron Paul -- I was thinking Rand -- and he has a thing or two to answer for about an incident that occurred during his 2008 presidential bid. After the primary in New Hampshire, the congressman's supporters pelted little old me with snowballs. And here's the scene that ensued.
(BEGIN VIDEO CLIP FROM JANUARY 2008)
UNIDENTIFED MALE: We're great Americans and you're not, Sean!
UNIDENTIFIED MALE: You suck, Sean!
(SHOUTING AND CHEERING)
(END VIDEO CLIP)
HANNITY: Joining me with reaction to all of that is the author of this brand new book, "Liberty Defined: 50 Essential Issues That Affect our Freedom," and that's Dr. Ron Paul. What happened was, they had a focus group. So I went over to the focus group, and you were not in the debate that night.
PAUL: I wonder why?
HANNITY: I didn't make the decision. But you weren't in the debate, and I was being held accountable for that. And so I saw them all out there, and I said -- they said, no, no, you have to wait for security to take you out. I said, I'm not waiting for security. I walked right out in the middle of them and -- well, are you going to defend that?
PAUL: Did you hear what Hillary said at one of our committee hearings about those supporters?
PAUL: She said they were the most enthusiast, excited supporters I've ever seen in politics.
HANNITY: I agree. I've experienced it firsthand.
All right, let me ask you this, because you said -- for example -- I'll give you one example. You said about the Ground Zero mosque issue that you thought this was a religious freedom issue. And I have a real problem when the families -- and you said, you know, you were raising the question about who is raising the question, just why and what is driving the people that were opposing it? Now, if we look at Imam Rauf, the guy that wants America to be Sharia compliant, that thinks Usama bin Laden is made in the USA, we are partly responsible for what happened.
You are not concerned about the families of 9/11 and their reaction after losing loved ones?
PAUL: Yes, but I'm also concerned about guilt by association and blanket guilt by a group. And if that goes through and you say you can't do it because it is Muslim and there are some bad Muslims over here and they did this, this means that you blame the religion. And you don't want to blame the religion. But in order to do that -- you -- I mean, if something happened that had it been a Catholic or something like did it, would you think, oh, it's a good idea, we don't want -- because he was a Catholic and he did bad things and therefore we can't allow a Catholic church to be built in a certain area?
HANNITY: But when I listen to you, I hear you talk about first founding principles, which by the way are really important, and I think that's the area that I would find an agreement with you. The difference is, is that the imam, while we believe in free speech, believes in a value system. He says he wants America to be Sharia compliant.
It is the antithesis -- wait a second, this is important -- it is the antithesis of everything we believe in. Women don't have rights, they don't drive, they get stoned to death, they need four male eyewitness if they are raped, they don't get to go to school. And--
PAUL: But that is not coming here. We have to stay--
HANNITY: That's what he said he wants.
PAUL: That's -- what we have to do is defend our principles. And actually, the principle here is a private property principle. We shouldn't have governments building buildings and telling people where to build. It should be a private property issue. If you own that land over there, you shouldn't be told what you can build on that. If you want to rent it to any type of religion, you should be able to, and you can't have guilt by association.
HANNITY: It is not guilt by association. The words of this guy on "60 Minutes" that if somebody wants America Sharia compliant, Sharia by its very nature as applied is one that denies women rights.
PAUL: But that's a different issue entirely. I mean, there is -- that goes on in Saudi Arabia.
HANNITY: But he wants that in America is what he said.
PAUL: I know.
HANNITY: So he's fighting for that.
PAUL: But then you defend it by a better idea, you defend it by the Constitution. They can't do that--
HANNITY: By opening the door -- isn't that opening the door for somebody who wants --
PAUL: No, I--
HANNITY: -- to overthrow America into a system that we -- that is contrary to our fundamental beliefs?
PAUL: No, I think you are closing the door on what makes America great, property rights and the fact that you don't have people guilty because they belong to a group.
HANNITY: Let me ask you--
PAUL: You don't have everybody guilty because of something horrible that has happened.
HANNITY: How -- I want to get serious here. If you get -- if you ever got to be president, how would you cut back on the entitlement programs that you talk so much about, and the welfare state, and the nanny state that has been created? How would you tell America that Medicare no longer exists, Social Security no longer exists? How do you -- how would you do that?
PAUL: The whole thing is, since I believe that a president shouldn't be a king and can't do it, he has to --
PAUL: Persuade and get the people to agree, and the Congress to agree.
I think one thing, none of this would happen if you couldn't print money to pay the debt.
HANNITY: I agree with that.
PAUL: Everything would be balanced then. So -- but can I close down the Fed? Not as a president you can't. But you could lead the charge on this. I mean, we've been doing this for a couple of years.
HANNITY: I agree.
PAUL: And I think you agreed with our audit the Fed. And get -- so you have to keep pushing on it. But if we could get the people to agree that they have to quit printing money, and now we are going into the inflationary repercussions of this, all this printing of money in the last few years, I think we can get people to do that. And then you limit overall spending. And it would be more like saying, well, everybody has to cut 10 percent or--
HANNITY: Last question and I've got to let you go, 47 percent of Americans don't pay taxes. They think the tax system is fair. So when you have almost a voting majority that don't pay taxes, how dangerous is that?
PAUL: Well, that part isn't dangerous. I would like to increase that to 100 percent that don't pay taxes, and then shrink government big enough so we don't have to have an income tax. Most of our history, we didn't have an income tax.
HANNITY: What would you support in an alternative for government revenues for infrastructure and defense?
PAUL: Let it be through user fees, you know, gasoline taxes for your highways.
HANNITY: Fair tax, support it?
PAUL: Not really. It is better than what we have, slightly.
HANNITY: But it would be too high?
PAUL: Oh, it would be way too high, because -- but it would be great for the underground economy, 30 percent or something. Can you imagine, people go to the store, oh, I have to pay another 30 percent. There would be so much underground. That's what happens in the Soviet type systems, you know, the socialist systems, there is a big growth of the underground economy.
HANNITY: Are you going to tell your supporters not to throw snowballs at me next time?
PAUL: I'm going to advise them. I don't tell people what to do. You know, I say nonviolence and tolerance, that is the message.
HANNITY: All right. Congressman, it's really good to see you. Thank you for being with us.
PAUL: Sure thing.
HANNITY: Appreciate it.
Content and Programming Copyright 2011 Fox News Network, LLC. ALL RIGHTS RESERVED. Copyright 2011 CQ-Roll Call, Inc. All materials herein are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of CQ-Roll Call. You may not alter or remove any trademark, copyright or other notice from copies of the content.