This is a rush transcript from "On the Record," December 20, 2012. This copy may not be in its final form and may be updated.
DANA PERINO, FOX NEWS GUEST HOST: I'm Dana Perino, in for Greta. We are one step closer to falling off the financial cliff tonight because just hours ago, the House decided not to vote on plan B, Speaker Boehner saying his plan to avoid a massive January tax hike just didn't have enough votes to pass.
Former House speaker Newt Gingrich joins us. I can't think of a better guest to have right now, Speaker Gingrich. Did you -- did you watch everything unfold a couple hours ago?
NEWT GINGRICH, FORMER HOUSE SPEAKER/FORMER PRESIDENTIAL CANDIDATE: Well, I did. But can we take just one second, Dana?
GINGRICH: I just want to comment about Tim Scott. Tim Scott ran as a Republican on a contract with his local county back in 1995. He was inspired by the "Contract with America." He was a very effective elected official. When he ran for Congress, he beat both former senator Strom Thurmond's son and former governor Carroll Campbell's son in the Republican primary.
He's the real deal. He was supported by the Tea Party movement. He is a solid conservative. He is a very honorable person. And I find it sad that people on the left are so threatened to have a conservative African- American member of the Senate that they would say despicable things about him.
I just want to say I know him personally. He's going to be a great U.S. senator. He was a great pick, and I'm very proud of Nikki Haley for picking him to replace Senator DeMint.
So I just wanted to get that out of the way before we talked about the current mess in Washington, which I am frankly puzzled by. Congress, the legislative branch, has five tools -- appropriations, oversight, legislation, communication by all of its members, and negotiation. Negotiation's the weakest of the five tools.
I frankly wish the House Republicans would go home, relax. They voted to stop a middle class tax increase. If Harry Reid wants to stop it in the Senate, that's fine. The president wants to veto it, that's fine.
This is not a crisis that will end the republic. It's a mess. And I frankly wish we would go back to open negotiations, to open hearings, to open markups, letting the American people see the process. I think negotiating in secret in the White House -- producing a $1 trillion, $2 trillion deal in the next 10 days I think is the worst possible outcome.
PERINO: And it's kind of -- to me, I've been surprised because they've all known that this was coming for a year. And yet it seems like after the election, nobody had any plan. And the Republicans have been in this cul-de-sac. And I keep thinking, Why aren't they blaming President Obama and Senator Reid for not being able to bring the Democrats along on deficit reduction, which was the point in the first place?
And in addition, Mr. Speaker, I'd like your thoughts on this, which is the White House and the Senate both said that the speaker's plan, plan B, was dead on arrival. So it wasn't going to be voted on anyway. So this whole thing was, like, an exercise in futility.
GINGRICH: That's right. And here's the challenge. Obama clearly believes right now that he can bluff the House Republicans and they will cave. I think people forget, when they talk about the fact that Bill Clinton and I got a lot done -- which is true -- welfare reform, four consecutive balanced budgets, a number of things that were serious reforms -- they forget that we also closed the government for six days in November of '95, closed it for 21 days in December and January.
We had a knock-down, drag-out period of beginning to realize we were both serious. And I think right now that Harry Reid, the Senate majority leader, and the President of the United States don't believe House Republicans are serious.
My advice to them would be, have every single committee and subcommittee starting January 3rd hold hearings on every element of waste in the federal government. Let the country see all the different ways we waste money. To pick up on what Congressman Cantor said tonight on the show when you opened, spending is the problem. And I would start driving issue after issue on spending.
And I'd say, Look, we'd like to fix the tax rates, we're glad to fix the tax rates. Any time the president and the Democrats want to talk and they're serious, we'll talk to them. Until then, we're going to get spending under control and we're going to do what we can to save our children and grandchildren. I think that would be a much betters strategy than where they are right now.
PERINO: Based on the substance of plan B, which initially was rejected by everybody, including lots of Republicans, and then over the -- then a couple days later, people started saying, Well, wait a second. It gives the tax cut -- permanent tax cut relief to 99 percent of Americans. It passes -- it fixes the AMT permanently. It did some pretty good things policy-wise.
But from the speaker's perspective, how could they not -- why did they not sell that to the members beforehand? And then how in the world do they call for a vote and not know that they didn't have them?
GINGRICH: Well, I think this is part of what happens when you get involved in being in too many secret rooms. You forget -- you know, the genius of the American system is, first of all, that its 311 million citizens get to participate. Second, that there are 537 elected officials in Washington. They all won elections. They all have legitimate rights. They all should be engaged.
And it's really important that you bring people along, that you grow your vote through information and conversation, and that the -- the actual vote comes last. It doesn't come first. And I think it's unfortunate that they are where they are right now, but I also think they -- they brought out in the open -- the president didn't care about getting his tax increase. The fact is that Harry Reid and the Senate Democrats didn't care about getting the tax increase.
What they want is everything. They want all the spending. They want the additional stimulus money. They want it on their terms. And when they couldn't get it, they think that they can blame the Republicans.
I was very struck -- I was with Bob Woodward the other day, a very wise senior reporter. And Woodward said any Democrat who thinks this president can avoid responsibility for the economy in the second term completely misunderstands American history. He got away with blaming George W. Bush for the first term. This is now going to be Obama's economy. And if it goes sour, it's going to be Obama's failure when it goes sour.
PERINO: I'm so glad you brought that up because right before you came on, I was wondering if at the White House tonight, they're thinking, Oh, my gosh, what did we just do? And they pushed the Republicans to a point that now it looks like the markets are reacting already, saying, We don't like this. We don't like the way this is going. If we go over the fiscal cliff -- now, Republicans might take the blame.
But I mean, at this point, I think the White House bears some responsibility for putting them in this position where they have their backs up against the wall, and Boehner has come all that way and they still said no.
GINGRICH: Look, I would suggest that House Republicans and the Senate Republicans don't look at any poll for the next 12 months. The election is in 2014. Figure out what you want to go to the American people with, what the real choice will be in 2014. Work away at it steadily. And people will come to believe in your seriousness and in what you're trying to accomplish.
The Japanese had a term after they won at Pearl Harbor and they had surprised us. They ran amok for about six months, and they ultimately got beaten badly at Midway, and they said they had "victory disease," that they came to believe their own clippings.
I think there's a certain amount of victory disease at the White House. I think they are dramatically overestimating the power they have. And I think they're underestimating the risk they're running of really putting this economy in trouble.
PERINO: I agree. Let me ask you about a little bit more recent history that just goes back to 1997, when you worked with President Clinton to get that bill done. I wonder if there were lessons that you learned at that point from that -- that you could provide to the House Republicans now, or if you're just dealing with a completely different type of White House in terms -- when it comes to negotiations.
GINGRICH: Well, you know, I have a sense that President Obama's radically different from President Clinton. President Clinton had been the governor of a Southern state. He had worked directly with a relatively conservative legislature. He was used to the give and take of governing -- as you know, with President Bush, who had been governor of Texas. Governors get in this rhythm of having to deal with the legislature. They may not like it, but it's a fact of life.
I think President Obama has been so much of an orator and a lecturer, so much the guy at the center of things, and had so much power with Pelosi and Reid in the first two years, that he really has not gotten the rhythm.
He and Boehner should be meeting for hours and hours and hours. We calculated one time that President Clinton and I met for 35 days all together, when you added up the different meetings.
PERINO: That's a lot!
GINGRICH: Because you got to listen to each other. You got to -- you got to say, Look, this is what I got to get and this is what I can't do. Is there someplace in here where we can work something out? That takes a lot of time. And I sense these two guys spend almost no time in serious conversation.
PERINO: I wanted to ask you about that, too, because it seemed to me that Bill Clinton was pretty good at taking whatever you were putting on the table and saying, Thank you very much, and taking that as a win and communicating that as if it was his success story. And that really has been what the -- I guess the most recent history written about Bill Clinton was that he was so successful because he was able to lead and get you to come to the table...
PERINO: ... when it was actually quite mutual.
GINGRICH: Well, look, it was mutually beneficial. We had not been elected in 40 years. When we got elected, we had not won reelection as a majority since 1928. So we had a real interest in figuring out how to get this thing to work so we could get reelected.
The president understood that he had started out too far to the left and had to get back to the center. So when we got to Welfare reform, we passed it twice, he vetoed it twice. The third time, he signed it.