This is a RUSH transcript from "The O'Reilly Factor," October 25, 2011. This copy may not be in its final form and may be updated.
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BILL O'REILLY, HOST: Now for the top story tonight: Can Governor Rick Perry make a comeback in the Republican sweepstakes? Today the governor unveiled a tax plan that calls for the following: a corporate tax rate of 20 percent; a corporate tax rate of just above five percent for companies wanting to bring overseas profits back to the USA; taxing only in-country profits on corporations, only money made here; a 20 percent federal income tax for workers or they can keep what they have now. The tax rate they have now. It's an option. Mortgage and charitable deductions remain for incomes under $500,000 but are abolished for anyone earning more than that. Abolition of the death tax; abolition of long-term capital gains taxes and taxes on Social Security benefits; a goal of balancing the federal budget by the year 2020.
Joining us now from Columbia, South Carolina, is Governor Perry. So how much would the feds lose in revenue under your plan, governor?
RICK PERRY, GOP PRESIDENTIAL CANDIDATE: Well, I don't really worry about what the feds are going to lose. What I'm worried about is getting people back to work in this country because the fact of the matter is the spending problem is what we've got in this country. I'm looking at a tax process that will allow people to keep more of their money because we know what happens when job creators get to keep more of their money than they're -- they have the confidence to go out and spend that money to create jobs that in turn create wealth.
O'REILLY: All right. It is…
PERRY: And that's what we have got to do in this country. We've got to build the confidence back in this country.
O'REILLY: Sure, it's a supply side argument that Ronald Reagan used to simulate the economy coming off the Carter years. But the problem that Mr. Reagan did not have that the next president, or if President Obama is re-elected will have, is the $15 trillion debt. So if your revenue stream under this plan and I don't know, I mean, it would be hard to crunch the numbers this quickly, comes down, even though you will stimulate the economy and I believe that, the federal debt is going to massively go up because of all the obligations that the federal government has.
PERRY: Bill, I truly believe that you've got to grow your way out of this. Now, the bottom line is we've got to cut the spending. But when -- when you give people incentives. For instance, bringing back those over $1 trillion that's offshore right now at 5.25 percent interest, that will create $360 billion worth of economic activity in this country. That's just some of the ideas that we've laid out here.
O'REILLY: All right.
PERRY: When we talk about we're going to cut the tax burden. We're going to balance this budget by 2020, and I'll make sure that you get the economic modeling on that so you can see how it works.
O'REILLY: Well I just want to know and I think –- yes, I think it's a -- I think it's an interesting exercise for your economic folks to go in and say look, this is how much less revenue the government is going to have if Governor Perry is elected president. However, this is our projection of what's going to happen in the future and how much we're going to cut because I think that's very important.
Now, you don't want a sales tax like Herman Cain, and I assume that's because you're the governor of a state that doesn't have a sales tax and that has attracted business to Texas. I used to live in Texas and, you know, it's obviously a good business climate there. However, the underground economy is $1 trillion plus. You say that, you know, GE and the other corporations are stashing all this money abroad and you're absolutely right and they're not paying any taxes now, you want them to come back. But the underground economy -- people who don't pay tax because they make money off the books -- that is still going to remain because you don't have a sales tax of any kind.
PERRY: Well, we have a sales tax in a substantial number of the states. But I will tell you that Herman's problem with that is going to sell it to places that already have a sales tax or those that don't have one. I mean, I just don't think that Americans trust Washington to give them another form of revenue coming in. Until there is a balanced budget amendment to the United States Constitution, which I call for in my plan, then Americans aren't going to trust government coming up with a new source of money of which to get in their pockets.
O'REILLY: Yes, but if you were president they would trust -- they would trust you for vetoing any kind of sales tax, two percent. You know what I'm talking about. You got, you got no federal revenue coming in from a whole bunch of people who are making money off the books and you know it's $1 trillion a year problem and that's a lot of money that the feds are not getting a dime and a lot of people not paying any taxes at all. So that's what I'm saying, if a guy like you, or a Republic would veto any kind of a price hike said look, this is the sales tax we are going impose to try to tap into that but it's not going to be anymore. But anyway, look, that's near -- Herman wants it, you don't want it. The folks will decide, right?
PERRY: That is correct. And I don't think the folks are going to want a sales tax. Not an additional way for Washington to get money -- hands on their money.
O'REILLY: All right. Now, I've got a whole bunch of questions for you about other issues, including illegal immigration, so you're going to stay right there in South Carolina for us, governor, and we'll be back in a moment.
PERRY: I'll be -- I will be right here for you, Bill.
O'REILLY: OK. We have bouncers outside.
O'REILLY: Continuing now with Governor Perry, who is in Columbia, South Carolina, this evening.
Governor, a new CBS poll has it this way: Cain 25, Romney 21, Gingrich 10, Paul 8, Perry 6, Bachmann 2, Santorum 1 and Huntsman 1. Why do you think your numbers have dropped so much?
PERRY: Well, I think any time you have these races they are going to go up, they're going to go down. You're going to have all kinds of movement on the races. So this thing is a long way from being over with. And we're just now laying out our -- our economic plans. And as you know, Bill, what people care about is who is going to lay out a plan to actually get this country working?
For 10 years we have created the most dynamic economy in America, a million jobs created in the state of Texas while this country was losing $2.5 million under this president. So people are starting to focus in on who is it that can actually get this country back working. And that's the reason we laid out our -- our tax plan.
As a matter of fact, that's the size of the tax return right there that we're talking with doing. You can stay with the old system and have the lawyers and the accountants or you can put this postcard in with 20 percent.
O'REILLY: My accountant Swiftie, he's broken-hearted here. He doesn't want that thing. But look, do you think you made any mistakes coming out of the gate here? Look, you started out you were the leader and now you are down to six percent in this poll. And I think you're going to go back up with the new plan as people hear more specifics. That's just my opinion. I could be wrong. But I do think you made some mistakes, and I'm just curious to know whether you do.
PERRY: Well, I don't think anybody has ever run the perfect campaign. And actually, these debates are set up for nothing more than to tear down the candidates. It's pretty hard to be able to sit and lay out your ideas and your concepts with a one-minute response. So, you know, if there was a -- if there was mistake made it was probably ever doing one of the -- ever doing one of the campaigns when all they are interested in is stirring it up between the candidates instead of really talking about the issues that are important to the American people about how are you going to get us back to work?
O'REILLY: So you think you got (INAUDIBLE) on the debate. With all due respect, can I tell you a mistake…
PERRY: I beg your pardon?
O'REILLY: With all due respect, can I tell you a mistake I think you made?
O'REILLY: All right. The immigration deal. I think that hurt you among Tea Party people, conservative Americans, because there is a very strong emotional current that the American worker is getting hosed by the federal government and part of that is that illegal aliens and their children are getting benefits, like in-state college tuition in Texas. And when you said, hey, depriving those children of that education is heartless, a lot of conservatives said, you know what's heartless? Taking my tax money when I'm struggling and giving it to people who shouldn't be here. I think that was a mistake.
PERRY: I -- I agree with you that I used the wrong word there. This is an economic issue. Here is the bigger -- the bigger problem is the federal government has been a total and abject failure of securing our border. I know. I've had to be dealing with it here for the past 10 years. We have not only required voter identification in Texas, I vetoed a driver's license bill. I have been strong on the immigration issue, put $400 million, our Texas rangers, other law enforcement, our -- our National Guard on the border to try to defend it, but the federal government forces us to deal with this issue.
We had two choices, Bill. We could either kick these individuals to the curb and then pick up the cost of what it was going to be at that particular point in time because the federal government requires us to give them education, to give them the health care. We made the decision in Texas and this is a straight up state issue that people of the state of Texas and it passed out of 181 votes, only four dissenting votes that we wanted taxpayers, not tax wasters. And that's the reason that Texas did this. And I realized this is a strict state-by-state issue and I respect other states as they make the decision.
O'REILLY: It's a legitimate argument. All right, but it came across as you weren't tough enough on, you know, with the border fence and all of that, so anyway.
Now, you and Romney, that's an interesting dynamic there. A lot of –- yes, we did a little body language on that and the body language came back and these guys would be hitting each other if -- if assault was legal. There is some strain there, is there not?
PERRY: Oh, I don't know whether there is strain. There is certainly a difference of opinion about philosophically where you stand. I mean, you can't change from one election to another.
O'REILLY: Yes, I mean it's more than that. There is an edge. But you can look, you can differ with somebody like me and we're not going to slug it out. But there you guys look like you really, don't like you too much.