This is a RUSH transcript from "The O'Reilly Factor," December 20, 2011. This copy may not be in its final form and may be updated.

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BILL O'REILLY, HOST: And what I want to do here tonight, Mr. President is solve the nation's problems here. You and me we can do it.

BILL CLINTON, 42nd PRESIDENT OF THE UNITED STATES: We can do it.

O'REILLY: Are you up for it?

CLINTON: I'm up.

O'REILLY: All right, what's this is class warfare business the Democrats are hoisting on the country? What is this? We didn't see that during your administration.

CLINTON: Well, you know I don't look at it as class warfare. I think if you look at what's happened over the last 30 years, the middle class has lost ground. Even before the collapse, before the financial collapse, median income was $2,000 a year lower than it was after inflation is when I left office.

So I don't mind paying more taxes but because I think I got the benefit of the tax cuts under President Bush and the benefit of being in the top one percent so my income went up. But that won't solve the problem. That will help us balance the budget when there is growth again.

But we have to change the whole job structure of America. We have got to basically reorient our economy toward the future. That's the real answer.

O'REILLY: But that's not being discussed. What's being discussed by the "Occupy Wall Street" people and by some elements on the far-left is the one percenters, me and you. We're not paying our fair share. I think I am paying my fair share. Now I didn't mind paying what you had me at.

CLINTON: But you got to... yes.

O'REILLY: I didn't mind paying you that but do you know between... among you, Obama and Bush who had the highest tax receipts of all three of you? Do you know? Bush. So under prosperity the tax cuts under Bush more money flowed into the federal government.

So Erskine Bowles comes back and says let's cut the corporate tax from 35 to 26. What does Obama say, what does the President say? No.

CLINTON: But if you look at what the Bowles-Simpson Commission recommended, I think there were a lot of great things in that report.

O'REILLY: Then why didn't the President take them?

CLINTON: Well, I don't know the answer to that but I think the... what Bowles-Simpson did is what I think should be done. Some variation of it. They said this long-term debt is going to kill us. We have to deal with it. Let's adopt some short-term strategies to get growth going and then let's have a long-term debt reduction package. That's what I think we should do and I... I think it will work.

O'REILLY: But I was surprised that the President didn't embrace it because it gave him a pathway out of the mess and that's where we are right now.

Now one more question about the class warfare, are you really convinced the Democrats aren't playing this card? Because that's all we hear is tax the rich, tax the rich, tax the rich.

I don't mind paying 40 percent and that was the high under you. All right. And Bush cut it back down to 34 percent. But I don't want $500 billion dollars going to Solyndra and its bankrupt. Am I crazy?

CLINTON: No but I think the idea of moving to a cleaner energy future and doing more energy efficiency...

O'REILLY: Love it.

CLINTON: ...makes smart sense.

And what happened to Solyndra was a unique case. With the Chinese producing more and subsidizing more and with Americans in the business of doing more, the price of the traditional (INAUDIBLE) cells dropped so much that it became an uneconomical thing. I personally prefer tax credits for people who actually produce it...

O'REILLY: Yes, tax credit.

CLINTON: ...because then if you and I have a different technology we are on even footing.

O'REILLY: In your book you say the key to getting the economy started is to get the banks to start lending money. Well, how are you going to do that? You can't force the banks to lend money.

CLINTON: No. Well, first I say that there is two big pots of money that don't run up the deficit, banks and corporate treasuries. I recommended in this book that we essentially let corporations repatriate their money with no tax if they hire more people with it. And if... if they pay the capital gains rate they can do whatever they want to and then we should take that money and seat an infrastructure bank and then take private capital... do like other countries. Most other countries let private investors in from all over the world invest in their infrastructure and just use their government funds as the base to attract a private capital.

O'REILLY: Right.

CLINTON: I think that makes a lot of sense. So you could do that.

O'REILLY: Ok. Now, 28 attorneys general don't want Obama care, suing the federal government; 28 out of 50; all right? I want you to make a prediction. Is the Supreme Court going to overturn that?

CLINTON: I doubt it. I hope not.

O'REILLY: I know you hope not. You're a nice Democrat. You're a loyal guy but the individual mandate is very troubling in the Constitution. Would you say that, is the big hinge.

CLINTON: I look at it an entirely differently. Let's look at just pure economics. The people who are defending the status quo are defending a system that is the only system in the world that charges 17.5 percent to insure... of income every year to insure 84 percent of the people. Every... no one else, no other rich country in the world spends more than 12 percent of income to ensure 100 percent of the people and we don't get better health outcomes.

And we are spotting our competitors a minimum... a minimum of $850 billion a year. It's terrible economics. Under the current system

O'REILLY: You know the solution to that. Let the insurance companies compete statewide. Let everybody get in the game, drive the price down.

CLINTON: You know let your insurance company compete across state lines.

O'REILLY: That's right.