• With: Charles Krauthammer, Steve Hayes, Dan Balz

    This is a rush transcript from "Special Report," October 6, 2011. This copy may not be in its final form and may be updated.

    BRET BAIER, ANCHOR: We begin a new segment called "Center Seat." We've invited the Republican presidential candidates to appear with us to answer questions from our panel. Our guest this evening, Minnesota Congresswoman Michele Bachmann. Thank you very much, congresswoman, for being the first in here in the panel.

    MICHELE BACHMANN, R - PRESIDENTIAL CANDIDATE: Thank you. I'm pleased to be part of it. Thank you.

    BAIER: Let's start it. Dan, why don't you begin?

    DAN BALZ, WASHINGTON POST: OK. Congresswoman, I think we want to start on the economy. One of the things you've said is that the way to get the economy moving right now is to start cutting spending in significant way. I'm wondering if you can point to some examples where there has been success in producing economic growth by sharply cutting spending at a time when the economy is either in recession or teetering on the brink of going back to another one.

    BACHMANN: Well, I'll tell you what I hear talking to business people, especially all over Iowa. The business people are telling me they don't feel like people in Washington, D.C. have a clue as to what is really going on in the real world. And they see all of the out-of-control spending. They are the ones telling me they want to see significant spending cuts in Washington, D.C.

    They also want to see the tax cuts for job creators lowered. I agree. I'm a federal tax lawyer. We're the second highest in the world and we should be one of the lower ones in the world.

    But then also, regulations, and they see that as well as being a huge problem. One guy in Iowa told me that he has a plant up in Canada, and he said the tax rate was 18 percent last year. He said I had a decision to make. I bought a million dollar piece of equipment and I could either put it in my Canada plant or I could put it in my Des Moines plant. I took a look at all of the out-of-control spending, I saw that you guys in Washington aren't going to do a thing and so I'm putting my plant up in Canada. That wasn't just machine that went. It was jobs that went. And this happens 10,000 times every day.

    BALZ: So cutting --

    BAIER: Go ahead.

    BALZ: So cutting spending in and of itself isn't really what you're --

    BACHMANN: That is not the whole package, absolutely not. That is part of it. We know we have to cut back on spending because we are spending 40 percent more than what we are taking in. That is one part. That is one aspect. Cutting back on taxes on job creators is another. Killing Dodd-Frank and killing Obamacare is a major issue.

    And then also I want to pass a mother of all repeal bills on job killing regulations and then pass the already negotiated three free trade agreement. That should have been long ago. Then we also need to legalize American energy production. And I would zero out the repatriation tax on American earnings earned overseas. That would be a good beginning I think to get it going. It's a package. It's not one silver bullet. It's a number of things we have to do for job creation.

    BAIER: Steve?

    STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: I'd like to ask you, congresswoman, about entitlement reform in the context of national debt. We haven't seen much specificity from Republican presidential candidates on entitlement reform. Mitch Daniels, who is not running for president, just told your friend Scott Hahn that the Republican candidates in the race now are missing clarity, specificity and boldness on entitlement reform. What are a couple of things you'd do specifically on entitlement reform?

    BACHMANN: I think, I would point back to Governor Daniels' speech that he gave at CPAC. It was a brilliant speech that he gave. And he had several very good, cogent paragraphs dealing with entitlement reform. He talked specifically about Medicare. He talked about taking care of people who are currently on it, but also moving toward health savings accounts. He said that's what he did in Indiana.

    He also talked about Social Security reform, making sure we keep promises with people who are currently on the system, but people who aren't, we need to also keep the promise with people who are younger. And so he was specific, I think. And I thought that Mitch Daniels had wonderful ideas. I think they're well worth exploring. I think Mitch Daniels is someone that I would like to bring on my team as a very sharp mind to deal with this issue, because, you are right. That is the driver right now. Because not only is it just Medicare, and also Social Security, but it's Medicare part D and now it's Obamacare.

    CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: But on Social Security, would you raise the retirement age or would you means test? Specifically?

    BACHMANN: I think with people who are currently on the Social Security system, we need to keep that promise as it is. We have can't change those terms. People who are not yet on it, I think people don't realize how serious our debt problem is coming up. We will have to act fairly quickly. We need to act in conformity with new longevity levels that we have.

    But also I think means testing is something at least for Medicare that we may be looking at in the future. And Social Security, again, this would be dealing with people and I want to be very clear to people who are watching. This is people who are currently not on the system. It's for the future.

    KRAUTHAMMER: Would you say to a person in their 20's or their 30's the retirement age is gonna be higher when you get there than it is now under your -- if you were president?

    BACHMANN: I think it will be very likely, that it will have to be higher. I started studying this back in 1987. I was at William and Mary, I was doing a post-doctorate degree in tax law. I had a baby born that year and I was very nervous about what his Social Security burden and what it would be. He is now 24. And it's sobering, what his generation will have to pay in Social Security taxes going forward. And so we have to do something. There is no question.

    BAIER: Congresswoman, this goes back to Dan's question and the president was hammering Republicans today on the jobs bill, the second stimulus as Republicans call it. Take a listen to his statement and your response to it.

    (BEGIN VIDEO CLIP)

    PRESIDENT BARACK OBAMA: Go ask the Republicans what their jobs plan is, if they are opposed to the American Jobs Act, and have it scored, have it assessed by the same independent economist that assessed our jobs plan. I'll be interested in the answer.

    (END VIDEO CLIP)

    BAIER: So his question I guess is what can you do right now if the economy is teetering? And he says that this jobs plan is the answer right now. What is your response?

    BACHMANN: Well, of course it isn't. I'll tell you the answer that one job creator in Iowa told me. He has 500 employees, he said one word -- "disaster." This jobs plan is a disaster, because look at the three component parts. Number one, he wants to continue with the payroll tax deduction. There is not a shred of evidence that that created a single job.

    He wants to continue to prolong the unemployment benefits. There is not a shred of evidence that that creates jobs.

    And then number three, he wants more stimulus projects for more Solyndras of the world. I mean let's face it, that hasn't created jobs.

    And how is he going to pay for it? He wants to take away the deductions for the three most popular deductions that people have, the home mortgage interest deduction, the charitable deduction, and the deduction for state and local taxes. This is a disaster, his plan. That's why it's dead on arrival. It's a joke for people who actually create jobs.

    BAIER: But his question is what is your plan? If you're not gonna approve his plan, what is your plan if the economy is teetering on the precipice?

    BACHMANN: My plan is what I told Dan. It isn't just one silver bullet. There is a lot of actions we need to take, one of which again would be very simple, legalize American energy production. And that would begin job creation almost immediately.

    BALZ: But a lot of those are long-term ideas, not immediate.

    BACHMANN: Well, it's amazing when you send a signal how quickly things change, because, again, UBS did a study three weeks ago that said the number one reason why employers aren't hiring is Obamacare. The one thing the president could do that would be very helpful, he could issue immediately a moratorium on implementation of Obamacare, of Dodd-Frank, he could put a moratorium on regulations and at the EPA in particular. And, as a matter of fact, he could go one farther and actually just cancel some of those rules and regulations that are in place. That would send a very strong signal.

    I'm a job creator, my husband and I. That sends a strong signal when we know we either A, aren't going to be paying increase taxes or B, we won't have to be in compliance with job killing regulations. It's very real.

    BAIER: We are going to take a break here. More "Center Seat" with presidential candidate Michele Bachmann. And don't forget that we'll also be continuing the conversation into a special edition of "Special Report" online. You can log in now at foxnew.com/sronline. We'll take your questions and comments. Stay with us.

    (COMMERCIAL BREAK)