CHRIS WALLACE, FOX NEWS HOST: Governor Palin, welcome to FOX NEWS SUNDAY.
SARAH PALIN, FORMER VICE PRESIDENTIAL CANDIDATE: Thank you so much.
PALIN: Oh, I think the two are and should be even more so merging because the Tea Party movement is quite reflective of what the GOP, the planks in the platform are supposed to be about. Limited government and more freedom, more respect for equality. That's what the Tea Party movement is about, so I think that the two are much entwined and I'm happy about that.
WALLACE: So what's wrong with the Republican Party that these Tea Party activists feel they have to go outside the GOP?
PALIN: Because both major parties, the "D" and the "R"s have both kind of lost their way in some respects. The GOP has some very strong planks in the platform that build a platform that I believe is best to build a strong, safe prosperous nation.
When the GOP strays from the planks in the platform, a people's movement like the Tea Party movement is invited in to kind of hold these politicians accountable again and remind them of their constitutional limits there on the federal level and it's a beautiful movement. I'm proud to get to be a part of it in terms of at least hearing from those in the Tea Party movement and sharing with them what I believe are some common sense solutions to the challenges facing us.
WALLACE: You say you are happy to be or proud to be a part of it. Some people think you want to be the leader of the Tea Party movement.
PALIN: No, I would hope that the Tea Party-ers don't believe that they need some kind of well-oiled machine, some kind of replicate of the GOP or the Democrat Party and instead they remain a movement of the people uprising and saying, listen to us, we have some common sense solutions that we want our politicians to consider and to implement and this is much bigger than a hockey mom from Wasilla.
It's much bigger than any charismatic guy with a teleprompter. It is the people's movement. It's about the people and I'm proud to be a part of this.
WALLACE: You recently stirred up some controversy as you often do, even when you endorsed Rand Paul as the Senate, he's running in the Senate primary in Kentucky the GOP Senate primary. And Bill Kristol, your long-time supporter was upset with you because one of the things he pointed out, Paul wants to close Guantanamo. He wants to send the detainees back to Afghanistan. He wants to repeal the Patriot Act. He wants to do away with any federal role in either gay marriage or drug laws, leave it to the states. Why would you support a guy like that?
PALIN: Because he's a federalist and he wants the states to have more say and as we respect the 10th Amendment in our Constitution, he wants the states to have more say in a lot of these issues. But nobody is ever going to find a perfect candidate. There are things that I don't agree with Rand Paul, and yet his domestic policies for the most part, I do agree with. He wants limited government. He wants the Feds to start taking their hands off states issues and I respect that and I'm proud to support him. Again, never finding a perfect candidate, no doubt he disagrees with me on a whole lot of issues. But proud to support him and others whom I can believe in.
WALLACE: What do you think of Barack Obama's presidency so far?
PALIN: He has some misguided decisions that he is making that he is expecting us to just kind of sit down and shut up and accept, and many of us are not going to sit down and shut up. We're going to say no, we do not like this...
WALLACE: Wait, wait, where's he saying sit down and shut up?
PALIN: In a general just kind of general persona I think that he has when he's up there at, I'll call it a lectern. When he is up there and he is telling us basically, I know best, my people here in the White House know best, and we are going to tell you that yes, you do want this essentially nationalized health care system and we're saying, no, we don't. And the messages are not being received by Barack Obama. So I think instead of lecturing, he needs to stop and he needs to listen on health care issues. On national security, this perceived lackadaisical approach that he has to dealing with the terrorists. We're saying that concerns us and we're going to speak up about it and please don't allow this persona to continue where you do try to make us feel like we need to just sit down, shut up and accept what you're doing to us.
WALLACE: Let's talk about national security. During the campaign, you said this about Mr. Obama. "Our opponent is someone who sees America as imperfect enough to pal around with terrorists who targeted their own country." The president has escalated the war in Afghanistan. He has launched more drone attacks in his first year than George W. Bush did in eight years. Given what he's done as president, do you take back palling around with terrorists?
PALIN: No, I don't, because his associations with Bill Ayers and with others, he never really has, I think, adequately addressed why in the world he would have a relationship with a type of person like that, who had such disdain for America that he would want to bomb, harm, hurt, kill, Americans.
WALLACE: But has he done a good job in protecting the country?
PALIN: So the things that he has done right now as president in protecting the country, more power to him. We appreciate that he kind of went there fully with the commanders on the ground asking for more reinforcements in Afghanistan. Couldn't get there all the way with these guys, but kind of went there. Good, more power to you. And I speak as a military mom, too, saying thank you. You're giving me a little bit more of a secure knowledge that you're looking out for our troops and the things that their commanders are asking for. I'm thinking kind of, of my son in this situation. Thank you for doing that. However, there are many things that he is doing today that cause an uneasiness in many, many Americans, I'm one of those.
Who looks at the way that he is treating the trials of these terrorists and kind of as gosh, they're on a crime spree right now. No, we are in war. These are acts of these war that these terrorists are committing. We need to treat them a little bit differently than an American who is worthy -- an American being worthy of our U.S. constitutional rights. I don't think the terrorists are worthy of our rights that people like my son fight and are willing to die for.
WALLACE: The unemployment rate fell to 9.7 percent in January. The growth rate of the economy, 5.7 percent in the fourth quarter. Doesn't President Obama deserve some credit for that?
PALIN: Very happy to hear about that miniscule decrease there in the unemployment rate, but better that than a growing unemployment rate. The point is though that we have lost millions and millions and millions of jobs as we have incurred greater and greater debt and deficit, debt that I believe is immoral because we're handing the bill to our children. They're going to have to pay for our needs and some of our wants today and I think that is unfair.
The point being, millions of jobs have been lost because, I think Chris, what’s coming from the White House is just a fundamental difference from a lot of Conservatives in our belief that government is not the answer. The bailouts, the takeovers of the private sector
-- that’s not the answer. That is not what built this great country into the most prosperous, healthiest, safest country on Earth.
No. It -- it is free enterprise. It's the innovation, and work ethic of our small businesses, and -- and our entrepreneurs.
Empowering them to be able to keep more of what they earn, and reinvest according to their priorities. And then be able to create jobs -- one -- one job at a time with the principles that are free market -- free enterprise based.
I don't think that is what we're seeing coming out of the White House. It -- it's quite fundamental -- the difference there.
WALLACE: Let's turn to Sarah Palin, because there are some questions quite frankly I've wanted to ask you for a while now.
In your book, "Going Rogue," you said that when you first heard that you were pregnant with Baby Trigg, you wrote this: "I'm out of town.
No one knows I'm pregnant. No one would ever have to know."
You made the choice to have Trigg, and it obviously -- you were showing me earlier pictures of him -- it was the right choice for you. Why not allow all women to make their own choice?
PALIN: Well I believe that these babies in our womb have the right to life. And that's what I stand on. And I did. I -- I honestly, candidly talked about that in my book when I said, "I can understand the sensitivity of the issue," because I've been there.
I've -- I've understood why that fleeting thought would enter a woman's mind.
And then when I found out that after ultra sounds, after tests, that Trigg would be born with Downs Syndrome, of course that thought occurred to me again. Wow, this is why a woman would be fearful of less than ideal circumstances, and maybe think that a quote, unquote, "problem," could just be swept away.
And instead I was able to kind of ratchet back my fears very quickly, and -- and remember that no -- so many of us who have that fundamental belief in the sanctity of life and the potential for every human innocent life, I got to fall back on that. And -- and that did lead me to make the right decision in allowing this baby to be born. And this baby now turning out to be the best thing that has ever happened to me and my family.
WALLACE: But can you understand where some women...
PALIN: Of course I can understand. That's why...
WALLACE: ... some people would say...
PALIN: ... I wrote about it.
WALLACE: ... I applaud your choice. Let me make my own decision.
PALIN: And that's why I wrote about it as saying that I understand why those thoughts would enter their mind. I want to empower women though. I -- I want -- and -- and if Trigg is an example, and if Pam Tebo's (ph) son, Tim Tebo (ph) is an example of the potential for every human life, then so be it. Let Trigg be that example.
I want women to know that they are strong enough, and they are smart enough to be able to do many things at once -- including carrying a child. Giving that child life. And then perhaps if they're in less than ideal circumstances or they're carrying a child while they're trying to pursue career, or avocations, or -- or education opportunities -- less than ideal circumstances.
Giving that child life which it deserves, and then perhaps looking at adoption, or looking at other circumstances after. But not snuffing out the life of a child.
WALLACE: The second thing is your decision to resign as governor of Alaska...
WALLACE: ... with 17 months left in your term. You said, "I wasn't going to run for reelection. So I was going to be a lame duck." You said that the state was being paralyzed, because all of your opponents were filing these lawsuits." Didn't you let your enemies -- your opponents drive you from office?
PALIN: Hell, no. Thankfully I didn't. What's -- what we did was we won, because the state today -- it's not spending millions of dollars to -- to fight these frivolous lawsuits, and -- and frivolous ethics charges. Ethics charges like me wearing a jacket with a snow machine logo on it. And getting charged for an unethical act for doing such a thing.
Little piddly, petty things like that that were costing our state millions of dollars. And costing me and my administration -- my staff members -- about 80 percent of our time fighting those things. "No," we said, "We're not going to play this game."
We picked our battle. And we said, "We're going to get out there, and we're going to fight for Alaska's issues," which usually involve energy independence. We're going to fight for these issues on a different plane. And we're not going to let you guys win. You're not going to let...
WALLACE: But -- but...
PALIN: You're not going to...
WALLACE: ... they're going to think they won, cause you're no longer governor. Let me -- let me just make...
PALIN: I don't think that they...
WALLACE: Let me just make this...
PALIN: I don't think that they think I -- look it. I'm sitting here talking to Chris Wallace today. I think some of them are going, "Dang, we thought she'd sit down and shut up after we tried to do to here what we tried."
WALLACE: Yes. Well I don't know that that's going to be
-- instead of this...
PALIN: And now we get to talk about energy independence.
Now we get to talk about those things that are important to Alaskans, and our country.
WALLACE: OK. But wait a minute. When -- before we were talking about Ronald Regan, do you openly admit he was your political inspiration...
WALLACE: ... really a formative figure in your...
WALLACE: ... developing of political consciousness?
Reagan during his entire second term as governor of California was a lame duck. Reagan in that second term was being sharply attacked by anti-war radicals. I can tell you, Ronald Reagan would never have quit.
PALIN: It's a big difference between just getting political pot shots fired your way. I can handle those. I get those -- shoot I -- I got more of those this morning. So what? That doesn't matter. But when it adversely affected the people that I was serving, that's bull. And I wasn't going to put up with that. Again millions of dollars -- a paralyzed administration. My staff not knowing what they could do or say, because the adversaries were continuing to obstruct. No way. I love Alaska too much to put them through that.
So in that last -- in that lame duck session I'm like no. I'm going to hand the reigns over to the lieutenant governor. He's as conservative as I am. He can progress our agenda -- a common sense conservative agenda for our state. And we can all get on with life.
WALLACE: You talk about new potshots. I think what you're probably referring to is that NBC has gotten a hold -- I'm sure you've heard -- of hundreds of emails in which your husband -- it was during your days as governor -- your husband, Todd, exchanged views with state officials about a judicial appointee, about appointments to -- to various state boards. A labor dispute -- was what he was doing appropriate?
PALIN: Absolutely. And you know there are so few people in the political world, and the media world that -- someone like me that we can trust. My husband is -- is -- he's my soul mate. He's my best friend. He's my number one advisor. I'm going to bounce things off Todd. Nothing confidential that couldn't be shared with others out there in the public. Todd never circulated anything that was confidential, and hadn't already been circulated.
WALLACE: But it's one thing to advise...
PALIN: He certainly had the right to express his opinion on things too. No, what NBC...
WALLACE: But it's one thing to advise you. He was also sending emails to state officials.
PALIN: He was forwarding on emails. And here's another thing. Todd and I being in some -- in some cases thousands of miles apart. If I emailed him about something -- say I was outside traveling. Todd's home. He's -- he's there at -- at a desktop, and I'm telling Todd, "Hey, Todd. Print this off for me. I'm going to grab it on my way home." Cause I work off a Blackberry constantly.
For practical reasons it helped too.
Todd helped as Alaska's first dude with no staff, with no office, being thousands of miles away in a -- a -- during a lot of times that with his job in Prudhoe Bay on the North Slope, and commercial fishing. He helped with workforce development issues.
Issues that meant a lot to him, and -- and people, yes, out there in the real world with car hearts (ph), and steel toed boots, and -- and hard hats trying to build this country. Todd helped in that respect.
He never got into the minutia of the politics. Todd's too good for that. He hates this kind of periphery political bull stuff that we go through. He's not a part of any of that. And, no. More power to Todd for being a good advisor, and a good practical person with common sense solutions.
WALLACE: We like to do a lightening round. Quick questions -- quick answers. So I want you to play along with me here.
PALIN: All right.
WALLACE: Attorney General Eric Holder -- should he step down?
PALIN: Sure. He should. And I think Rham Emanuel should step down too. I think these guys are giving our president wrong advice, and for a variety of reasons I would like him to step down...
WALLACE: And specifically Holder -- what...
PALIN: Yes. Yes. Because of the way that we are treating these terrorists allowing them our U.S. Constitutional protections when they do not deserve them.
WALLACE: Should the rule "don't ask -- don't tell" for the Military be revealed?
PALIN: I don't think so right now. I'm surprised that the President spent that on his State of the Union speech when he only spent about nine percent of his time in the State of the Union on national security issues. And I say that because there are other things to be worried about right now with the Military.
I think that's kind of on the back burner. It's sufficient for now.
To put so much time and effort and politics into it, unnecessary.
WALLACE: White House Chief of Staff -- you mention him -- Rahm Emanuel. You called him out. He used the "R" word. He said, "retarded." He has now apologized for using that word, met with activists, said he's going to join the campaign to try to eliminate use of that word --
PALIN: Oh, you know, Rahm Emanuel, I think he had some indecent and insensitive ways of being, including his language. And as I said for a variety go reasons, giving the President poor advice and his heavy handedness. I think he should step down.
I'm not politically correct. I am not one to be a word police. But I do believe that his insensitivity, in a time when I had just promised in my GOP convention speech that those with special needs and families and those who love those with special needs would have a friend, and a advocate in the White House if John McCain and I were so blessed as to be elected.
That didn't stop me because our votes didn't carry the day, we didn't win. That didn't stop my passion, my commitment to reaching out and to helping the special needs community when they asked for it. And they did ask for it on this one. They reached out to me and said, can you kind of highlight the problem that we have the White House, with both the President and his Chief of Staff being so insensitive to the special needs community. And I said, I'm here. Send me. I will do so.
WALLACE: OK. But Rush Limbaugh weighed in this week. And he said this:
"Our politically correct society is acting like some giant insult's taken place by calling a bunch of people who are retards, retards."
PALIN: He was satirical (ph) in that --
WALLACE: Wait a minute, let me finish.
WALLACE: "I mean, these people, these liberal activists are quote, kooks." Should Rush Limbaugh apologize?
PALIN: They are kooks, so I agree with Rush Limbaugh. Rush Limbaugh was using satire to bring attention to what this politically correct --
WALLACE: But he used the "R" word.
PALIN: Using satire. Name calling by anyone -- I teach this to my children, you teach it to your children and your grandchildren, too. Name calling by anyone, it's just unnecessary. It just wastes time.
Let's speak to the issues and --
WALLACE: But you know what some people are going to say, Governor, and have said. They say, look, when it's her political adversary Rahm Emanuel, she's going to call him out, he's indecent, apologize. But when it's a political friend like Rush Limbaugh, oh it's satire
PALIN: I didn't hear Rush Limbaugh calling a group of people whom he did not agree with "F-ing retards." And we did know that Rahm Emanuel, it's been reported, did say that. That's a big difference there.
But again, name calling, using language that is insensitive by anyone -- male, female, Republican, Democrat, it's unnecessary, it's inappropriate and let's all just grow up.
WALLACE: All right. You can are a FOX News analyst so I want you to take off your political player hat and put the analyst hat on and really try and do your best job, almost like one of the commentators of the Super Bowl.
PALIN: Oh gee, I'll try. OK.
WALLACE: Handicap the 2012 GOP presidential race for us. Who's the front-runner?
PALIN: No idea. I have no idea.
WALLACE: You're not a very good analyst.
PALIN: Fire me then, Roger. Sorry. I already failed. But listen, no, we have some strong, some young terps (ph) in this party. Paul Ryan, I'm very impressed with Paul Ryan.
WALLACE: Congressman from Wisconsin.
PALIN: Yes. He's good. Man, he is sharp, he is smart, articulate and he is passionate about these common-sense solutions that America has got to adopt to get us on the right road.
I can name a whole lot of people.
WALLACE: Well, what about Romney and Huckabee and Pawlenty?
PALIN: As I say, I could name a whole lot of them but we don't have a whole lot of time. But I'm very impressed with many of the characters, the personalities of those with great intelligence in this party and I can't wait to see who rises to the surface, after hopefully some very competitive, contested primaries.
I'm all about competition. I'm all about, even on our local level and state level, I want to see contested primaries where we are forced via competition to work harder, produce better, be more efficient and that's what these contested primaries that I look forward to will produce.
WALLACE: You talk about rising to the top. There's a new poll out this week of Republican voters across the country and it shows someone named Sarah Palin leading the 2012 race by five points over Mitt Romney. Aren't you the front-runner for the nomination?
PALIN: Nope. Don't know who conducted that poll and I know that polls are fickle and heck, after this interview, Chris, we may see a plummeting in the poll numbers. Who knows. These are fickle. I can't comment on what the poll numbers mean today.
WALLACE: Why wouldn't you run for president?
PALIN: I would. I would if I believe that that is the right thing to do for our country and for the Palin family. Certainly, I would do so.
WALLACE: And how do you make that decision over the next three years?
PALIN: It's going to be thankfully a lot of time to be able to make such a decision. Right now, I'm looking at, as I say, other potential candidates out there who are strong. They're in a position of having the luxury of having more information at their fingertips right now. So that the current events that we're talking about today, they --
WALLACE: Wait, wait, wait. Because -- you're basically saying you will consider it.
PALIN: I think that it would be absurd to not consider what it is that I can potentially do to help our country. I don't know if it's going to be every seeking a title though. It may be just doing a darn good job as a reporter or covering some of the current events.
WALLACE: But you're going to consider, you're go to go through the process of thinking --
PALIN: I won't close the door that perhaps could be open for me in the future. I don't want any American to ever close the door in their personal or their professional lives and put themselves in a box and say, heck, yes I'm going to do that. Or, no way I'm not going to do that, when we don't know what the future holds.
WALLACE: There's a report this weekend that you are now getting daily e-mail briefings on domestic and foreign policy issues from a group of top advisors in Washington, D.C.
PALIN: Ever since our PAC was formed, we have had good people contributing. Some -- many volunteers, I guess you would call them advisors, yes, firing away e-mails to me every morning saying, this is what's happened in Washington overnight. You need to be aware of this. Good. It's great. It's helpful.
WALLACE: Do you -- isn't that the move of somebody who is thinking about running for president?
PALIN: You mean, conventionally how someone would -- I have no idea how conventionally people do this. How they try to open a door that's cracked, if it's even open. And if that involves having a group of advisors send them e-mails every morning. I don't know how any of that stuff works. I don't know, I'm just appreciative of having some good information at my fingertips right now.
WALLACE: Would you say that you're more knowledgeable about domestic and foreign affairs now than you were two years ago?
PALIN: Well, I would hope so. Yes, I am.
Two years ago my engagement was on the state of Alaska. Largest, most diverse state in the union. Twenty percent of the U.S. domestic supply of energy coming from our state, desiring to and working towards rampage up that domestic energy production. That was my focus.
Now, of course, my focus has been enlarged. So, I sure as heck better be more astute on these current events, national issues than I was two years ago.
WALLACE: I know that three years is an eternity in politics. But how hard do you think President Obama will be to defeat in 2012?
PALIN: It depends on a few things. Say he played, and I got this from Buchanan, reading one of his columns the other day. Say he played the war card. Say he decided to declare war on Iran, or decided to really come out and do whatever he could to support Israel, which I would like him to do. But that changes the dynamics in what we can assume is going to happen between now and three years. Because I think if the election were today, I do not think Obama would be re-elected.
But three years from now things could change if on the national security threat --
WALLACE: You're not suggesting that he would cynically play the war card.
PALIN: I'm not suggesting that. I'm saying, if he did, things would dramatically change if he decided to toughen up and do all that he can to secure our nation and our allies. I think people would perhaps shift their thinking a little bit and decide, well, maybe he's tougher than we think he is today. And there wouldn't be as much passion to make sure that he doesn't serve another four years --
WALLACE: But assuming he continues on the path that he going on and we don't have that rally around the flag (ph) --
PALIN: Then he's not going to win.
WALLACE: Not going to win?
PALIN: He's not going to win. If he continues on the path that he has American on today -- and here's the deal -- that's what a lot of Americans are telling him today and he's not listening. Instead he's telling everybody else, listen up and I'll tell you the way it is.
Well, we have a representative form of government in our democracy.
And we want him and we want Congress to listen to what those things are that we are saying. And that's what the Tea Party movement is about, too. It's not a well-oiled beautiful machine.
It's the people saying, please hear us. Congress, you have constitutional limits and we want you to adhere to those. We have free market principles that built out country. Mr. President, we want you to remember those. We want you to look back on successes in history, like what Reagan did in times of crisis. And, could you repeat those things because they are proven to succeed.
WALLACE: Word is that you're getting $100,000 for this speech this weekend. True?
PALIN: I'm not getting it. They're writing a check -- a $100,000 check. And as I've said from Day One on this, I'm turning right around and being able to contribute it back to the cause. That means to people, to events --
WALLACE: So you're going to use your PAC and contribute it to candidates?
PALIN: I don't know if it's going to go to the PAC or if it goes to some non-profit or what.
Bottom line, I'm not personally benefiting from this. And the funny thing is, as I've had a lot of people, including a couple of talented people and talent at FOX say, funny thing about these type of speeches, Sarah you're an anomaly. Nobody ever has asked, are you getting paid for this? Or, what are you going to do with the money?
But, this is the new normal I think when it comes to me, is people wanting to have me under a microscope and figure out every little detail of my life, including speaking fees.
Bottom line, Tea Party movement, I'm giving the money back to the cause.
WALLACE: Finally, regardless of whether you ever run for political office or not. What role do you want to play in the country's future?
PALIN: First and foremost I want to be a good mom. And I want to raise happy, healthy, independent children. And I want them to be good citizens of this great country.
And then I do want to be a voice for some common-sense solutions. I'm never going to pretend like I know more than the next person. I'm not going to pretend to be an elitist. In fact, I'm going to fight the elitist because for too often and for too long now, I think the elitists have tried to make people like me and people in the heartland of America, feel like we just don't get it and big government is just going to have to take care of us.
I want to speak up for the American people and say, no, we really do have some good common-sense solutions. I can be a messenger for that.
Don't have to have a title to do it.
WALLACE: Can I get a "you betcha" out of it?
PALIN: Oh, you betcha.
WALLACE: Governor, thank you.
PALIN: Thank you.
WALLACE: Now that you've found the way to FOX NEWS SUNDAY, I hope you'll come back.
PALIN: Thank you, I will.