This is a rush transcript from "On the Record," May 5, 2010. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: Tonight, former Speaker of the House Newt Gingrich right here and right now! Good evening, Mr. Speaker.

NEWT GINGRICH, R-GA, FORMER SPEAKER OF THE HOUSE: Good evening.

VAN SUSTEREN: Mr. Speaker, so many issues on our plate tonight, but let me start first right down in Arizona with immigration. What would you do?

GINGRICH: I would pass a comprehensive national immigration bill. I would control the border. I'd make English the official language of government. I would make very clear that we are pro-legal immigration. I would have a legal guest worker program that was outsourced to American Express, Visa or Mastercard so you didn't have the kind of fraud you'd have with the federal bureaucracy. I'd be very tough on American employers because you wouldn't have anybody being working illegally if you didn't have employers who are hiring them illegally.

So I think there is a program -- what I wouldn't do is blame the people of Arizona, who are frightened, who see their federal government failing totally, and who have had casualties, literally, a local rancher killed, policeman killed, serious problems. So the answer is not Arizona, the answer is Washington. And the federal government should do its job.

VAN SUSTEREN: All right, why won't the federal government do its job? Because it's not like this problem just arose about a week or two weeks ago. People have been talking about immigration at least going -- I mean, as far back as President Reagan. Everyone's been talking about securing the borders, doing all this stuff. But we've got zero done or almost zero.

GINGRICH: No, you're exactly right. When President Reagan signed the Simpson-Mazzoli immigration bill, which ended up giving amnesty to three million, he wrote in his diary that he signed the bill because we had to get control of the border. We had to have a guest worker program. And we had to make sure employers did not hire illegally. All three of those promises failed. And I think you have to put blame on both parties for refusing to take seriously the challenges we're faced with.

You didn't have, under Republicans, any real effort to control the border, and you don't have under Democrats any real effort to control the border. What Arizona is telling us is that this problem is now serious enough that we need to confront it, deal with it. I would hope, as a rare break from his normal practice, that the president would be willing to be genuinely bipartisan and insist on listening to everybody, but hammer out a bill, which means, by the way, the labor unions have to accept a large guest worker program and a large 401B visa program, both of which the labor unions have opposed. And it means that the right has to accept some path not to citizenship but to legality for people who are in the United States.

I think this will be a very contentious issue, but I think it's got to be done in a way which brings people together and not ignored any longer. The answer is not to attack Arizona. The answer is to solve the problem in Washington.

VAN SUSTEREN: All right, now, there's no secret who's running the government now. The Democratic Party has the White House, the House and the Senate. So do you -- they've got all the authority to sort of drive this engine. Do you see anything coming out of any of those three entities to show a serious commitment to resolving the illegal immigration problem?

GINGRICH: No. What we've seen so far has been a cynical and deliberately political effort to turn the immigration debate into an effort to isolate Republicans from Latinos. It has been totally calculated. It's been signaled for the last two months. And it is, frankly, fairly, I think, disgusting and inappropriate to see the Democrats try use this issue. This is a serious national problem, and it's a problem we ought to address and solve. It has to start with controlling the border, but it has to include a lot more than that, and I think we need a comprehensive program.

VAN SUSTEREN: All right, just to be fair, when the Republican Party had the White House under President Bush 43, did you see serious commitment to immigration reform, illegal immigration reform?

GINGRICH: Well, look, I mean, in all -- in all fairness, while I disagreed with the bill, John McCain and Edward Kennedy did produce a bill. The president did hold a press conference in the Rose Garden. But bill collapsed because it was essentially out of touch with the reality of the American people. And the same thing will happen again.

There's a rumor that the Democrats may try to pass a bill that gives amnesty to 10 million people and allows them to register as citizens and vote simultaneously. That kind of a bill will shatter the Democratic Party even more than it's already been hurt by big government and big health care and big deficits. If that's the direction they go in, they'll get nothing done.

VAN SUSTEREN: All right, a lot of attention, obviously, in the last couple days or a week or so on this oil spill and also the terror suspect in Times Square. But before we even get to those two topics, whatever happened to jobs? Because all these topics are important to the American people, but fundamentally jobs -- and I know had you a job summit in South Carolina, where they're 12.2 percent unemployment. But what do we do about jobs?

GINGRICH: Well, that's what's so weird about this administration. The number one, number two and number three issues in America are jobs and the economy. And this administration ought to be focused ever day on creating jobs, not killing them. But every time they turn around, they're killing more jobs.

We held a meeting -- American Solutions today had a small business leadership meeting. We had a tea party meeting. And then tonight, we had a summit on jobs in Greenville with about 500 people here. Everybody here gets it. They know that at 12 percent unemployment, South Carolina needs to focus on jobs.

VAN SUSTEREN: All right, but let me -- and...

(CROSSTALK)

VAN SUSTEREN: I guess I'm looking for the "do." I understand the talk and I understand your commitment...

(CROSSTALK)

VAN SUSTEREN: ... what do we -- what can we do?

GINGRICH: Well, what we could do is, one, move to a balanced budget by controlling spending and reforming government with no tax increase. Two, pass the five tax cuts which have now been introduced in the Congress, which are the American Solutions jobs program, which I'll go over, if you want me to. And three, create an American energy program to quit sending $500 billion overseas. If you kept that $500 billion at home, you'd create a ton of new jobs just out of our energy industry.

So three steps -- control federal spending to keep interest rates low and balance the budget, cut taxes in five different ways, zero capital gains tax, 50 percent reduction in Social Security and Medicare tax for both the worker and the business, 100 percent write-off annually for new equipment, go to the Irish corporate tax rate of 12.5 percent, and finally, eliminate the death tax permanently. And then open up American energy to enable the country to produce energy here at home to keep the money here at home. Those steps would lead to a dramatic recovery and would create millions of jobs within three years.

VAN SUSTEREN: So that I fully understand what you propose, what would the Democrats say is wrong with your suggestion?

GINGRICH: They love big government and they don't like business and they hate the idea of tax cuts. They want to raise taxes, which will kill jobs. They want to raise taxes on energy, which will kill jobs. They want to raise taxes on health care, which will kill jobs. The want a much bigger government, which will kill jobs.

It's no -- it's no accident that the only area that grew in the last month, according to Gallup, was the federal government. State and local governments shrank in employment. The private sector didn't increase. The federal government grew more than all of the private sector combined. Now, I don't think the American people want to see a country where the only recovery is federal employment.

VAN SUSTEREN: All right, the oil spill -- how -- how is the -- how do you characterize or describe or evaluate the Obama administration response to this catastrophe in the gulf?

GINGRICH: Well, let me say, first of all, at American Solutions, we came out yesterday in favor of an independent commission. And we agree with the Center for American Progress, a much more liberal group, that there ought to be an independent commission to look into this because this should not have happened. And there are 4,000 wells offshore. There are going to be more in the future. And we need to find out what went wrong and what we need to do to fix it for the future.

Second, we ought to make an investment in dramatic new technology for clean-up. The Coast Guard today is using the same basic techniques we used in 1969, 40 years ago, which is the last time we had an oil well problem. That was Santa Barbara. Forty years ago, and they still have the same basic technology because of no investment and new breakthroughs.

The biggest thing wrong, I think, with the Obama administration response is that they dramatically underestimated the problem. And then they had an exact parallel to Bush and Katrina. You have clumsy federal bureaucracies moving far too slowly. Governor Bobby Jindal has been very public and very clear that much of what he's trying to do has been frustrated by the very slowness of the federal bureaucracy, and I think that that has compounded the problem.

I think that the difficulty is very real. All of us who favor development offshore have to take honestly and seriously this problem and find a way to fix it. But I think the Obama administration is going to find that they bear a great deal of the brunt -- just as Bush did in Katrina, they're going to bear a great deal of the brunt for the failure to handle effectively this oil well problem.

VAN SUSTEREN: What could they have done, though? I mean, and what would you have actually expected the administration to do?

GINGRICH: Well, I think, first of all, they should -- they should have deployed the full Coast Guard much faster. And they should have worked at it faster. Second, they should have put much more pressure on BP from day one. I think if you look at the list Governor Jindal has released, he literally couldn't get decisions.

We're in a situation, first of all, where BP has to be held accountable for paying all the costs of the clean-up and all of the cost of losses by fishermen, tourism, communities, beaches, et cetera. I mean, I think it's very important to establish that from day one and to establish an orderly procedure for getting that money to the people who've been hurt.

VAN SUSTEREN: Speaker Gingrich, if you will stand by -- and next: Is the White House fumbling the Times Square terror case, or is the president getting it exactly right? More with Speaker Gingrich is next.

(COMMERCIAL BREAK)

VAN SUSTEREN: Speaker Gingrich is back. He is also co-host of the new documentary "Nine Days That Changed the World." Mr. Speaker, before I turn to the issue of the terrorism attempt in Times Square, I want to ask you something about -- ABC News is reporting that three days after the leak was discovered in the Gulf of Mexico that the Department of Interior's secretary's chief of staff took off on a trip to the Grand Canyon. I think it was work-related, but this three-day gap -- is -- you know, is that fair for me to be critical of, like, you know, they're not minding -- minding the important store if they're going off to do another business?

GINGRICH: Well, I think the parallel with Katrina is very telling. I think that the number one threat to the environment in the United States at that point was an unknown, and frankly, not well understood disaster in the gulf. And it's telling that once they began to realize how bad it was, they to helicopter the chief of staff out of the Grand Canyon to get him down to New Orleans to play a key role.

So I think you have to argue that if they been correctly leaning forward, they probably would have canceled his -- or postponed his trip, which is -- it's a legitimate trip. He has a role in the National Park Service. But I think they would prudently have postponed it, sent him to New Orleans three days earlier and had an on-site leader who could have answered Governor Jindal's questions more effectively than was happening.

VAN SUSTEREN: I guess I'd be more inclined to sort of give a pass on this, you know, going off on this other business trip, legitimate business trip for three days, if it weren't for the fact that on Christmas Day, when that attempted bombing on the airplane -- one of the president's national security advisers went on a ski trip with his son because it had been planned. And I've always been a little bit scandalized. Even I came off vacation to cover the story because it was so important. But I guess that I see those as a little bit of, like...

GINGRICH: Well, they're -- they're...

VAN SUSTEREN: ... either bad luck on the administration's part, or they're ignoring red flags.

GINGRICH: No, I think they're ignoring red flags. And the parallel you see is that not only did they have to helicopter him out to get him down there as fast as possible, once they began to realize how big the problem was, but they've also replaced the top Coast Guard person with a more senior commander. And again, I think the parallels to Katrina are very real. The federal government -- this is -- you know, this is not a personality thing about President Bush or President Obama, it's about the federal government as an institution, that it consistently is too slow, too cumbersome and too bureaucratic, and it gets tied up in red tape and is, frankly, not very good at answering these kind of challenges.

VAN SUSTEREN: All right, terrorism in Times Square. Fox News is reporting tonight that the terror suspect was upset over drone attacks in Pakistan. Now what do we do?

GINGRICH: Well, first of all, I don't want to sound like an old- fashioned American, but I don't actually care whether the terrorist was upset. He's a terrorist. He was trying to kill hundreds of innocent people. I'm tired of the psychoanalytic approach to foreign policy. When somebody's your enemy, you know how to deal with enemies. He's not a candidate for therapy. We don't need to put him...

VAN SUSTEREN: I wasn't -- I wasn't suggesting...

GINGRICH: ... in with the psychiatrist who killed people at Ft. Hood. I'm not picking on you, I'm...

VAN SUSTEREN: I wasn't suggesting...

GINGRICH: ... just saying...

VAN SUSTEREN: I -- I...

GINGRICH: ... the whole notion...

VAN SUSTEREN: Just so you know, I -- I was not suggesting we coddle him because he was upset. Please don't -- please don't get that. I'm just wondering how do we -- how do we figure out, you know, who's here in this country...

GINGRICH: First of all...

VAN SUSTEREN: ... -who's got motives, no matter how horrible the motives are...

GINGRICH: Right.

VAN SUSTEREN: ... because they can kill.

GINGRICH: And then, by the way -- and by the way, that can -- that can include native-born Americans. I mean, the fact is, since we're not even allowed to describe the fact that he's Muslim, we're not allowed to talk about any religious motivation, we're not allowed to have an honest, candid discussion of the problem, how could you possibly have any way of getting at the root of this thing?

This is an administration dedicated to avoiding reality and to living out a fantasy foreign policy, even at the risk of American lives. But there's a more fundamental fact here. Michael Scheuer, who was the head of the bin Laden task force at the CIA in the late '90s and twice found bin Laden and was in a position to kill him but was blocked by the Clinton administration -- Scheuer wrote recently a very sobering report. He said, Remember, nobody stopped the bomber in the airplane in Detroit except that the bomb didn't go off. The security -- the system failed. Nobody stopped the bomber in Times Square, except that the bomb didn't go off. The system failed.

And I think we need to understand, after almost 10 years of work, over 30 years, if you go back to the Iranian seizure of our embassy in 1979, the fact is, we today do not understand these enemies. We are not ahead of them. We have been lucky. And that's dangerous. You cannot build your national security system on an assumption that your opponents are incompetent. And I think we ought to have a much more thorough debate about how to overhaul our security system.

Here's a guy who barely becomes an American citizen and promptly goes off to Pakistan, leaves his family in Pakistan, goes to a terrorist training camp, and we know nothing about it? And Pakistan is supposedly our ally?

I mean, I think there are a lot of fundamental questions about this case, and I'm deeply troubled. If you'll notice, the first reaction was that it's not a terrorist attack, it's a lone individual, exactly like happened in Detroit, exactly what happened at Ft. Hood, exactly what happened in Arkansas. I mean, the desperation of the American elite to avoid the reality that we are at war with a religiously inspired movement of fanatics who are now connected by the Internet and who now communicate with each other across national boundaries -- this is really dangerous to our survival to have an elite this determined to avoid reality.

VAN SUSTEREN: Mr. Speaker, thank you very much.

GINGRICH: Thank you.

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