The following is a rush transcript of the September 12, 2010, edition of "Fox News Sunday With Chris Wallace." This copy may not be in its final form and may be updated.
CHRIS WALLACE, ANCHOR: Joining us now to talk about the economy, the campaign and growing anti-Islamic feeling in this country is former Republican speaker Newt Gingrich.
And, Mr. Speaker, welcome back to "Fox News Sunday."
NEWT GINGRICH, FORMER SPEAKER OF THE HOUSE: Good to be with you.
WALLACE: This week, the president tried to set the terms of the economic debate for the fall. Here's what he had to say about the GOP.
(BEGIN VIDEO CLIP)
PRESIDENT OBAMA: They would have us borrow $700 billion over the next 10 years to give a tax cut of about $100,000 each to folks who are already millionaires.
(END VIDEO CLIP)
WALLACE: Question: If congressional Democrats try to extend the Bush tax cuts for the middle class, can Republicans afford to block that until they also get the tax cut for the so-called wealthy?
GINGRICH: No. In fact, I think the Republicans will probably surprise the president by offering to pass whatever tax cut he'll sign, as long as it isn't offset by tax increases.
I mean, every time the president says, "I'll cut taxes over here," he then says, "Oh, by the way, I'll raise taxes over here." And you end up with a net destruction of jobs.
The big problem the president has -- the whole theory of the elephant in the room -- is jobs. And raising taxes on the people who create jobs kills jobs. And the American people know it, even if the president doesn't.
WALLACE: So you're saying, in effect, that when the president tried to set up this as a choice, they're trying to hold the tax cuts for the middle class hostage, Republicans are going to say, "Not us. We'll take whatever we can get."
GINGRICH: Yeah. I think Republicans ought to say, "We're going to pass any tax cut that you'll sign that has no increases. And we'll come back in January as a majority and we'll see if we can pass the rest."
WALLACE: But you're, in effect, saying that at least until you -- if and when you gain control of Congress, you're giving up on the tax cut for the wealthy.
GINGRICH: No, you -- you're saying that the president of the United States is determined to stop the tax increases on people who create jobs. He is the president. It's better to at least help the middle class even if that doesn't create jobs.
You know, and I think the Republicans would be very wise to say, "We will pass any tax cut this president will sign as long as it doesn't have a poison pill of a tax increase."
WALLACE: OK. Let's talk, though, about -- because you still want to continue...
WALLACE: ... the Bush tax cut for the so-called wealthy, people making over a quarter million dollars a year. Let me just follow up on that.
The nonpartisan Congressional Budget Office...
WALLACE: ... analyzed 11 different policy options on how to boost the economy, and they found that tax cuts for high earners would have the lowest what they call bang for the buck...
WALLACE: ... of any of them to boost economy, because they say high earners are more likely to save the money than to spend it.
GINGRICH: Well, first of all, I mean, the -- first of all, the bureaucrats at the Congressional Budget Office, who don't create jobs and aren't entrepreneurs, gave you their bureaucratic interpretation of reality.
The thing that the president doesn't understand and the thing that Keynesian economics get wrong is real simple. Do you want people to have enough money to invest to create jobs? If they have a surplus of income so they can create jobs, that's somehow bad and the president wants to take away the income. That means he's leaving them with no money to create jobs.
You look around this country today, virtually every entrepreneur in this country today says -- and they say it to me day after day -- "I'm not creating any jobs while this guy's president because he simply wants to take away the money. So why would I go out and risk my capital to create a job so he could increase taxes, increase the cost of health care, increase government control, increase regulations?" The result is this is the longest recession since the Great Depression and the longest period of really severe unemployment. And he has no answer for the unemployment.
WALLACE: Let me ask you another aspect of this, though. If you extend, as you want, as Republicans want, all the Bush tax cuts, that is going to blow a $3 trillion...
WALLACE: ... hole in the deficit. I thought your party was so concerned about debt and the deficits.
GINGRICH: Look, when you have a -- when you have a 16-year-old with a credit card who doesn't think the bills come due, you can never get caught up, because they'll just charge more.
The president of the United States has radically increased the size of the federal government since Bush left office. John Boehner has correctly proposed -- the Republican leader in the House -- let's go back to Bush's 2008 budget and you can save like -- something like a trillion, 300 billion dollars just by not spending the money.
So when we balanced the federal budget in the 1990s, which we did for four years, we controlled spending and we cut taxes simultaneously, and we reformed government. There's no reason...
WALLACE: But taxes were higher in the 1990s than they are now because you've got the Bush tax cuts of 2001 and '03. What about the argument -- I mean, John Boehner -- the House Republican leader's idea was go back to the last Bush budget and keep all the Bush tax cuts.
Isn't he making the Democratic argument that your party's idea is let's go back to Bush?
GINGRICH: Well, first of all, if you want to go back to the world before Pelosi and Reid of December of 2006, there was a lot higher employment, a lot higher income. The middle class was much better off. That would not -- I think most Americans would...
WALLACE: Well, you can't blame the whole financial crisis...
WALLACE: ... on Reid and Pelosi.
GINGRICH: No, but you could -- you can blame the level of failure for the last two years and the level of spending for the last four years on the liberal Democrats both in the Congress and in the White House.
I'd make a -- I'd make a deeper argument here. You show -- you do an economic run of what this country would be like at 4 percent unemployment, with 5.5 percent of the country back to work full-time, with bringing down the under-employment number from 16 to 17 percent to about 7 or 8 percent, increase in revenue because people are back at work, decrease in food stamps -- this president's set an all-time record for the number of Americans on food stamps. I mean, that's not where you want to go. You want to go to a paycheck, not a food stamp.
WALLACE: Back in the '94 midterms, you presided over a 54-seat Republican gain. How well do you think Republicans will do this year?
GINGRICH: I think they will do -- I mean, I'm not going to try to compete with people like Charlie Cook, but I think they are going to do somewhere between mid 40s and more than we did.
I think the momentum that's building in the country, the unhappiness with the administration, the disarray of the Democrats, problems like Congresswoman Waters and Congressman Rangel -- all these different pieces are coming together.
WALLACE: Two Democrats who are under ethics charges.
GINGRICH: I mean, all these different -- yeah. All these things are coming together, I think, in a very dangerous brew for the Democrats.
WALLACE: So mid 40s. What's the high end?
GINGRICH: Oh, I think the high end's probably around 60. I mean, Cook and others have said it could go to 80, but I think that's implausible. But I wouldn't be shocked if they didn't beat our record and get...
WALLACE: Of 54.
GINGRICH: ... more than 54.
WALLACE: So we're...
GINGRICH: I would not be shocked.
WALLACE: So we're talking Speaker Boehner?
GINGRICH: Oh, yeah. I think -- I think for all planning purposes, in eight out of 10 futures, Boehner is the speaker and then Pelosi has to decide whether to stay or leave.
WALLACE: A top House Republican, Lynn Westmoreland of Georgia, said on Friday that if the GOP takes control of Congress, they are going to pass spending bills that the president is likely to veto. And then he said this, "If the government shuts down, we want you with us."
Is that what we can expect from a Republican House, another government shutdown like when you were in charge?
GINGRICH: No, I don't think you can expect it. I think that John Boehner will do everything he can to find a way to keep the government open. And I think that he will seek to get the president to agree to a continuing resolution, but I don't think he will give up on principle. And so it partly -- a lot of it depends on the president.
WALLACE: But isn't it a little troubling that even before you take control of the House you're already talking about another government shutdown?
GINGRICH: Sure. I -- look, I don't think those are the wisest words that you could use. But the point he was making, which is valid, is if the Republicans say we're not going to spend, for example -- let's say they (inaudible) the country once, "We're not going to spend any more money implementing the Obama health reform," and let's say that Obama says that I'll veto the whole bill, I mean, that's a real challenge.
WALLACE: So a shutdown is possible?
GINGRICH: If the president wants to push it, it is. But I don't -- I think -- I think that a Speaker Boehner would work very hard to find a middle ground that kept the principles that are going to be in effect on election day that nonetheless the president could sign.
But remember, this president, when he first met with the Republicans in January of 2009, said to them, "I won the election." It will be interesting to see what happens if he has to meet with a Speaker Boehner and a Majority Leader McConnell and they can say to him, "We just won the election."
WALLACE: Finally, and we've only got less than two minutes left -- you enjoyed that. It was a pretty funny line.
Let's talk about the mosque near ground zero and the threat to burn Korans this week. You say if the president was willing to call out the pastor about the Korans, he should be willing to call out in equally strong terms the imam about the mosque.
GINGRICH: It doesn't even have to be strong -- but first of all, I'm totally opposed to burning the Koran. I think every religious person should have a deep sense of respect for other people's religious documents and religious symbols just as we were deeply opposed to the Taliban destroying the two historic buddhas which they blew up. So I think we ought to all oppose burning the Koran.
Second, all the president has to do is something mild. He could just say publicly, "They shouldn't build it there." Now, that shouldn't be that painful for him. But the truth is he's unwilling to say that. And that's unfortunate because it's a very bad idea to build that mosque and center that close to ground zero.
And it is the opposite of what Imam Rauf says it is. It is, in fact, an affront to virtually all the families who lost loved ones at 9/11.
WALLACE: Speaker Gingrich, we want to thank you, as always, for coming in and talking with us. Always good to talk to you, sir.
And we want to note the speaker and his wife Calista host a new documentary called "America at Risk: The War With No Name" which can be found at the Website on the screen.
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