Debt Panel Drops Bombshell on Administration

This is a rush transcript from "Hannity," November 10, 2010. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: Just hours ago, President Obama's own deficit reduction commission dropped a bombshell on the administration.

Now if you thought Obamacare was controversial or the stimulus or TARP or the auto bailout, wait until you hear what your government is considering now.

Now at a press conference today in Washington, the commission unveiled its plan to show us how we're going to slash the nation's deficit. Take a look.

(BEGIN VIDEO CLIP)

ERSKINE BOWLES, DEBT COMMISSION CO-CHAIR: Every member of the commission today, when we were meeting said they thought this was a serious plan. And -- but nobody I think likes everything in it or dislikes everything in it.

And so what we need to do now is debate it, try to come up with the reasonable compromises, modify those things that need to be modified, change those things that need to be changed, but this is a really strong starting point.

(END OF VIDEO CLIP)

HANNITY: All right. So what exactly is the so-called starting point? Let's take a look at some of the recommendations.

First, they want to increase the Federal Gas Tax rate starting in 2013 by 15 cents per gallon. Next they propose increasing the Social Security retirement age. Now third, the commission is calling for cuts in both Social Security and Medicare benefits.

They want to end tax breaks like the Mortgage Interest Deduction that so many Americans rely on. And over $200 billion in discretionary spending cuts. By the way, half have been proposed and half of those come from slashing the Pentagon's budget.

Now that's the game plan that was announced today. Now the question is, will President Obama take his own advice of his own commission?

And here in studio to help break down all of this, former White House communications director, author of X-rated brand new book, "Eighteen Acres," Nicolle Wallace is back with us, along with Sandra Smith from the Fox Business Network.

Well --

NICOLLE WALLACE, FORMER WHITE HOUSE COMMUNICATIONS DIRECTOR: Can we get an R?

(LAUGHTER)

HANNITY: All right.

WALLACE: You just drop me off the New York Times best seller list.

(LAUGHTER)

HANNITY: It's not real. But you have -- the first female president whose husband is having an affair with a reporter.

WALLACE: It's a very -- it's a very PG-rated affair.

HANNITY: OK. It's PG-rated affair. You heard that.

WALLACE: Come on.

HANNITY: Now that's as Clintonesque as anything that I've heard.

All right. I got to tell you. I'm looking at this. I mean, if people thought the stimulus, TARP and the auto bailouts were bad, we have a deficit commission. They want to gut the Pentagon, raise taxes.

And I don't hear -- I don't hear anything about economic growth in this.

SANDRA SMITH, FOX BUSINESS NETWORK: That's the biggest problem. There is nothing showing -- promoting economic growth, job growth, anything that corporations are going to look at this and say, this is going to make things better in the future.

Yes, it talks about the tax hikes, spending cuts. But most of those spending cuts coming from defense spending --

HANNITY: The Pentagon.

SMITH: There's no --

HANNITY: They don't realize there is a war. This is what's infuriating. They don't realize there is a war.

SMITH: First of all, this is going to go nowhere. This is going nowhere. There's 18 members of this commission, 14 of them have to approve these recommendations. One of them has already said he won't vote for it. Another has already said that he doesn't like any of the ideas in here.

So really, this is just a menu for everybody to look at and everybody to hate because nobody likes what's in this.

WALLACE: Well, let's remember why we're talking about deficits. We have at many points in this country the government has operated with deficits, but they haven't created the sort of anxiety that they create right now. Particularly among Tea Party --

HANNITY: We've never had a president accumulate more debt --

WALLACE: Right.

HANNITY: -- than every president from Washington to Reagan in three years.

WALLACE: The anxiety coupled with the deficit is because there's nothing happening in our economy that's giving corporate America, the people who hire people, confidence. And if these proposals don't increase the confidence in the American economy, that we need to start adding jobs, then there will be no political will.

Because the only reason that there is added pressure on Washington and on politicians to do something about the deficit right now is because we're in such dire straits with our economy.

HANNITY: Look, I think we've got to deal with the entitlements. I don't have a problem with dealing with entitlements. But here's what they're saying. They're going to --

WALLACE: But although, Sean, the last president who tried to do that, President George W. Bush --

HANNITY: George Bush. It didn't work.

WALLACE: He grabbed that third rail. He put both arms around it and he hugged it tight because he thought it was in the interest of that program's long-term ability to continue to exist for your kids, for my kids. And it went nowhere because there was not the political courage --

HANNITY: Listen. Here's the thing. If you're going to say to the American people after they squandered our Social Security trust fund, it was never put in a lock box, and they bankrupted the country -- if they're going to say by the way, we're going to give you Social Security the day before you die, if you're lucky. And we're going to means test it so you've got to pay your whole life, and if you paid your whole life, you're going to -- we're going to confiscate it basically.

SMITH: And by the way, they're going to take away your benefits even more after you reach the age of 68. And then 69 once they up the age even more.

HANNITY: All right. So they've got to do all of that, let me opt out now. And if that means I get old and I squander my money, let me eat dog food. Leave me alone. Because I am going to pay my whole life and people are not going to see a penny of benefit.

SMITH: Here's the thing. Let's face it. Nobody is going to like what we're going to have to do to lower the deficit in this country. Like I said, this is just a menu of things. But the thing I was talking to Nicolle about is there's nothing in here, Sean, that really says hey, you know, we're sacrificing the first born here.

There's nothing in here that really shows that they're targeting this massive federal deficit that we have. And I will tell you, to the credit of one idea in there, is that they're talking about lowering the corporate tax rate.

Now on Wall Street --

HANNITY: They give --

(CROSSTALK)

HANNITY: Wait a minute. But they give on the one hand, they take it away on the other.

SMITH: That's the problem. That's the problem.

WALLACE: And they take more than they give.

SMITH: You're laughing at all my notes here, but I was looking through this today. They're talking about lowering the corporate taxes --

HANNITY: Yes, but they're taking it back.

SMITH: -- by 22 percent with all the tax deductions that they take out of there and all the --

HANNITY: You lose. It's a net tax increase.

SMITH: It actually raises corporate taxes $700 billion.

HANNITY: Good point.

WALLACE: And to get back to where we started, that is the opposite direction we need to go to inspire the confidence of the business community to hire.

HANNITY: Wait a minute. Isn't the answer we repeal health care, lower taxes, stimulate economic growth, let the private sector create jobs, and increase revenue to government?

WALLACE: They should have given you a seat on that commission.

(LAUGHTER)

HANNITY: Yes. If they had given me a seat on that commission, they would have gotten an earful today and I would have come out immediately after these recommendations.

Now I know these things are more symbolic. And I know that we talk about earmarks. It's a very small part of the budget. It's not going to balance the budget. But John Boehner did something that I am encouraged about, because it shows that the Republicans have gotten it.

He says, Nancy -- and he's going to return Nancy Pelosi's Gulfstream Five. He's going to fly commercial.

SMITH: Commercial.

HANNITY: The Republicans in the House said -- they're saying no earmarks. Jim DeMint is trying to get the Senate to do the same thing. Small, but symbolic and important, I think, a message.

SMITH: And actionable. I mean things like this from the Obama's deficit commission is just kind of -- it's something that looks good on paper. John Boehner, he's actually doing something that we're all going to be able to see. It's something he's actually going to do. He's committing himself to it.

People like to see this. And this really means that they're taking control.

HANNITY: You see, if they want real entitlement reform, they've got to provide the American people choices. If they're going to pull this away from young people and cut benefits and raise the retirement age, and means test it when it's all said and done, why don't they give us a choice?

WALLACE: Well, and that's --

HANNITY: And that's not going to be part of the solution.

WALLACE: And I think you have to trust the public to make smart and wise decisions about their future. Because here's the reality. We're not going to have Social Security. It's not going to be around anyway.

HANNITY: We pay all our life and they're going to steal it?

WALLACE: Well --

HANNITY: And they're going to legalize it.

SMITH: They already are.

WALLACE: It's insolvent. It's insolvent.

SMITH: Yes. It went black.

WALLACE: It won't be there. So --

HANNITY: Well, what if a big -- they always love to demonize corporations. What if a corporation did this?

WALLACE: Well, I'm sure they'd be hauled up --

SMITH: They would be demonized.

WALLACE: Yes.

HANNITY: Demonized?

WALLACE: Obama would tax them and take away their bonus.

HANNITY: They would be in jail. That's how criminal this is. You know Rick Perry got in trouble for saying this is a Ponzi scheme. He's right.

SMITH: We're printing money -- we're printing money on a regular basis now. We're talking about another $600 billion the fed is willing to buy back our own debt.

HANNITY: Yes.

SMITH: I mean, Sean, we're watching our dollar go down every day while our deficit continues to rise. It's a mess.

HANNITY: All right.

SMITH: And this isn't providing a solution.

HANNITY: We got to run. So your book has -- the first female president whose husband has an affair with a reporter.

WALLACE: Right.

HANNITY: And you want it R-rated?

WALLACE: And I'm sure she is for deficit reform. So even more reason to --

HANNITY: So she's a conservative who gets stabbed in the back by her liberal husband.

(LAUGHTER)

WALLACE: It is not X-rated, though. You must retract that.

HANNITY: All right. R-plus.

Content and Programming Copyright 2010 Fox News Network, Inc. Copyright 2010 Roll Call, Inc. All materials herein are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of Roll Call. You may not alter or remove any trademark, copyright or other notice from copies of the content.