Senate Republicans Draw Line in Sand Over Tax Cuts

This is a rush transcript from "Hannity," December 2, 2010. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: Senate Republicans stood united today behind extending the Bush tax cuts. They are vowing to filibuster every measure except the ones necessary to fund the government until the Democrats agree to extend these tax cuts.

Now here's Minority Leader Mitch McConnell on the Senate floor earlier today.

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL, R-KY., MINORITY LEADER: A while ago I delivered a letter to Senator Reid signed by all 42 Senate Republicans. It says that every Republican will vote against proceeding to any legislate matter until we funded the government and protected every taxpayer from a tax hike.

Basically what it means is first things first.

(END OF VIDEO CLIP)

HANNITY: Now if the Democrats still are not aware that the American people and the economy need these tax cuts, perhaps the report issued earlier today from president's Debt Commission will sober them up.

Now commission co-chairs former Senator Alan Simpson and former White House chief of staff Erskine Bowles are calling their report the moment of truth. Now it contains solutions that they say will prevent the country from going broke. Now they include drastically reducing the tax rates -- by the way, Democrats, are you listening? -- abolishing the alternative minimum tax, making Social Security sustainable over the long-term, cutting discretionary spending which has sky rocketed 34 percent in the last decade, and slashing health care costs through a number of measures.

Now these sound like the types of things that conservatives have been saying for years. And joining me now with reaction is the author of the new best seller, "Valley Forge," Fox News contributor, former Speaker of the House Newt Gingrich, who by the way is hosting the Americano Forum this Thursday and Friday in Washington, D.C.

Mister Speaker, good to see you. Thanks for being here.

NEWT GINGRICH, FORMER SPEAKER OF THE HOUSE: It's great to be with you. And it's a pretty interesting time in terms of what's happening in Washington.

HANNITY: It really is. Well, first of all, I like what I see. Thirty days from now, everybody watching this program, everybody out there, has no idea how much they're going to owe the government in taxes.

Businesses can't prepare for the coming year. They weren't -- they didn't have the courage to do this before the election. So now here we are at the last minute, the president is still apparently holding firm on the idea he doesn't want to extend tax cuts for small business and the so- called wealthy.

Do you like what the Republicans are doing? They said -- nothing gets passed now until we do this.

GINGRICH: Well, I thought Senator McConnell showed enormous leadership, first of all, in making very clear that the Republicans are opposed to a tax increase and second in getting all 42 Republicans to sign a letter saying they would stand firm to stop Senator Reid and the Democrats in doing anything else except fund the government until they got a vote on no tax increase for anyone.

Well, what I was surprised by, Sean, I don't know if you've picked up on this but I thought that President Obama was remarkably tone deaf yesterday. And basically going through the same baloney that he said before the election.

It was as though he hadn't noticed the election results. And he was back at the same stand with the same ideas trying to manipulate the Republicans into giving in, and I thought it showed a real lack of understanding of how severe and how significant the election outcome was.

HANNITY: What do you think -- what is it? Is it his personality? Is it his rigid ideology? Is it arrogance? Is he tone-deaf? You know, what is it?

GINGRICH: I don't know. I mean on the one hand he's been amazingly successful going from being a -- a state senator to U.S. senator to beating Hillary Clinton, which you know I thought he couldn't do, to winning the presidency.

So at one level maybe he just has this belief if he keeps doing whatever he did it will keep working. But there are times in life when if something isn't working at least an old saying that if you're in a hole quit digging.

And I would have thought that he would have come in and said look, our number one goal is to get this economy growing, to get jobs created to get people back earning paychecks.

And in order to do that, while I don't like it, I am going to concede that the American people gave the Republicans the power and therefore I'll go along with no tax increase in anybody. It was a very easy give for him. And yet he couldn't bring himself to do it.

HANNITY: All right. So this president has given us $3 trillion in new debt. We're projected under Barack Obama, as his budget projections go out, to accumulate $13 trillion in new debt.

Now Greece is going bankrupt. Ireland is headed to bankruptcy. Spain and Portugal have trouble.

Do you foresee a time that if we don't take drastic measures, that the United States of America could be facing bankruptcy?

GINGRICH: Yes, I don't think it's likely in the short run but I think in the long run it's unsustainable. But there's a deeper part of this. I mean just in a level of practicality, I'm going to talk about how the -- you know, how the train runs, how the airplane flies, how you drive a car.

We are headed towards a December 31st where the tax code is going to revert to a huge tax increase on virtually every American. An AMT tax increase of about $70 to $80 billion. No corporation in America, no investor in America, no small business in America is going to know what their real tax rate is for next year and that is just a total mess.

Now for the president of the United States -- forget ideology. Just as you're driving the car should stay on the road, flying the airplane so you land safely, driving the train so it stays on the tracks, for him to not realize at the beginning of December, that his administration is about to preside over a catastrophic mess in which everybody is going to be in a total muddle, and in which withholding may well go up for an enormous number of Americans, virtually every American is going to end up with less take-home pay in January in an economy this weak.

And as you point out correctly, with the Europe melting down and the euro, frankly, on the edge, I think, of collapsing, this is such an irresponsible failure to govern. And forget whether you're right or left. This just makes no sense in terms of governing the United States.

HANNITY: Where is -- you were there when Bill Clinton was president and he did make a pivot. And he said the end of big government is over. And the end of welfare as we know it. And you had a debate with Bill Clinton somewhere around that time. I don't remember the exact date. And he seemed to get the message.

Dick Morris went in, showed him some polling data and he changed his philosophy, his ideology, his position. He ended up getting re-elected by a pretty significant margin.

Is there anybody you think advising this president, going into the oval office, saying, Mr. President, this is what's going to happen on December 31st if you don't act fast?

GINGRICH: Well, let me say I don't know what impact David Plouffe going in will have. I just finished reading his book, "The Audacity to Win," which I found pretty remarkable and pretty impressive.

But what's striking here -- it took Bill Clinton about seven months from November to June to really make the switch that you're talking about. And it was very painful and most of his liberal staff bitterly opposed it.

But the president -- President Obama has a different situation. President Obama is faced with an extraordinary economic mess on January 1st. I mean he doesn't have the luxury of waiting around until next summer.

And for him to not say to Republicans in Congress I got it. You guys won the last election. This after all was his mantra back in January of 2009. He said to the Republicans I won, you need to go along with me or I'll run over you.

Well, guess what, Mr. President, you just lost. And so you have some obligation to listen to the winners and the winners are telling you they will pass a no tax increase bill in the next week.

HANNITY: What is --

GINGRICH: -- if you'll disagree to sign it.

HANNITY: What -- if you were to advise the Republican leadership that is there now -- it is pretty extraordinary for Mitch McConnell to get all 42 Republican senators to say nothing moves in this body until or unless and until we get this done.

What would you advise him would be an acceptable compromise if you even want to call it that?

GINGRICH: I think an acceptable compromise is to extend the no tax increase provision for five years. The Republicans would like to make it permanent. But I think if they could get a five-year extension that would be a reasonable compromise. But I think the Republicans have no obligation to accept anything less than no tax increase on any one in the middle of a recession.

And when you look at 9.6 percent unemployment, all the pressure is on the president.

HANNITY: All right. We'll have much more with Speaker Newt Gingrich coming up straight ahead.

(COMMERCIAL BREAK)

HANNITY: And we continue now to former Speaker of the House Newt Gingrich.

Mister Speaker, Democrats want to bring up a lot of other issues. "Don't Ask, Don't Tell" is on their agenda. The Dream Act which would be amnesty is on the agenda. The new START treaty, cap-and-tax, the unemployment bill.

All of these issues -- do you think because the election occurred that those things should wait until the new Congress gets into session?

GINGRICH: Sure. Absolutely. When you lose more seats than any time since 1948 you'd been repudiated. And I don't that Speaker Pelosi and the Democrats in the House have the moral authority to pass anything.

There are two emergency items, continued government funding and keeping the tax rates where they are now in order to create stability for job creation and prosperity. Other than those two things I don't think there's anything significant that Republicans should agree to in this lame duck session.

This duck is worse than lame. This is close to a dead duck session.

(LAUGHTER)

GINGRICH: And I think the fact is, when you have this big a defeat there ought to be some humbleness on the part of the losing party to recognize that they've lost the trust of the American people. That's why they got defeated and they ought to relax and allow the new team, the people the American people chose, to come in and have a chance to try and to solve things.

HANNITY: I think you're right. I think this is the equivalence of a no confidence vote in Obama, Reid and Pelosi and their policies -- this government's policies.

Now I do know for a fact that you fly commercial. You recently got back from a big trip out in Hawaii. Do you have a problem with the full body scans? Did you -- Newt Gingrich, former speaker of the House, did you get a pat-down and what do you think of the exemptions that government officials get?

GINGRICH: Well, first of all I don't think government officials should be exempted. I think it'll be nice if they actually put in the same TSA equipment for Air Force One. I think the president ought to have a chance regularly to experience what all other Americans go through.

I -- look, I'm willing to go through a full body scan or anything else you need to. What I am offended by is the absolute unwillingness of this administration. And as you know, Callista and I did a movie called "America at Risk: The War with No Name," where we outlined -- who are the people who've been terrorists in the last three or four years?

They're all males. They're all young. They're all fairly identifiable in other ways. The fact that we refuse to focus on being honest about who our enemies are, so we're going to a point -- we're going to have a full body scan of an 83-year-old nun from Des Moines because we don't want to be honest about who our enemies are?

I think it's just a sign of how weak and how incoherent this administration is on national security. I'd rather spend the resources hunting down our opponents than put every single American through the kind of -- frankly inappropriate government intrusion into your life.

Having your children groped by a government official has got to be the furthest thing from what George Washington and the founding fathers envisioned --

HANNITY: What --

GINGRICH: -- when they rebelled against the British.

HANNITY: What is -- is it just that we've become so politically correct as a society that we've got to treat a 19-year-old Yemeni exchange student the same way we treat that -- you know, 80-year-old nun that you mentioned from Des Moines?

GINGRICH: Well, look --

HANNITY: Interesting you mentioned Des Moines. But -- yes.

GINGRICH: That was actually cited in an article the other day. I wasn't making it up. But you know when we released "America at Risk" and we talked openly about the fact that there are radical Islamists you should have heard people screaming about it.

Yet who was the young man in Portland who was trying to kill a lot of people last week? He happened to be a radical Islamist. Who are the people we've been arresting all over the country for the last two years? They're young males who happened to be oh, radical Islamists.

You think you're going to get this attorney general or this president to be honest about the threat we face? And so they would rather harass all of us --

HANNITY: Wow.

GINGRICH: -- so they can maintain liberal dignity than tell the truth and have the courage to act on the truth.

HANNITY: I kind of -- you know like in the name of safety, if they're really concerned about safety I think our borders would be controlled by now. I don't think we'd be giving Miranda rights to enemy combatants in the battlefield nor do I think we'd be given civilian trials to known terrorists.

And those are the first steps that you'd take if your real goal was safety before patting down children and nuns and the elderly in wheelchairs. So --

GINGRICH: If we -- if we really care about safety we would close down WikiLeaks. We would treat the people at WikiLeaks as enemy combatants. We would declare that the kind of thing this private did is treason. We would make quite clear that we're not going to allow Americans to get killed and American allies to get killed, and American capacity to deal in the world to be crippled by a group of people who clearly are the enemies of the United States.

WikiLeaks is not a fun and games event. WikiLeaks undermines profoundly the ability of the United States to work around the world. Why would you, if you were a foreigner thinking about helping the United States, why would you confide anything to an American when you know that it could end up in The New York Times based on some leak?

HANNITY: Yes.

GINGRICH: And I think we should have a very aggressive campaign to shut WikiLeaks down and to make life permanently miserable --

HANNITY: Mister Speaker --

GINGRICH: -- for people involved.

HANNITY: We've known about this for six months.

GINGRICH: Right.

HANNITY: And we've done nothing.

GINGRICH: And that tells you how lacking in seriousness this administration is.

HANNITY: All right. Mister Speaker, good to see you. Thanks for being with us. Appreciate it.

GINGRICH: Thank you.

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