This is a rush transcript from "Hannity," May 27, 2011. This copy may not be in its final form and may be updated.
SEAN HANNITY, HOST: Welcome back to this special edition of "Hannity." Now we have just heard from former Pennsylvania Senator Rick Santorum. Now it's former New Mexico Governor Gary Johnson's turn to tell us why he is the best person to take on President Obama in 2012.
HANNITY: How are you? Good to see you.
GARY JOHNSON (R), FORMER NEW MEXICO GOVERNOR: I'm great, Sean. Thanks for having me in.
HANNITY: You are running for president?
JOHNSON: I'm running for president, running for the Republican nomination for president.
HANNITY: Well, you have the stamina. You are a tri-athlete, right?
JOHNSON: Right, endurance athlete.
HANNITY: An endurance athlete -- I ran three miles and like -- you know, an hour on the tennis court, I'm ready to pass out. You are going to need it for this battle.
JOHNSON: You know, I've been at this now for 16 months with our America initiatives. So I've been out on the road talking to people. I wouldn't be here if I didn't think I could do the job. I wouldn't be here if I didn't think I could do a good job. You have to have a resume to get involved in the contest.
HANNITY: What are the things that -- we want give everybody that is running access to people so they can hear you. Right now, I don't think you would disagree with me that you are one of the lesser known candidates.
HANNITY: And so a big underdog. What do you do to breakthrough?
JOHNSON: Well, so New Hampshire ends up to be key in this whole equation. The early primary states end up to be key in this. But New Hampshire, I'm going to spend a lot of time in New Hampshire and New Hampshire, they vet the candidates. I think they set the stage for the rest of the country.
HANNITY: You have a really excellent track record as governor.
JOHNSON: And I do, I really believe that. You got to have a resume to do that.
HANNITY: I mean, you balanced the budget, you cut a number of thousands of jobs without firing anybody --
JOHNSON: You know, not one single opinion any of tax went up in an eight year period. Reformed Medicaid in New Mexico to save 25 percent over what we were spending for Medicaid, built 500 miles of a four lane highway without raising taxes.
You started off by saying 1,200 fewer state employees over an eight year period. That had never happened before and I think that was really --
HANNITY: Attrition then -
JOHNSON: You know, attrition, managing. Not that we didn't try and get rid of deadwood also, but for the most part, it was just managing attrition.
HANNITY: Where I think you run into difficulty, like every candidate they have some difficulties. OK, I think your difficulty is you are on the more libertarian side of the Republican Party, but you are a Republican.
JOHNSON: Yes, I'm a Republican. I would argue that perhaps some of these issues are really conservative and that it is conservative. And for me, as governor of New Mexico, everything was a cost been fit analysis, everything.
What are we spending our money on and what are we getting for the money we are spending? Included in my tenure as governor it might be an embellishment, Sean, I might have vetoed more legislation than the other 49 governors in the country combined. And New Mexico -- thousands of times I used the line-item veto. Given the New Mexico is a state that is 2-1 Democrat. I think the fact that I get reelected really speaks volumes to the fact that people appreciate good stewardship of tax dollars. I'm going to argue I did that.
HANNITY: There's no doubt that I think for national security reasons and for obvious economic reasons the defining issue of our time is the economy and the debt and the deficits and out of control spending and this power grab in Washington. How do you stop it?
JOHNSON: I'm under the belief that we are on the verge of a financial collapse. Unless we -- and that's in lieu of the fact that we have 14 trillion in debt.
And we have no ability to repay $14 trillion in debt if we're racking up $1.6 trillion in deficit spending in deficit spending this year, the year prior, two years prior and the years looking ahead. Look, we're not going to pay back $14 trillion in debt. We have to embark on balancing the federal budget tomorrow.
JOHNSON: Well, cutting $1.675 trillion from the federal government. You got to start out by talking about Medicare and Medicaid. I'll just throw out some suggestions here. There are other, but let me just throw the fact that the federal government could cut Medicaid and Medicare by 43 percent.
They could block grant the states. I'm going to say this throughout my campaign, 50 laboratories of innovation, the notion of best practices. Give it to the states to deliver health care to the poor and those over 65 and do away with the strings. Do away with that regulations - Let states handle it. There would be best practices emerge. Other states would emulate the best practices. They're be failure. States would avoid the failure. In New Mexico, Medicaid, now it came with all the strings attached. It came with all the regulation attached. It came with a mandate that here are the services that you had to deliver, but Medicaid in the State of Mexico, I shifted that from a fee for service model to a managed care model and saved 25 percent. If I were to have been given Medicare, I could have done the same thing with Medicare and saved 25 percent. By the way, I used 25 percent. I could have saved more money. I still could have delivered health care to those truly in need by cutting it 43 percent, I could have done that. But I was governor of the state. I had a legislature that was 2/3 Democrat and, you know, I wasn't the benevolent dictator.
HANNITY: What about Social Security? Means test, raise the retirement age or?
JOHNSON: A third item would be to change the escalator that is built into Social Security. Cost of living increases from the wage index to the inflation rate. That in and of itself would make Social Security solvent.
So it is important to point out that it's not cutting Social Security. It is about making it solvent into the future. That means making it a system that takes in more than what it pays out.
HANNITY: So irritating to me had any corporation misappropriated the retirement fund that is supposed to be put in a lock box, if we recall, was put in the general fund, it was all spent. The CEO, CFO would all be in jail right now and of course, the government is not held accountable or to the same standards.
JOHNSON: And then talking about monetary policy in the country. The fact that the dollars that we have in our bank accounts today, are worth less than they were yesterday or worth less than they were a week ago, a month ago, a year ago. That's the fact we are printing money to cover all these obligations.
The Federal Reserve has devalued the dollar significantly from a monetary policy standpoint, abolishing the Federal Reserve would bring about this discipline of spending within our means. Now, I have said that if the congress were to pass a bill an billion the Federal Reserve, I would sign on to that legislation. But in the meantime, we went to the moon. We can balance the federal budget, but we need to do that tomorrow. So I don't have a plan for doing this -- I don't have a plan for getting a quarter of a way there in eight years. I have a plan here or a desire that we do this in 2013.
HANNITY: And still ahead, we'll have much more with presidential candidate Gary Johnson. Now the former New Mexico governor talks about his sweeping proposal to cut the size of the government to avert an economic disaster. That and much more as the Hannity primaries continue right here on Fox.
HANNITY: Welcome back. Gary Johnson says he has big plans to overhaul America's fiscal and entitlement programs. Will you the voters, will go along?
HANNITY: Well, you have 47 percent of Americans that don't pay a penny in income taxes. Now one said, and they think the system is fair. You have more people dependent on government for some assistance.
How do you get the people that have been, let's say mentally conditioned to look to government to now say, Gary Johnson is right. We're going cut all these services. We're going to restructure how we use them and they say, wait a minute, you're taking away my benefit, my, my. How do you get people to buy into it?
JOHNSON: And Sean, you play a role in this every single day, talking about it every single day on your show. And that is, is that there's an awareness in this country right now that has never existed before in my lifetime.
In my lifetime I've watched us spend more than what we've taken in for my entire lifetime and I've always thought there would be a day of reckoning. That day of reckoning is here and it is now. Does this get us all to act this? I'm under the belief first of off, we are gonna have this financial collapse. And I'm under the belief that we do have to take this on. Maybe, maybe there's an appetite to actually do that. Now, to do this, this would take Republicans to be in control of the Senate and the House and the presidency. Why the American electorate would give Republicans back control of this, given a few short years ago they did this and Republicans passed a prescription health care been fit and ran up record deficits at that time, I'm not sure why American citizens do that. But I'm under the belief that only the Republican Party can solve this. I'm trying to grow the Republican base to get Republicans in a position to do this.
HANNITY: Do you think they've shown enough strength, for example, on the 11 budget. Do you think they're showing enough resolve on the debt ceiling debate?
JOHNSON: Well, it is moving in the right direction, but it is not nearly enough. And it is not getting there fast enough. I don't think we have eight years, I really don't. This is going to be a bond market collapse.
HANNITY: Do you think America's bonds will collapse?
JOHNSON: Well, there won't be an -- federal reserve, as you know is buying up our debt right now. Come June, that's going to expire. They say they are not going to do that anymore. What happens when there is no appetite for the debt and they have to step back in with --
HANNITY: I'm not disagreeing with you. Sadly, I say this, I think America under Obama, Pelosi, Reid is in a steep decline. As a consequence the world is in decline.
I agree with you. I think the political resolve has to be there. There's not one thing that you have said so far that I disagree with.
JOHNSON: From my standpoint here, I'm putting myself into this contest to be -- if you will, talking the truth on these issues and it wouldn't be just this issue, I with would argue that it is going to be across the board. Whether or not this flies or not, that will remain to be seen. This is what I think I'm offering up.
HANNITY: Now this is where I think your libertarian leanings going to hurt you in some primaries. I think the same thing for Ron Paul or any libertarian on the war. You don't think we belong in Afghanistan, Iraq?
JOHNSON: Well, initially, Afghanistan was totally warranted. We were attacked. We attacked back. That's what our military is for. We should remain vigilant to the terrorist threat.
But after being in Afghanistan for six months I think we effectively wiped out al Qaeda. And here it is, we are there 10 years later. We're building roads, schools, bridges, highways and hospitals and borrowing 43 cents out of every dollar to do that.
HANNITY: I agree with that aspect, but the argument being, of course, though they have a better society when we leave the chances are -- I don't buy it. History have shown that you are not going to be able to do this.
But I disagree with this aspect and that is that Iraq and Afghanistan were warranted because we had a whole series, you know all the incidents leading up to 9/11. People really at war with us. Wikileaks even proved recently the depths to which they were planning after 9/11, future acts and we need to go on offense.
JOHNSON: What we don't argue about is the need for a strong national defense. We don't argue that at all. What we might argue about is the actual threat to our national security.
When it came to Iraq, I would have argued at that time this isn't a threat to our national security. But if they do have weapons of mass destruction, we have the military surveillance capability to see that happen and we could go in and strike at that point.
HANNITY: I don't want to reargue the Iraq war.
JOHNSON: Fast forward to Libya.
HANNITY: Libya, I think if you say that Qaddafi has to go as the United States president, you better take him out because I think this president, it all goes to this decline in America.
I think he's timid, weak, indecisive and I don't think he really has the moral courage to make a tough decision and he always pulls back to his radical ideological base. But on the issue of Iraq, we knew he use of weapons of mass destruction. We had images of dead children, Kurds in the north because chemical weapons were used. The way he was acting made everybody and anybody including most Democrats conclude that he had them.
JOHNSON: Well, and under the umbrella of a no-fly zone, did this occur?
HANNITY: And up next, the Hannity primaries get a little heated as my discussion with Governor Johnson returns to the topic of legalizing all drugs in America. That debate, straight ahead.
HANNITY: Welcome back to the Hannity primaries. We continue now with former New Mexico Governor Gary Johnson.
HANNITY: You run into I think problems with the base, legalizing drugs, a couple of other positions --
JOHNSON: Legalizing marijuana, talking about harm reduction strategies regarding all the other drugs, so talking about legalizing marijuana. I came at this issue from a cost-benefit analysis standpoint.
Sean, I'm not telling you anything that you don't recognize. Half of what we spend on law enforcement, the courts and prisons is drug-related and to what end? Well, $70 billion a year. We're arresting 1.8 million people a year in this country. We now have 2.3 million people behind bars. We have the highest incarceration rate of any person in the world, America.
HANNITY: Marijuana is a different category. What do you do when people are in a crack induced state of psychosis? If it's decriminalized or legalized, what do you do with people so needing a fix for heroin that they would kill their own mother? Predictable results of hard drug use, what do you do then?
JOHNSON: Well, first of all there's an educational process in all this.
HANNITY: If you are too stupid not to stick a needle in arm or a crack pipe in your mouth, you have lost it. There is no educating somebody that crack is bad for you.
JOHNSON: Sure, Sean. But you treat it first as a health issue, rather than a criminal justice issue. You don't treat it first as a criminal justice issue. These are the people that we know. These are people -- people that we care about.
HANNITY: Are we going to provide free health care for them? Are we going provide free heroin, crack?
JOHNSON: Let's differentiate between marijuana though and harder drugs. What I'm advocating is the legalization of marijuana and having drank alcohol and having smoked marijuana neither of which I do today, because I think they are both handicaps.
But having done both, I can tell you there's a big difference between the two. The big difference is that marijuana is a lot safer than alcohol.
HANNITY: I don't agree.
JOHNSON: Well, you don't have to agree. Citizens of Denver five years ago voted to decriminalize marijuana in Denver on a campaign based on marijuana being safer than alcohol.
HANNITY: Can't these arguments still be made on the crack heroin issue. What do you do in those cases? What are you going to do --
JOHNSON: First you look at it as a health issue rather than a criminal justice issue --
HANNITY: You're a fiscal conservative. You're a libertarian. You don't want to pay for their health care, do you?
JOHNSON: Exactly, Sean. So listen to me from a cost benefit analysis. Listen, from a cost-benefit analysis, Portugal, 10 years decriminalizes all drug use. In the last 10 years, they've statistically shone a 50 percent decrease in heroin use.
HANNITY: Wait a minute. Great Britain experimented with the same decriminalization of heroin and there were other - when we talk about this the other way, Needle Park is another failure --
JOHNSON: I mean, I can talk about all of these.
HANNITY: Maintenance issues where the government ends up giving these drugs to these addicts. The state becomes the pusher. We have people that literally are decrepit and no longer live life as a bunch of junkies.
JOHNSON: So chief of police from Zurich, Switzerland comes to Albuquerque, this is about 10 years ago and he said, I'm the chief of police from Zurich, Switzerland. He said when they came out with a heroin maintenance program in Zurich, Switzerland --
HANNITY: Free heroin --
JOHNSON: Free heroin, government controlled you have to get a prescription, clean needles. The idea was to reduce death, disease, crime, corruption, the things that I think really people care about.
He said when they came out with this program in Zurich this was crazy. I've been in law enforcement my entire life, all my friends were in law enforcement. We could not have been more opposed to this. Death, disease, crime, corruption, was going to skyrocket. He said I'm here today to tell you, Zurich is a much better place to live. Citizens of Zurich voted to re-up on that program.
HANNITY: We are not going to convince each other, but --
JOHNSON: It is a good dialogue. This is something that needs to be talked about in this country.
HANNITY: I want to go back to my original question as my last question. On economic issues, I agree with you. We have a slight deviation on some defense issues.
JOHNSON: So make the drug argument from an economic standpoint.
HANNITY: How do you get the conservative base, a lot of which are Christian conservatives the idea that America would legalize or go down this road is repugnant to me.
I don't think government should have that role in the moral destruction of a human soul, which is predictable by giving them those drugs.
JOHNSON: I just want you to put yourself in the position. We talked earlier about the fact that you got a couple of sons.
HANNITY: One son, one daughter.
JOHNSON: Statistically one of those two are going to smoke marijuana statistically.
HANNITY: And that will be the one that I beat the living daylights -- I'm kidding, joke.
JOHNSON: You are joking. You want to deal with that problem. You don't want the government dealing with that problem. You don't want one of your two kids subject -- the law as it exists, I don't want our kids criminalized for actions --
HANNITY: A misdemeanor small amounts of marijuana.
JOHNSON: This is the notion we have, Sean, that we've really kind of put this on the back burner. When the reality is these laws are very discriminatory. You have --
HANNITY: Crack, powder cocaine, distinguished.
JOHNSON: You are brought over to the side of the road. You smell marijuana. If you are of color, there's a four times more likelihood you will end up behind bars for that stop as opposed to being white.
HANNITY: You are pulled over to the side of the road and your car wreaks of marijuana, I don't want you on the road.
JOHNSON: Exactly, and that will never be legal either. It will never be legal to smoke pot and get behind the wheel of a car.
HANNITY: Do you not agree with me or see that the conservative base is going to have a hard time with these positions that's my last question?
JOHNSON: Well, it is an educational issue. So in my experience, I'm the only one out there talking about this. I've had this field for 12 years to myself. What I found it is an issue that is really pretty thin iced.
When people get educated about it just a little bit, everybody seems to move on the issue. Now people don't move from wanting to I am machine the death penalty to making it legal. But they move from the death penalty -- maybe we don't have to put them to death. I'm just saying everybody with just a little bit of education on this issue seems to view it in a different way. That's a good thing because we've got so many people locked up in this country.
HANNITY: Gary Johnson, it's great to see you.
JOHNSON: Sean, great to see you. Thank you very much for having me.
HANNITY: Come back soon.
Content and Programming Copyright 2011 Fox News Network, LLC. ALL RIGHTS RESERVED. Copyright 2011 CQ-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 CQ-Roll Call. You may not alter or remove any trademark, copyright or other notice from copies of the content.