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Can Obama Overcome Economic Woes in Reelection Bid?

This is a rush transcript from "Hannity," June 7, 2011. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: And another one bites the dust, Austan Goolsbee has announced the he is resigning from his post as President Obama's top economic adviser to return to teaching. Now he follows in the footsteps of his predecessor Christina Romer who left in September and then to the list of other previously departed economic advisers.

National Economic Council Director Larry Summers who is asleep, OMB Director Peter Orszag and the latest departure comes as the administration attempts to explain away the struggling economy that only seems to be getting worse.

Now according to CBS News, an estimated 45 percent of unemployed Americans or about 6.2 million people have been jobless for more than six months. What does our president have to say about all of that?

(BEGIN VIDEO CLIP)

PRESIDENT OBAMA: There are always going to be bumps on the road to recovery. We're going to pass through some rough terrain.

(END VIDEO CLIP)

HANNITY: And joining me with reaction in studio tonight former Tennessee senator, a former presidential candidate, the one and only Fred Thompson. How are you, Senator? Good to see you.

FRED THOMPSON, FORMER PRESIDENTIAL CANDIDATE: Good to see you.

HANNITY: Alright? Family's good?

THOMPSON: Great, they're doing great.

HANNITY: We love having you back. Any comments about Anthony Weiner?

THOMPSON: That's another fine mess you got to get to the bottom to Sean. You know, the quality of scandals going down in this country, do you remember Watergate?

What did the president know and when did he know it? Now it is what did the congressman show and when did he show it? Don't you think the quality of scandals has gone down in this country?

(LAUGHTER)

HANNITY: I really do. Well, I knew I wanted to invite you just for that reason. Here's USA Today, today. I always clip the newspapers every morning, and you know what it was like, you were doing a radio show. Unfunded obligations per household, $534,000.

They go on to actually explain -- we have a record $61.6 trillion of total financial promises not paid for on top of the $14 trillion debt they want to raise, $61 trillion. Can we ever recover from that?

THOMPSON: All the good numbers are going down. All the bad numbers are going up. We are coming out of this recovery, with about half the steam, less than half the steam we traditionally do since World War II when we have recessions. Unemployment back up. You know, gasoline prices back up.

And the last poll I saw, I don't know yesterday, I guess it was, a Gallup, 65 percent says the country is on the wrong track. So it is tough. And the president is going to pay a price for it, unless he gets those back up the middle of next year.

I think the trend is going to be important too if it starts going back up. He is going to have to hurry. The people that I talk to don't see any indication that things are going to turn around soon.

HANNITY: They've actually projected downward now, all the financial experts, the rate of growth is so anemic that there is virtually no growth and they don't see any prospects of jobs coming in.

Here is the issue I think politically because there's never been a president that's been elected, re-elected with unemployment rates this high.

THOMPSON: Right.

HANNITY: Isn't it a predictable failure? It is not going to get better. We keep hearing from the media, well, you know, President Obama, this is a weak field.

THOMPSON: Sean, I have a hard time seeing a long term scenario. Not that long, but a longer term scenario that is a good one to bail us out on this. We spent all the money we can spend. No more stimulus.

The fed has printed all the money that it can afford to print. We've got a medical package now that the country is trying to adapt to. It is so screwed up that they've had to grant about 1,500 waivers to people who can't possibly comply with it. People are looking at all that.

Taxes going back up in a year or so, a year and a half and people are scared. People are concerned and try to do something on entitlements, the number one single issue facing the economy really longer term is everybody knows, everybody concedes. And the roof falls in on Paul Ryan.

The president, you know, instead of leading, demagogues it. So people look at that whether it be the Chinese or other bond holders, or the American people, American businessmen and say what reason do I have to believe that in a little while, all this is going to turn around?

And I will have reason to put good money down to hire people or invest in a company, when I have this regulatory burden facing me, when I have these tax rates potentially facing me. And our debt is -- has no hope of being dealt with.

HANNITY: Two things. China is now openly lecturing us about how bad our debt is. They are holding trillions of dollars in debt. On top of that, you got an economy, as you point out, in just literally no-growth mode.

The president running for reelection, you ran for president. What would you advise all of these candidates. I know you haven't endorsed anybody -- in particular person. What would you tell them that they need to focus on to win the primary and then take on Obama?

THOMPSON: First of all, I've never been as proud of the leadership in my party as I have been over the last several months. Over in the House, guys like Ryan and Boehner and those guys, have really stepped up because we are in worse shape than people even realize.

Larry Lindsey, an economist who is a good friend of mine, points out that interest on the debt alone could swallow us. We are paying about $200 billion a year in interest now with rates almost zero. If interest rates go back up to where they normally stay, over a period of last several decades, we will totally be swamped with almost a trillion dollars in interest payments alone.

I mean, things are bad. Republicans are stepping up with a Medicare plan. They are stepping up, as far as this debt ceiling is concerned.

HANNITY: How do you overcome the demagoguery?

THOMPSON: You just got to do it. I mean, this is going to test our democracy like nothing has, I think in the last couple hundred years.

Do the American people mean it? When they went to the polls and elected a Republican House, did they mean that or are they going to say, yes, I want you to cut spending, but not mine, I got my check the other day, I see nothing wrong with Medicare.

It's going broke sure as we are sitting here. It's going to drive it into bankruptcy along with the rest of the government. Liberals should realize there won't be any money for any of their other programs that they like too.

HANNITY: You miss running?

THOMPSON: No, I don't. I enjoy watching them. I saw Pawlenty today he made his economic speech. I thought it was very good, what I saw. He's laying it out there. He's being specific. He's opening himself up for that kind of demagoguery.

In the end of the day in a democracy, you have to have ultimate faith in the American people to ultimately, finally do the right thing and that's what we are going to find out in these next few elections.

HANNITY: Good to see you, Senator.

THOMPSON: My pleasure.

HANNITY: I really appreciate you being here.

THOMPSON: Thank you.

HANNITY: And we're going to take a break -- you want to throw the football out?

THOMPSON: Not especially.

(LAUGHTER)

THOMPSON: I like a real football.

HANNITY: It is a real football!

(COMMERCIAL BREAK)

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