This is a rush transcript from "On the Record," July 18, 2011. This copy may not be in its final form and may be updated.
GRETA VAN SUSTEREN, FOX NEWS HOST: We are running out of credit and we're running out of time. It is President Obama versus the Republicans. And this crisis means a lot to every American. And our leaders are literally clawing at each other. But is the fight strong, passionate and principled, or is it something else?
Congresswoman Sheila Jackson Lee went before Congress on Friday. This is what she is saying about the problem.
(BEGIN VIDEO CLIP)
REP. SHEILA JACKSON LEE, D-TEXAS: Read between the lines. What is different about this president that should put him in a position that he should not receive the same kind of respectful treatment of when it is necessary to raise the debt limit in order to pay our bills, something required by both statute and the 14th Amendment?
But I do not understand what I think is the maligning and maliciousness of this president. Why is he different? And in my community, that is the question that we raise. In the minority community, that is the question that is being raised. Why is this president being treated so disrespectfully?
(END VIDEO CLIP)
VAN SUSTEREN: Joining us is Republican presidential contender and former CEO of Godfather's Pizza, Herman Cain. Nice to see you, sir.
HERMAN CAIN, GOP PRESIDENTIAL CANDIDATE: Thank you, Greta.
VAN SUSTEREN: All right, Congresswoman Sheila Jackson Lee I do believe is saying that she says that it's racist how the president's being treated. If it is racist, it must be stopped. If it is not racist, she must be stopped from what she's saying because it's not going to fix the debate. Racist or not, because I assume as an African-American man, you have seen racism.
CAIN: I have seen racism, lived through racism. I know racism when I see it. This president isn't different, he's just wrong, dead wrong. She is playing the race card, like they do when they can't defend this president's record. So they go to the race card or they go to the class warfare card. And that's all that she is doing. The race card is now a joke because a lot of American people have figured it out. It's not going to work the way it usually does.
VAN SUSTEREN: All right, racism is wrong. It's dead wrong.
VAN SUSTEREN: It's painful. It still exists.
VAN SUSTEREN: So if this isn't racism, how do we get Representative Sheila Jackson Lee to come out and debate this strong, aggressively on the issues?
CAIN: I don't think you're going to get her to change because the people who depend upon the race card, they're not going to change. This is all she knows what to do in order to try and attack conservatives or attack Republicans or defend a failed president in terms of all of his policies.
Look at the failed economic policies. Look at a lot of the other failed decisions that he's made. The only thing that they revert to is the race card. He's just wrong. It has nothing to do with race. I see this, when I'm out on the campaign journey. I talk to people. I'm all over the country. There's no racism out there because he's black. It's all because they don't agree with his policies.
I was attacked on my radio show because I disagree with this president. They didn't call me racist, they called me shameless and a lot of other names. This is their last resort because he cannot stand on his record. And so they only have to play the race card.
VAN SUSTEREN: All right, the -- obviously, the debate here in Washington is getting pretty ugly.
VAN SUSTEREN: Every president's come here, whether it's President George W. Bush, President Bush 43, or this president, claims to be the uniter or try -- you know, I'll be able to bring people together, I'll be able to do things that other won't. This is deeply divided, Republicans and Democrats right now. And even with the Republicans, there's division.
If you were president, how would you handle this debate differently? Not what's your position, but how would you get a resolution? Because we're up against a deadline.
CAIN: First of all, I never would have allowed this to become a crisis. That being said...
VAN SUSTEREN: How?
CAIN: If a year ago, this president had taken the leadership position, he could have, at that time, made sure that we could pay the interest on the debt, make sure that we pay our military and our military families, make sure that we pay Social Security recipients and make sure we pay the bills for Medicare and Medicaid. Everything else would have been on the table. That's when you're forced to make the hard choices.
That's what I would have done a year ago, and it wouldn't have been as painful. Today, it's going to be more painful to do the same thing, but I still think you can do it.
VAN SUSTEREN: How? How do you -- how do you get the -- I mean, if you're the Republican president and you're trying to get the Democrats to agree -- because this is really a divide in ideology in many ways.
VAN SUSTEREN: This isn't just a grudge match. This is ideology.
VAN SUSTEREN: How do you fix this?
CAIN: Here's how you do it. OK, after you do the four things that I talked about, the next step is you go by agency by agency by agency and do a deep dive and identify programs. Some programs, some agencies you may have to cut 80 percent. Some programs you may have to -- some agencies you may have to cut 30 percent. This is the way you go about doing the cuts, not an across-the-board, where every member of Congress, all 535, are going to defend their favorite project. No. The president has to take leadership on this issue.
Now, that being said, what I would do if I were him right now, is to go to the American people and tell them the truth and put everything on the table. He's not putting everything on the take, like how about furloughing some federal employees? He's using scare tactics to try and force a decision or force a result that the American people don't want.
The American people, I hear them every day. They don't want to raise the debt ceiling because they believe that that is a charade. And they don't want to raise taxes.
VAN SUSTEREN: Care to predict what's going to happen come August 2nd? Are we going to have debt ceiling raised in some deal or not?
CAIN: I hate to make a prediction, but it does...
VAN SUSTEREN: We're all guessing here in this town tonight!
CAIN: ... but it doesn't look good. If I had to make a prediction, I'm going to predict it's going to be stalemate. And as a result, they will raise the debt ceiling. The Republicans will hold the ground on not raising taxes. And then the president is going to blame the Republicans because he's going to hold Social Security hostage.
VAN SUSTEREN: And the question is ,,,blame the Democrats. It's equal opportunity blame. All right, now, one of the things that in -- you know, people -- Democrats are thought to focus on the lower class, the poor people, and the middle class. Republicans are thought to focus on middle class and the rich. I've always thought you need to focus on all three.
VAN SUSTEREN: It's a three-legged stool.
VAN SUSTEREN: What could you do to inspire people who are in the inner city? Because they really need help. They need inspiration. And they need -- the need something to -- we need to do something about these cities.
CAIN: First you got to start with the national economy, which I have a two-phase economic vision. The first phase is to lower corporate and personal income tax rates to 25 percent maximum, suspend taxes on repatriated profits, take the capital gains rate to zero. That's phase one. And you make them permanent.
Now, specifically for the inner city, empowerment zones. This was a concept that had been talked about years ago but it was never implemented.
VAN SUSTEREN: Jack Kemp did that.
CAIN: Exactly. Jack Kemp did that, and he was absolutely right. If we do it the right way, I believe that in addition to these tax changes that I've talked about, which is going to put fuel in the economic engine, empowerment zones is how I propose that we do something about these inner cities that have been devastated.
VAN SUSTEREN: Mr. Cain, thank you very much. Hope you'll come back. It's going to be a long election season. Thank you, sir.
CAIN: Thank you, Greta.