Interviews

Presidential Candidate Gary Johnson: Don't Raise the Debt Ceiling

2012 GOP presidential candidate on debt crisis, balancing the budget

 

This is a rush transcript from "Your World," July 25, 2011. This copy may not be in its final form and may be updated.

NEIL CAVUTO, HOST OF "YOUR WORLD": All right, you might not say it's tied directly to the debt talks, or the lack of them here, but gold has hit a record today at over $1,600 the ounce -- $1,612, more to the point, up almost $11 the once today.

Typically, when folks are getting nervous, they tend to park their cash in the precious metal, less so in stocks. And certainly the stock market down about 88 points today, down, but not meltdown.

But Republican presidential candidate former New Mexico Governor Gary Johnson says, the meltdown not withstanding, if it were to come to pass, it would be greater if we keep kicking the can down the road.

Governor, good to have you.

GARY JOHNSON, PRESIDENTIAL CANDIDATE: Great to be on here.

And, really, I -- the opportunity here is to stop printing money. So, I would not raise the debt ceiling. And for all the -- all the chaos that will ensue, all the problems that will go along with this -- and I don't want to minimize that -- this is something we could deal with now, as opposed to later.

And I'm in the camp that believes we are going to have a monetary collapse. And that will be the bond market that collapses, simply because there's no repaying $14 trillion in debt, given our current deficit this year, last year, the year before, years going forward.

CAVUTO: You say there's greater hell to pay, Governor, sort of passing the buck than -- than not.

JOHNSON: I think there could -- that it could be a situation that we are going to not be in control. We're in control...

CAVUTO: Can you do both? In other words, can you get an extension, then resolve yourself to fix this? Or you say we have been there, done that?

JOHNSON: You -- you -- you...

(LAUGHTER)

JOHNSON: Well, been there, done that. How many times have we have seen that played out in our lifetimes, where this is the last time that we are going to raise the debt ceiling, when the reality is, is I can't tell you how many times I have seen that play out.

Republicans control the House. Look, Republicans may not control anything in the future. This is certainty. The certainty is, we could actually bring this to bear now. And by bringing this to bear, stop printing money and deal with a balanced budget now, as opposed to what I just think will be calamitous down the road.

CAVUTO: It would be pretty calamitous, as you say, if we...

(CROSSTALK)

JOHNSON: Now. Now, yes, yes, yes.

CAVUTO: And the argument is that interest rates could rise a lot. Things could get very, very messy, maybe for quite a while. You still say that would be preferable than the alternative?

JOHNSON: I think the markets are really ahead of all of us when it comes to all this thinking. And, certainly, a lot of this has to be discounted into it.

(CROSSTALK)

CAVUTO: Do you really? Because, if they have this factored in...

JOHNSON: Well, we're not -- we're not -- first of all, we're not going to default on paying back interest on the debt.

CAVUTO: No, I know. You're saying in the event of a downgrade, right, and something like that.

So -- but I don't think the markets have factored that in. Or have they?

JOHNSON: Well, who is to say? I go back to 2008, when the market drops 800 points, and all this conjecture over, well, Congress failed to act -- then they acted.

CAVUTO: We should just say you are talking about the first time Congress rejected TARP under then President Bush.

JOHNSON: Right.

(CROSSTALK)

CAVUTO: ... fell about 770 points.

JOHNSON: Right. So -- so...

CAVUTO: The market could lead this again.

JOHNSON: Well, sure. But it happened. And if -- if that were the end-all, if that were the fix, why, the markets would have recovered 800 points immediately, and they didn't.

CAVUTO: Good point.

JOHNSON: So, I just -- like I say, markets are one thing. Certainty is another thing. Here's a chance for politicians to actually create certainty, and certainty -- you know, a sound monetary system, a sound dollar.

CAVUTO: But you have argued we -- we are probably not been deserving that AAA rating, right, for a while...

JOHNSON: Well...

CAVUTO: ... because we have skated past this for years.

JOHNSON: Well, we have been talking about this I think for years, that this is a -- this is a downgrade that should happen, will happen.

Recent statistics, the -- the Federal Reserve was buying up to 70 percent of our own debt. So, you know, borrowing is one thing. Printing money is another thing. And we're printing money. That's what we all need to recognize. And when it goes to 100 percent printing money to actually buy up our own debt, why, that's the -- that's the monetary collapse.

CAVUTO: The argument for doing something like this is, you know, the "genie out of the bottle" argument not withstanding, Governor, and that it is hard to put that back in when hell comes furious, is that it will -- we will be forced to be disciplined.

Do you buy that?

JOHNSON: Well, force. Let's force it now. Let's -- let's make -- let's force it now. Let's not raise the debt ceiling. Let's deal with this, as difficult as it is -- as it is going to be. And I don't want to downplay just how difficult it is going to be.

CAVUTO: Even if it means raising taxes as part of a deal to forcibly raise...

(CROSSTALK)

JOHNSON: I don't -- I don't think it is a matter of raising taxes. I would not advocate raising taxes.

I'm advocating on the side of the fair tax, which would eliminate business-to-business tax, eliminate the corporate tax. I think that it really reboots the computer, reboots the American economy for decades of real growth, back to fair tax, eliminate the income tax, eliminate the IRS, one federal consumption tax, simplify, fair, encourage savings.

CAVUTO: Good stuff, all.

Governor good seeing you again.

JOHNSON: Neil, thank you very much for having me on.

CAVUTO: Gary Johnson.

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