Rep. Paul Ryan Rips Obama's Jobs Plan; Herman Cain Defends His '999' Tax Proposal

The following is a rush transcript of the September 18, 2011, edition of "Fox News Sunday With Chris Wallace." This copy may not be in its final form and may be updated.

CHRIS WALLACE, HOST: I'm Chris Wallace.

President Obama takes on entitlements and wants to raise taxes on millionaires to cut the nation's debt, while continues a hard sell on his jobs plan.

With the U.S. in danger of a double-dip recession, are Republicans ready to deal with the White House?

We'll ask the man with his own plan to get the country moving, Congressman Paul Ryan, chairman of the House Budget Committee.

Then, fresh off the campaign trail, a presidential candidate with his own ideas on boosting the economy. We continue our series of 2012 one-on-one interviews with businessman Herman Cain.

Plus, the Fox News/Google Republican Party of Florida debate is now days away. We'll ask our group if top contender Rick Perry can cement his status Thursday as front runner or is in danger of flaming out.

All right now on "Fox News Sunday."

And hello, again from Fox News in Washington.

On Monday, President Obama will announce his plan to cut the nation's debt and pay for the job's program. And we're now hearing he will propose a minimum tax rate for millionaires as part of the package. But will Republicans agree to any of it?

To get an early response, we turn to Congressman Paul Ryan, chairman of the House Budget Committee and the GOP point-man on these issues. He joins us now from his home state of Wisconsin.

Congressman, while little has been confirmed, here's an outline of what the president is reportedly likely to announce tomorrow. Let's put it up on the screen -- $4 trillion in savings, at least $340 billion from entitlement reform to Medicare and Medicaid, at least $800 billion in revenue increases, including that new plan to insure millionaires pay, at least the same percentage of earnings as middle income taxpayers.

Let's start if we can, sir, with entitlements. Do you see anything

positive about a Democrat president taking on entitlements?

REP. PAUL RYAN, R-WIS.: I sure do. But I don't know if there's anything positive in this plan. I want to keep an open mind and see what it is. But from what we hear originally, it looks like it's just more price controls and reimbursement cut to the doctors and other health care providers, which simply leads to restricted access to care seniors.

Medicare already has a new the president's panel, the IPAD, starting next year, which will further price control Medicare providers. So, I think that's going to work if that's what he's going to continue doing.

The other thing, in the tax side is permanent tax increases on job creators doesn't work to grow the economy. It's actually fueling the uncertainty that is hurting job growth right now. And don't forget the fact that most small businesses file taxes as individuals. So, when you are raising these top tax rates, you're raising taxes on these job creators where more than half of Americans get their jobs from in this country.

So, what we want to see are pro-growth economics. Even the president's fiscal commission is saying, with Democrats on there, lower tax rates, broaden the tax base for economic growth, and just more nickel and dime reimbursement cuts to health care providers will simply lead to less access for care for senior citizens.

WALLACE: We'll get to the taxes in a minute. I want to stick on the entitlements for a moment. The Democrats have been hammering you part, have been hammering the GOP ever since they supported your plan, the Ryan plan, that would have created a premium support program which according to experts, some people call it a voucher plan, would have reduce -- made health care costs more expensive for Medicare recipients starting in 10 years.

Does the fact that the president is addressing any entitlement reform take the bull's eye off of the GOP's back?

RYAN: Well, it's constructive in that he's acknowledging that there's a big problem with these programs. And he has made that acknowledgment a couple of times now, saying they're going to go bankrupt if we don't do something to fix them. That's good.

So, the question then is -- what's the best way to fix them? We believe the best way to fix them is not to jeopardize the access to these benefits for current seniors. Our bill says leave them alone, don't disrupt their services and then have a new reform program for younger generations that gives them more choice, more competition, it's not vouchers. They choose among competing plans, just like they do in Medicare Advantage or the Part D benefit.

And what we do is we have a strengthened program that works like the one we have in Congress, so that it's actually something that's solvent. We actually make Medicare solvent and we don't do it by restricting access to drugs -- restricting to seniors care, like doctors and hospitals.

The problem is, what the president has said he's going to do, and what this new law does, is it puts 15 bureaucrats in charge of rationing prices to Medicare for current seniors. And that jeopardizes their care and also doesn't save the system.

So, what we've seen from the president so far -- more price controls and rationing. No plans to save it from bankruptcy.

We preserve it for current seniors and we have a new system that works like what we have in Congress that prevents the program from going bankrupt in the first place. We think that's a better idea. But I'm glad he's actually wading into the discussion. Now, let's talk about what ideas work the best.

WALLACE: Let's turn to taxes and there's a lot to talk about. I want to break it down in some bite-size pieces.

First of all, what do you think to all -- over the papers today, I guess, the New York Times reported that, first, this idea of a new minimum tax rate for millionaires to insure that they pay at least the same percentage of their money that they get their income as middle income taxpayers?

RYAN: Great. So, I guess what he's saying he's going to raise on capital at ordinary income tax rate, raising capital gains and dividends. Look, if you tax something more, Chris, you get less. If you tax job creators more, you get less job creation. If you tax investment more, you get less investment.

At a time when experts are telling us, including, I said the fiscal commission, we should lower tax rates on investment and job creation by getting rid of all of the loopholes so we can create economic growth. So, we think this is going in the wrong direction. Let's not forget that under the current law that the president has already passed, the top tax rate on individual and small businesses in 2013 goes to about 44.8 percent.

So, we have employers in Wisconsin that pay that tax rate are competing against countries that are taxing their businesses from 16 percent in Canada, almost 21 percent going in England, 25 percent in China. The world taxes their businesses at about 25 percent and he's saying we're going to tax these job creators at above 45 percent with this new tax. What it does is it adds further instability to our system, more uncertainty and it punishes job creation and those people who create jobs.

Class warfare, Chris, may make for really good politics but it makes a rotten economics. We don't need a system that seeks to divide people. We don't need a system that seeks prey on people's fear, envy and anxiety. We need a system that creates job and innovation, and removes these barriers for entrepreneurs to go out and rehire people. I'm afraid these kinds of tax increases don't work.

WALLACE: But, Congressman, this is being called the Buffett rule, because it comes after Warren Buffet, the multibillionaire owner of

Berkshire Hathaway said, I end up -- because I get so much of my money from capital gains -- I end up paying a lower tax rate than my secretary who gets her money in salary.

What about the question -- what about the question of fairness, sir?

RYAN: So, what he's saying, what he forgets to mention on that, that's a double tax. Capital gains and dividends are taxes on money that has already been taxed once before based on income. So, a person who's paying an income tax is paying the first level of tax on that money and then when you pay capital gains and dividends tax, you are paying that tax again on that money that earns it. What it does -- and we've done this before -- we have raised capital taxes gains and dividend taxes, we hurt economic growth, we stifle investment in our economy. So, if we tax investment in job creation more, you will get less of it. Like I said, this is -- this looks like to me not a very good sign, because it looks like the president wants to move down the class warfare path.

Class warfare will simply divide this country more. It will attack job creators, divide people and it doesn't grow the economy.

Go to and see a video we put that shows a common sense idea that has a lot of bipartisan support in Washington these days to lower tax rates on these things by going after the loopholes.


RYAN: People use tax shelters which we want to get rid of.

WALLACE: I got a lot to ask you. I don't mean to interrupt but I have a lot to ask you about, Congressman.

Let's take a look at the big picture on taxes. The President Obama is proposing almost $500 billion in increased revenue to pay for his job's plan. We're told, he's likely to propose at least another $800 billion in increased revenue as part of tax reform as deficit reduction.

Are you saying that Congress -- and I am talking about the Republican-controlled House -- won't go for any of it?

RYAN: You already have a $1.5 trillion tax increase coming in current law starting in 2013. Now, we're talking about another tax $1.3 trillion tax increase on top of that? I mean, he is giving us a stimulus bill which is basically like the old stimulus bill, just half as large. Temporary tax rebates with increases, and then another tax increase on job creators and successful businesses in addition to that? Why on earth would we go with that? Especially when the problem is spending.

We want to cut spending. We want to reform these entitlement programs. And if we do it the right way, it doesn't jeopardize seniors. And we want to have a tax system that is not designed on picking and choose winners in society, but on encouraging investment and job creation and economic growth.

WALLACE: But, Congressman, what you're basically saying is the supercommittee, the 12 members of the House and the Senate who have been charged with coming up with another $1.2 trillion to $1.5 trillion in deficit reduction by Thanksgiving, you are basically saying there's going to be no bargain, there's going to be no compromise.


WALLACE: Let me just finish -- because the Democrats are demanding more revenue be part of it. I'm not saying they're right or wrong. But that's what they are saying.

But if you don't get, then you got these automatic triggers which include $600 billion in automatic cuts to the Pentagon.

RYAN: The president has proposed about $13 trillion in new debt in his budget, more or less his core budget. Clearly, we can cut $1.2 trillion dollars. The president is planning on spending $46 trillion over the next 10 years. It can't be cut $1.5 trillion or $1.2 trillion from that. That shouldn't be that tough.

So, we see the supercommittee as an opportunity to get a down payment on debt through spending cuts. Where I thought we had a shot at bipartisanship -- and this new rhetoric to second-guess myself, was on business tax reform. President says get rid of the loopholes, lower the tax rates, make us more competitive. A simple system that helps us compete, that's what I was hoping we could get. And I thought the

supercommittee might have been a good vehicle to do that.

But if we are just going to do class warfare and trying to get tax increases out of this, and I don't think much will come of it. But if we come together and get a $1.2 trillion to $1.5 trillion spending cut, then I think we have a shot at actually getting something done. We should hold our expectations down on the select committee and let's just get another down payment on debt. There's so much spending that needs to be cut.

And I just clearly think we can come to consensus on this much. We propose $6.2 trillion in cuts in our budget. Clearly, Democrats could work with us and get $1.5 trillion.

WALLACE: Let me switch subjects on you. What do you think of the chances of the country is headed for a double-dip recession?

RYAN: The economist tell me it's about 50-50, because of all this uncertainty, they don't know what the tax regulations are going to be, you got 219 new expensive regulations on the table coming from the Obama administration to economy this year, you got and a massive tax increase coming in 2013. And now, these two proposals, the permanent tax and stimulus, and this new proposal for more tax increases, I think that just helped shoot down our economy.

And then you got all these European problems which could wash over on our shores.

And so, I do not think the president is not doing what we need to do to grow this economy.

WALLACE: OK. So, let's do a quick check list if we can of the president's jobs plan. Money to build roads and bridges, the so-called "shovel-ready projects." Are you going to go for that?

RYAN: Well, they're not shovel-ready, number one. But we are going to do a new highway reauthorization. And so, that's the normal course of business. But we don't want to do it with all this borrowed money.

So, we do believe infrastructure is good and we're going to fix this, but we don't think that's going to work. If you want to do the rightful shot, the temporary tax rebates -- we tried that in the Bush administration, they failed then, too. And when you pay for them with permanent tax increases, they don't work.

And we just don't think we should be bailing out state governments when the federal government's budget is even in worse shape than the state governments are.

WALLACE: So, not to infrastructure as part of the jobs plan and no to aid to the states to keep first responders and teachers on the payroll?

RYAN: That's the constitutional responsibility of state governments, not the federal government. This should not --

WALLACE: And how about these -- I just need to go through this quickly with you, sir. How about those payroll tax cuts? How about the retraining for long-term unemployed?

RYAN: So, I -- the Georgia plan sounds interesting. I think that's something we are looking, which is an unemployment reform. The temporary tax rebates, like I said, Chris, I'm all for letting people keeping their money. But this particular idea was tried in the Bush administration, earlier in the Obama administration. It hasn't worked, and especially when you're taking these temporary tax rebates and paying for them with permanent tax increases, that is actually self-defeating.

So, we just don't want to go with ideas that have already proven to fail. We want to advance solutions that are proven to work and these don't do that.

The president said business tax reform and trade agreements in the speech. We think those helpful for job creation. But he didn't put any of these ideas in the bill he sent us the other day.

WALLACE: President Obama has been going around the country selling his job's plan over the last couple of weeks. And he said if your party blocks his plan, that he will blame the GOP for the continued unemployment.

Let's take a look at the president.


PRESIDENT BARACK OBAMA: It's time for the people you sent to Washington to put country before party, to stop worrying so much about their jobs and start worrying more about yours.


WALLACE: Congressman Ryan, can he pull a Harry Truman and campaign next year against a, quote, "do-nothing Congress"?

RYAN: We passed a budget that balanced the budget, pays off the debt, reforms that tax code by getting rid of loopholes and lowering tax rates. We passed regulatory reform. We passed new energy development to explore domestic energy production.

We have passed so many bills out of the House to create jobs and they are sitting over in the Senate. And so if he wants to run against the do-nothing Congress, he should focus it on the do-noting Senate Democrats. It is 817 days since they bother to try to pass a budget.

We have passed ours on time.

And so, I think we should take a look where the problem is in Congress. I would argue at the senate. Not doing a budget two years to me is just ridiculous.

So, we have a difference of opinion on what -- how best to fix these problems. But when the president does things like this, it leads to believe that he's not in bipartisan consensus making mood. He's in a political class warfare mode and campaign mode. And that's not good for our economy.

WALLACE: We got less than a minute left, Congressman Ryan. And I want to ask you one last question, and that's about Solyndra, the solar panel-making company that got a loan $535 million federal loan guarantee from the government, as part of the first stimulus plan. The company just bankrupt, laying off 1,000 workers and leaving taxpayers footing the bill.

Less than a minute, what's the lesson of Solyndra, sir?

RYAN: There are billions more of this exact kind of spending that came out of the stimulus that will produce these results we fear. This is industrial policy and crony capitalism at its worst. It's exhibit A for how this kind of economic policy doesn't work.

We shouldn't be picking winners or losers in Washington. We should be setting the conditions for economic growth so that the private sector can create jobs. Washington is not good at picking winners and losers, so we shouldn't try.

WALLACE: Congressman Ryan, we're going to have to leave it there. I want to thank you for joining us tonight. It's always a pleasure to talk with you, sir.

RYAN: Thank you, Chris.

WALLACE: Up next, presidential candidate Herman Cain on his 9-9-9 plan to jump-start the country.


WALLACE: The Republican presidential race is at a crucial stage with the Fox News/Google Florida GOP debate set for next Thursday.

We continue our 2012 one-on-one series of interviews now with a candidate looking to move up in the polls.

Herman Cain, welcome back to "Fox News Sunday."


WALLACE: You heard my discussion with Paul Ryan. Let's talk about some of the president's various plans.

Let me ask you specifically -- what do you think of this idea of a minimum tax on millionaires to make sure they pay at least the same percentage of their earnings, their income as middle income taxpayers?

CAIN: Bad idea as Representative Ryan said. You tax something more, you get less of it. I couldn't say it better than Representative Ryan. It's a bad idea. Secondly, if you were to tax the millionaires more using that bad idea, it still doesn't solve the problem of how to reduce the spending. So, that's just class warfare flowering in my opinion and it's not going to help.

WALLACE: What do you think, generally speaking, of the president's deficit reduction plan?

WALLACE: We don't know all the details, but apparently he is going to address entitlements. Not sure how deeply. But he is going to address entitlements. He's also going to ask supposedly at least $800 billion including this millionaire's tax, in new revenue.

CAIN: Right. The speech that he gave was supposed to be a jobs plan was not a job's plan. He put one little thing in there which was to take the pay roll down 50 percent for the employer and employee. That is just small potatoes compared to what the big problems. My anticipation along with a lot of other people that when he comes out saying how he is going to pay for it, it is going to be filled with more tax increases including what I call sneaker taxes.

When Obamacare passed, a lot of people didn't realize that that was a 3.8 percent surtax hidden into the health care legislation. And so it's going to be a hodgepodge of taxes and sneaker taxes and to try and make up for the $450 billion that he wants to spend.

WALLACE: Do you give him credit for at least putting, and I know this was a bit criticism of him during the debt debate, that he wasn't putting specifics on the table about entitlements, Medicare, Medicaid? Do you give him credit for -- that he's going to have something specific about that?

CAIN: If he puts some specifics out there, I will give him credit for it, but I can't get excited about the president saying he's going to be specifics on the table until we actually see the specifics, because too often we heard a lot of promises but we didn't get the specifics that I believe most people were looking for.

WALLACE: You talk about the fact that you are a businessman. You come from a different sector than all these politicians. What about the argument that you hear from top officials in the economic side like Fed chairman Ben Bernanke and top economist in the private markets who say yes we do need long-term deficit reduction, but in the short-term if all you do is cut spending, that is going to be a drag on growth it is going to drive this country into a double-dip recession if we're not already headed there?

CAIN: We are headed to a double-dip recession. See the discussion has been mostly about, you know, whether you cut spending and where do you spend more? The Democrats want to spend more and that puts the Republicans on the defensive of trying not to spend.

My focus is growth. That should bring everyone together. If we focus on getting serious about growing the economy, which this president is not serious about growing the economy, because he is not using fundamental economic guiding principles. The biggest one that this president and the administration have no clue, quite frankly, is that the business sector is the engine that drives economic growth. That is one of the guiding principles for the plan that you mentioned that I have put on the table called 999.

WALLACE: We're going to get to that in a minute.

CAIN: But my point is the business sector, this president continues to come up with ideas that's going to punish the business sector, that's going to slow down the business sector, and as Representative Ryan mentioned it's going to create more uncertainty for the business sector.

We don't even know what the tax rate structure is going to be in the beginning of the 2013 and that's less than a year-and-a-half away. Uncertainty is killing this economy, Chris.

WALLACE: But what about the idea that the president is offering let's cut the payroll tax rate not just for employees but for employers as well. And we'll give a tax credit for businesses that hire, small businesses, that hire new people or give a raise to people already on the payroll?

CAIN: Cutting the payroll tax by 50 percent by employers and employees is too little too late. It's not deep enough.

Plus if you only do that and you don't cut the top corporate and personal tax rates, like I have proposed prior to my new plan, and if you don't suspend taxes on repatriated profits, you really have not provided any boost. So, yes, he took a little -- he's put his toe in the water on that, but he didn't really go far enough. It is still, still mostly with more spending, more trinkets, more things in the tax code that the business community, quite frankly, can't get excited about.

WALLACE: Before we get to 999, your plan, I want to ask you one

other question -- Solyndra, the solar panel manufacturer, got half billion federal loan guarantee just went bankrupt, laid off a thousand workers and we the taxpayers end up footing the bill.

CAIN: Right.

WALLACE: Do you think this was a good faith effort on the president's part to boost, maybe misguided, but good faith to boost the green industry or do you think he was just trying to help one of his big political supporters?

CAIN: I think it was two things. First, he was trying to help one of his political supporters. And it would have been good faith if halfway through this waste of money, they had stopped. But according to the reports that we've seen, they didn't stop and they knew that the company was going down the tubes. So I don't think it was not a good faith effort to boost this green energy business in the green energy sector. It was bad decision making and it was an attempt to select one of the losers. And as Representative Ryan said, I know I keep referring to him but he is absolutely right on, the government should not be in the business of picking winners and losers because most of the time they pick the losers. That's what the whole Solyndra thing is about.

WALLACE: OK, you are now pushing what you call the 999 plan for economic growth -- 9 percent corporate flat tax and 9 percent personal flat tax and 9 percent sales tax, but you would eliminate the payroll tax, the estate tax and the tax on capitol gains. Question, what do you think that would do to the economy?

CAIN: It would boost the economy and here's why. Think about the fact that corporations now are looking at for the next year and few months a 35 percent top corporate tax rate. To wake up and say you mean the tax rate is going to be 9 percent? That is going to inspire the business community.

Secondly, small businesses which generate most of the jobs, they are also going to be excited because it is going to treat subchapter S and S corporations the same. What the president doesn't understand, a lot of people don't understand, is when he throws around numbers like everybody making over $250,000 is going to impose another tax, he is punishing small business, because with a subchapter S corporation, if you eke out a profit, you have to run it through personal income tax and you could be penalized if you make too much money.

WALLACE: Let me ask you about this, though, you say that this plan would be revenue neutral, yet you would lose all these rates -- you would lower all these rates, you would eliminate the deductions and we'd end up with the same amount of total revenue for the government as what we currently have.

We went to your website to try to check this out. There is no explanation on your website of how you arrived at 999 or how these numbers add up.

CAIN: Here is how we arrived at it. I had some of the best economists in this country help me to develop this plan. You know, my background is mathematics. It was a simple regression analysis. We took the government data and looked at how much tax revenue from personal income tax, how much tax revenue came from corporate tax, how much revenue came from capitol gains tax, how much revenue from the death tax. We added them all up and you do a simple regression analysis and say in order to reduce this much on corporate income, personal income and national sales tax, what should that number be if we equally break up those three buckets. It was a simple regression analysis.

WALLACE: Now you say that, and you say -- and you just repeated that this plan was researched and developed by some of the leading economic thinkers in the country. Again we looked at your website, no mention of anyone.

CAIN: No, I haven't put them on there, -- the most important thing is to put the plan on there. We are following up now with an official scoring of my plan, but because the way it was derived was so simple to produce such a simple concept we didn't make that a priority.

WALLACE: All right. But let me ask you about this, because Mitt Romney came out with a 59-point plan on jobs. Glenn Hubbard who was -- is now the Dean of Columbia Business School and was the chairman of the council of economic advisers for George W. Bush wrote the forward, helped him develop the plan. Tell me the name of one of these leading economic thinkers who helped you come up with this plan.

CAIN: The chairman of my economic advisers is a gentleman by the name of Rich Lowery of Cleveland, Ohio. He worked with a couple of other people quite frankly that are well known that I'm not at liberty to mention their names.

WALLACE: Why not?

CAIN: Because they have their own independence businesses and I don't want to compromise their confidentiality at this point.

When they tell me it is OK to mention their names publicly, I will mention it. But I -- trust me, it was a couple of people that you know very well. But I don't want to compromise their...

WALLACE: But wouldn't they be proud? I mean, if this is a great plan wouldn't they be proud to say?

CAIN: They'd be proud after I get it passed. And then they would be. But no, Chris, I got some people to work -- help me go through the thinking on this that I'm not going to compromise their confidentiality at this point just to prove to people that this is a well thought out plan.

WALLACE: Well, let me just say, because there isn't a whole lot of back up, and we don't have the bona fides of a guy like Glenn Hubbard. We tried to do our own very rough analysis and you are a lot better of this idea of regression analysis than we are. It looks to us under your plan corporations and the wealthy will end up paying a considerably less than they currently do, and lower income people, particularly the 45 percent, roughly of Americans who don't pay any income tax now will end up paying a lot more true?

CAIN: No. Not true. Everyone who works pays the payroll tax, which is 15.3 percent. So even if you don't own a corporation and don't have to pay corporate taxes, your tax goes from 15.3 to --

Secondly on the national sales tax.

WALLACE: Yeah, but what about the 45 percent who don't pay income tax now?

CAIN: A good economic growth plan should not be designed to help more people not pay taxes, Chris. And let me give you the statistic as to why. 50 percent of the taxpayers pay 97 percent of the taxes. What are we supposed to do, get that number to 50 percent paying 100 percent? No. And --

WALLACE: I'm not saying it's wrong, I'm just saying though that they're going to end up paying more in taxes.

CAIN: They are going to end up paying some taxes, but not necessarily more. And here's why.

The individual taxpayer will decide how they spend their money in terms of the 9 percent sales tax. OK? Now, their behavior will determine how much tax they pay.

Only if they spend every dime that they make will they pay the full 9 percent. It will encourage savings and it will encourage people to be responsible for their own decision-making

WALLACE: Mr. Cain, we're going to have to leave it there. It is one of the new plans, one of the few new plans that's come out. And we're going to have to explore it some more.

CAIN: We will have it officially explored (ph), and I'm going to try to get my advisers to allow me to use their name.

WALLACE: Well, we would like to have them and you back on.

Mr. Cain, it's always a pleasure.

CAIN: Thanks, Chris. It's a pleasure. Thank you.

WALLACE: And we'll see you at the big debate on Thursday in Florida.

CAIN: I'll be there. I'll be there.

WALLACE: I am sure you will be. Me too.

Coming up, more on the GOP presidential contest as the new front- runner comes under heavy fire. We'll ask our Sunday group if Rick Perry can hold up to all the attacks



MITT ROMNEY, REPUBLICAN PRESIDENTIAL CANDIDATE: The question is, do you still believe that Social Security should be ended as a federal program as you did six months ago when your book came out and returned to the states? Or do you want to retreat from that?

GOV. RICK PERRY, R-TEXAS, PRESIDENTIAL CANDIDATE: I think we ought to have a conversation.

ROMNEY: We're having that right now, Governor. We're running for president.

PERRY: Yes, sir. If you let me finish, I'll finish this conversation.


WALLACE: Well, the fireworks from the last debate, when all eyes and tough words were aimed at the new front-runner, Texas Governor Rick Perry.

And it's time now for our Sunday group -- Paul Gigot of The Wall Street Journal; former Democratic senator Evan Bayh; Bill Kristol of

The Weekly Standard; and Fox News political analyst Juan Williams.

Rick Perry has been in the race five weeks now. He's at the top of the polls based on his strong record of job growth, job creation in Texas, and this visceral connection he has to Tea Partiers and evangelicals. But, as we saw in this last debate, he's also shown some real vulnerability.

So, sort of big picture, Paul, what's your take on Rick Perry?

PAUL GIGOT, WALL STREET JOURNAL: Well, he came out very strong because he can appeal to both -- to several of the different strands of the Republican coalition -- cultural conservatives, economic conservatives, based on his Texas record. He doesn't have a big foreign policy record, as he showed in those debates, and hasn't thought a lot about them, but he has the potential. But I think he's been undermining that potential with his performance in the debates.

He clearly has shown that he hasn't thought deeply about a lot of these subjects. He hasn't even defended his job's record very well in Texas. And on Social Security, he's got a vulnerability there, calling it a Ponzi scheme and a monstrous lie, which even if you're a Libertarian and you think it's technically true, is not the way to reassure voters in a way that will give them the confidence that you can reform it. And I think that's a big vulnerability for him. You see Romney going at that and saying he can't beat Obama, he's vulnerable, so go with me.

WALLACE: Senator Bayh?

FORMER SEN. EVAN BAYH, D-IND.: Well, the first observations I'd have, Chris, is it looks like the Republican Party is back to only 10 commandments. They've forgotten about Reagan's famous 11th commandment, do not speak ill of a fellow Republican. So, from a Democratic perspective, this is great. It plays right into the strategy of making it a choice between two people rather than a referendum on the state of the nation.

And Rick is going to pick up some baggage here -- Social Security, as Paul mentioned -- and this could go on for quite a while. Both candidates have money, Romney and Perry. The Republicans have gone from winner-take-all system. Many states now have proportional representation, and there seems to be a level of personal enmity between these two that could really -- he could win the nomination, but be damaged goods, and that could only be helpful to the Democratic Party.

WALLACE: Bill, Perry has problems. It's not just Social Security.

He's also got this issue where he signed an executive order, later

overturned by the state legislature, that sixth grade girls would have

to get this vaccine against the HPV virus, which causes cervical

cancer. He's also got a moderate record on immigration in Texas which

is being attacked from the right.

What should he be most worried about right now?

BILL KRISTOL, "THE WEEKLY STANDARD": I think he can handle each of

these issues. I think he can win, actually, a debate on whether Social

Security is sustainable as it now exists.

WALLACE: Well, I don't think anybody thinks it's sustainable as it

now exists. The question is, how --

KRISTOL: Well, and I think that he -- and that's not what he's

saying, and he used a little colorful rhetoric in "Ponzi scheme," but I

don't think that's going to hurt him that badly, and he can correct his

-- I think was a somewhat silly statement on Afghanistan and all that.

It really is more of a question of whether he -- when voters step back

to look at him, do they think he's up to being president? I don't think

any one of these issues is particularly damaging to him, but I do think

in the first two debates, he hasn't -- now, he's new to it, he hasn't

run for president before, he hadn't been planning to run for president

until a couple of months ago.

So he's got to show improvement over the next couple of debates. I

still think you'd have to favor him in the current field. Just

analytically, I still think he has a slightly better chance than

Romney. And it's hard to see anyone else in the current field coming

up. But this still may not be the whole field.

I think Governor Christie could well get in. I've given up on Paul

Ryan. I've given up --


WALLACE: Are we going to get another love letter to Ryan Paul?

KRISTOL: I'm reassuring you that I'm giving up on Paul Ryan. But

I've got to think if you are Chris Christie looking at this field, you

think, you know what? Maybe I really owe it to the Party and to the

country to run.

WALLACE: You know, Juan, one of the things I think is the

tremendous disadvantage Perry is at getting in the race so late, that in Romney's case, he's had five years to work out the kinks. In Perry's

case, he's in his first debate, when all these other guys have had more

experience, more training, more vetting.


been on the national stage. And I think that's his biggest liability,

is the American people just don't know him.

So I think something like the "Ponzi scheme" comment comes across to

many Americans has ham-handed and dangerous. And there's a Gallup poll

out this week that indicates it damages him with a third of Independent

voters who said they just wouldn't support someone who uses that kind of talk. And then you combine that with his talk about Ben Bernanke

-- if Ben Bernanke increases the money supply, it would be treasonous,

his talk of secession, a lot of these things that aren't really

substantial if you bore it down -- it's just words, rhetoric, maybe,

intended to feed the base. But it increases the sense that maybe he's

not ready.

And his performance in the debate, as Paul pointed out, has not been

something that's been reassuring if you've been watching. I mean,

people love his presence. He's a commanding presence on the stage. I

don't think anybody would say he doesn't belong there.

But the question is, is this someone that really can he be elected?

Would he run strongly against President Obama? And there's no

indication at this point that that's who he is.

WALLACE: Let's turn to Mitt Romney, we'd agree, the other front-

runner in this race, who this week -- and let's put it up on the screen

-- did something I have never seen before. This is an e-mail they sent

out to reporters.

They basically opened up their opposition research. They sent

reporters a list of questions, and the backup for them -- tough

questions, embarrassing questions -- to ask Rick Perry on the campaign


Your sense, Paul Gigot, of how Romney is handling the fact that he's

not alone at the top anymore?

GIGOT: Well, he is practiced at this. He shows that in the

debates. He's got a well-oiled machine.

I get e-mails constantly form the Romney campaign. I get nothing

from the Perry campaign.

But I think Romney has a problem, which is that he is playing it

safe. This may be a problem this year, because that's the conventional

-- he's not proposing a tax cut, he's not doing anything specific on

Social Security or Medicare. That's the conventional politics. Don't

take any risk, don't put any details on the table.

Is this a conventional year? I don't know.

You have a lot of Republican voters who want people to show

leadership, they want somebody who's going to say, if we win, we have to reform the government, and here's how we're going to do it. Romney is not doing that. He's playing a conventional political game in what may not be the right year to do so.

BAYH: This could be good for Mitt Romney, Chris, because if Rick

Perry is not guarded enough, Mitt Romney has been too guarded. Remember

when he was being heckled a few weeks ago and he got a little angry?

That actually brought out a sense of authenticity in him that had not

been present before, and the base of the Republican Party reacted very

well to that. So it could be that this back and forth in what appears

to be some genuine and personal dislike between the two could actually

bring out a more compelling Mitt Romney.

WALLACE: Go ahead.

KRISTOL: That could happen.


KRISTOL: But one fact. The CBS/"New York Times" poll which came

out on Friday, the one poll, the most recent poll taken, the one that

captures some of the post last Monday night's debate sentiment, has

Perry at 23 percent and Romney at 16. That's 39 percent total.

Half of the Perry and Romney voters themselves say they have

reservations about those candidates. It remains, I believe, an open

race. And there's not a front-runner of the kind --

WALLACE: Open race in the sense that --


KRISTOL: In the sense that there's no George W. Bush, there's no

Bob Dole.

WALLACE: No, no, but an open race in the sense that of the six

other people on the stage, do you see one of them --

KRISTOL: Well, no one is above seven in that poll, none of the

others. I don't totally rule out that one of them could take off a

little bit, but I think the more likely opportunity there is among -- if

you add up, incidentally, all the minor candidates, a third of the

Republicans in this poll are saying they don't prefer any of the current

candidates. So, plenty of room for Chris Christie.

If you get Chris Christie on next week, we'll have the debate

Thursday night. You'll be there. If Perry or Romney do terrifically

well, I might withdraw this. But if they don't do terribly well, get

Chris Christie on the show next Sunday, and --


WILLIAMS: Your discontent is not spread across the GOP. In fact,

since Perry has come in now, most Republicans say they are content with

the field.

KRISTOL: No. Half of Republicans and half --

WILLIAMS: Right. So it's a huge shift since Perry has entered.

You've got to give Rick Perry that much credit.

But I would say this -- that the debate, it seems to me, has created

a sense of discontent. I mean, this week we had these poverty numbers

come out. We have big issues in American society about jobs. And yet,

here they are arguing about the vaccinations in Texas for little girls

and suggestions that it causes retardation.

Just imagine -- so when you think about Republicans cheering on

death penalty issues, or saying a motorcyclist should be allowed to die

if he doesn't have health insurance, it just makes the GOP look like

they're way out of touch.

WALLACE: And how does Barack Obama look these days?

WILLIAMS: If you ask the American people about his jobs plan, most

say it's a good idea.

WALLACE: And how about if you asked them how he's handling the economy?

WILLIAMS: Ask them about Congress, Chris. You know the numbers as

well as I know them. We all know the numbers.

WALLACE: He's not running against Congress, he's running --

WILLIAMS: Obama's numbers are down and Congress' numbers are down.

BAYH: If it's a referendum, he has trouble, Chris. If it's a

choice, he's got a real chance if the Republican choice cannot appeal to moderates and Independents. These debates are pulling the Republican

field further to the right, particularly in a state like Florida, where

they may have trouble on Social Security.

WALLACE: Got to take a break here.

When we come back, can the president pass his jobs plan? And what

about all that money that went to Solyndra?



JON STEWART, HOST, "THE DAILY SHOW": This scandal would only be

exploitable if the president had made this one particular company the

poster child for the program, if he had, let's say, toured the Solyndra

facilities, or met with the CEO, or praised its cutting-edge ingenuity

in a speech that, in retrospect, will seem ill advised?

OBAMA: The true engine of

economic growth will always be companies like Solyndra.


WALLACE: Oops. Our pal Jon Stewart, joining the growing chorus of

criticism about the solar panel company Solyndra, which got a federal

loan guarantee, but has now gone bankrupt, leaving taxpayers on the hook.

And we're back now with the panel. Well, more bad news for the

president, Paul. Here he is, going around the country, pitching his

jobs plan -- some would call it stimulus 2 -- at the exact time that we

find out about this company, which got a half-billion dollars from the

first stimulus, Solyndra.

What do you think is the lesson of Solyndra?

GIGOT: Well, it's a lesson that -- whether or not there is

favoritism to be found here in giving the loan, which we may not find

out that there really was that much political favoritism. It's still --

it's not just a metaphor for the Obama policy, it is the Obama policy.

It's the idea that you can politically allocate capital, you can

have government-direct investment, and you can create jobs, you can

create wealth. And the fact is, it can't. We discovered that.

There are $39 billion worth of these Energy Department loans in

addition to Solyndra. How many jobs have they created by one measure?

Four thousand. I think that's $10 million a job.

Juan is better at math than I am, but I think that's not a lot of

jobs. So you have this, I think, wide open criticism that is available

to the Republicans to say, look, this is how they think the economy

works, it hasn't worked, here's our alternative. They ought to be

talking about the Solyndra economy.

WALLACE: Senator, as a matter of fact, I have exactly the numbers

that have come out on this. And let's put them up on the screen. It

is pretty stunning.

This loan for Solyndra was part of a $38.6 billion program to boost

green energy. It reportedly has created 3,545 jobs. That works out

exactly to $10.88 million per job.


BAYH: My understanding, Chris, is that there are other loans,

several dozen in the pipeline, that will create several thousand more

jobs. But look, I agree with Paul.

WALLACE: So maybe it works out to $6 million or $7 million per job.

BAYH: Well, my point is, I agree with Paul conceptually. The

government shouldn't be in this kind of business.

The problem with that is that the Chinese are. And we have a

decision to make as a country, do we just unilaterally disarm and say

that solar power going forward will be entirely a Chinese enterprise, or

do we try and compete with them? As long as we're involved, we have

that choice.

And the only way -- this was a mistake. An honest mistake, but a

mistake. The only way to avoid the chance of making any mistake is to

do nothing and that the Chinese control the entire market, and that's

something that would not be in the best interest of our country.

WALLACE: But is that the answer, Bill? I mean, you've got a

command and control economy in China. Are we going to try -- we don't

do that very well.

KRISTOL: Well, you also have much lower wages in China. And so, if

we're going to compete with China on simple manufacturing for solar

panels, I mean, good luck with the subsidies we're going to need for

that. I don't know that -- if the Chinese can make solar panels more

cheaply, let's by all means import them, and it will be in business'

interest to put them up if green energy is so wonderfully competitive.

I do think the Solyndra loan is a metaphor. Not just a metaphor,

but as Paul said, a kind of example of the stimulus in particular.

A friend of mine, Mike Obart (ph), said that it's bad enough to try

to pick winners and losers. The Obama administration has a particular

knack for picking losers. And then highlighting this particular loser.

And look, I'm not -- it's bad enough as policy. I'm not so sure

there isn't a real scandal here, too. You know?

And it is amazing. I mean, the official who was in charge of this

at the Energy Department, he had to recuse himself from the Solyndra --

why? Because it was his wife's law firm that represented them.

But regardless of the scandal, I do think Republicans need to make

this the example of crony capitalism. Who was Solyndra's adviser in

getting this loan from the government? Goldman Sachs. I mean, really,

the whole crony capitalism with the bailout and with the stimulus needs

to be, I think, a focus of attention by Republicans, who then need to

explain how markets really should work.

WALLACE: Juan, I have got to switch subjects on you, and I want you

to talk about the fact that the president is going to, tomorrow,

introduce his big plan to the super committee to cut the deficit, we're

told, by perhaps $4 trillion over the next 10 years, and the one nugget

that we got on the front page of "The New York Times" today, this

millionaire's tax to ensure that millionaires pay at least as high a

percentage of their income as middle income taxpayers do.

What do you think of this?

WILLIAMS: I think it's a populist appeal by the president that,

according to the polls, is a winner. I mean, most Americans think that

the millionaires should be paying more. The idea that Warren Buffett

has made himself the poster child for more equity in terms of how taxes

are paid to his secretary, shouldn't be paying more in terms of taxes

than he pays because of payroll taxes and income taxes -- he's paying,

of course, taxes on his dividends. And it's a huge differential, and

people are saying that's not fair.

If we are truly serious about addressing deficit spending, if we're

serious about not taxing people who make $250,000, well certainly you

can understand why we would tax people who make more than $1 million.

WALLACE: Paul, your reaction to the millionaire taxes in

particular, and in general, to what you are hearing about the

president's deficit reduction?

GIGOT: All old, bad ideas are new again. I mean, this is how we

got the alternative minimum tax, which now hits millions of -- I think

maybe even 10 million, 15 million -- middle class taxpayers. We got it

because in 1969 they said millionaires aren't paying taxes, so we'll put

a minimum tax on.

Sure, 21 millionaires at first. Now millions of middle class

people. That's what always happens when they say they want to tax the

rich. There aren't enough rich to go around, there aren't enough rich

to finance the deficit, so you end up hitting the middle class.

WILLIAMS: Well, then how come -- how do you justify the idea that

you would say, oh, let's go have a serious attack on entitlement

spending, which is needed in this country, without saying that the

people who have profited the most from the American system should pay

some fair share, Paul?

GIGOT: Reduce the rates and to grow the economy.

WILLIAMS: Reduce the rates?

WALLACE: Let's let Senator Bayh in.

BAYH: What we need now more than anything else in this country,

Chris, is economic growth. Capital investment is an important part of

generating economic growth. So we've got to look at tax reform that

will incent hiring people, making those investments, then have a tax

code that is equitable. But you've got to do it in that order.

WILLIAMS: But it's -- and in less than 30 seconds, it's a trillion

dollars in new revenue. Does that do what you just said? Because that's

what the president is calling for.

BAYH: Well, at this time it's not the right time to raise burdens

on people who make hiring decisions or investing decisions. But

eventually, once the economy has begun to recover, we may need to ask

people who have been successful to do more to help get the deficit down.

WALLACE: Thank you, panel. See you next week.

And don't forget to check out "Panel Plus," where our group picks

right up with this discussion on our Web site, We'll

post the video before noon Eastern Time.

Up next, how you can take part in Thursday's Republican debate.


WALLACE: And now this program note. Next Thursday, Fox News,

in partnership with Google and the Florida Republican Party, will host a GOP presidential debate in Orlando. And you can participate by going to

You can submit a video question -- and I promise, we are looking at all of them -- by clicking the "Ask a Question" video tab on the right-hand side of the page. It's easy to do.

Take a look at this one from Michael and Brandy (ph) in Spencer, Indiana.


UNIDENTIFIED FEMALE: There's growing concern among Americans about

the size and the scope of its federal government and its infringement

upon state and individual rights.

UNIDENTIFIED MALE: If you're elected president, how do you plan to

restore the 10th Amendment, hold the federal government only to those

enumerated powers in the Constitution, and allow states to govern



WALLACE: Now, if you don't want to do that, you can vote on which

of the questions already posted you would like to use.

Bret Baier, Megyn Kelly and I will be asking questions, many of them from you. Plus, Shannon Bream will be watching online polls you can also participate in while you watch the debate.

So be sure to tune in next Thursday, 9 p.m. Eastern, for the big debate with a big difference.

And that's it for today. Have a great week, and we'll see you next

"Fox News Sunday."

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