This is a RUSH transcript from "The O'Reilly Factor," September 16, 2011. This copy may not be in its final form and may be updated.
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BILL O'REILLY, HOST: Continuing now with our lead story: fear in American over the terrible economy. Joining us from Washington, Tom Friedman, columnist for The New York Times and author of the brand-new book, "That Used to Be Us: How America Fell Behind in the World It Invented and How We Can Come Back."
Mr. Friedman, first of all, are you surprised that the Obama administration's top-down big economic policies have failed?
TOM FRIEDMAN, COLUMNIST, NEW YORK TIMES: Well, you know, Bill, from the very beginning of this administration, and the recession really starting the Bush years, you know, my argument has been we cannot bail our way out of this. We can't stimulate our way out of this. Ultimately the only thing we can do is invent our way out of this. We need start-ups, not bailouts. And, you know, I'm not an expert on stimulus and how much jobs it produced and how many it didn't. Ultimately though my focus has been, Bill, on how we get more people starting companies. That's where jobs come from.
O'REILLY: But that's where the diversion of opinion comes.
O'REILLY: Some people believe the private sector has to be let loose to do that through tax breaks and incentives. And then the liberals say no, the big government has to do that through stimulating directly into the free marketplace.
Now, your paper -- and you don't represent your paper -- but editorially it was big on let's go big government, let's just cut it in as many -- you know, the argument was well, the stimulus didn't work because it isn't big enough. That's Krugman.
FRIEDMAN: You know…
O'REILLY: It wasn't big enough. We should have doubled the debt. And then, Americans are now getting scared because of the $14 trillion debt that you point out in your book rightly is eroding our power everywhere.
FRIEDMAN: You know, Bill, I think what we need to do right now, and this has really been -- it's the argument of the book and the argument of my column. We need to do three things. We need to cut spending. We've made promises we cannot keep. The same time I think we do need to raise revenue because we also need to invest in the traditional pillars of our success. We need to do all three of those things at once. One of the things we found in doing the book, we went around to manufacturers in this country. And it's hard to find one who doesn't tell you I can't find workers to do the kind of high-skilled things we need. And that's why so much of the emphasis on our book is on education.
O'REILLY: OK, let's look at that then.
FRIEDMAN: But once -- can I -- one point. See, my view, Bill, we are in a long-term problem. This didn't just start in 2008 and that's really the argument of the book.
O'REILLY: Well, the education system -- and the public school education system in America has been declining for many years.
O'REILLY: Although there is an elite group of schools that turn out very, very bright people.
O'REILLY: Inner-city schools in particular, and I taught in one so I know what I'm talking about, are in trouble.
O'REILLY: But right now you have $10,300 invested in taxpayer money in every single public school student in this. That's an enormous amount of money, a record breaking amount of money. Bush starred it with a "No Child Left Behind" and Obama has continued it -- $10,300 a year for every single American student. I'll submit to you and you say we need more. I say no, we don't need more. The problem here is bad parenting. That's why these students are falling behind because their parents are lazy, derelict. They put them in front of the computers all day long. They don't encourage reading. They don't discuss things with their children. And for a teacher, it's very hard to overcome that.
FRIEDMAN: Well, you know, as you know in the education chapter in our book, we say this is a collective problem. My wife is a school teacher. My daughter did Teach for American as a school teacher in D.C. We talk about this a lot. Clearly, you know, I think the reform efforts like we've seen in D.C. and other parts of the country to find better teachers and to incentivize them better and to win off the battle is important.
O'REILLY: And what happened to Michelle Rhee who did that? What happened to her?
O'REILLY: The school superintendent in D.C. She was fired by a liberal mayor…
O'REILLY: …who wanted to control the school system. So you're in a big battle there.
FRIEDMAN: But her successor – yes, but her successor, who really follows her beliefs, was kept on. But Bill, the important point we also add in our book is, as you know, we say exactly we need better teachers, we need better neighbors, we need people already to be concerned about the schools in their neighborhood whether they have kids in them or not. We need students ready to come to school to learn…
O'REILLY: Yes, I know, but you can't force parents to be responsible. And that's always where it breaks down.
FRIEDMAN: Well, I that's a -- that's a leadership issue. And you know, obviously you can't. There's many factors that go into it…
FRIEDMAN: …but this is a collective problem.
O'REILLY: I understand that but the solution isn't pouring more money into it because people's property taxes are killing them and they can't pay any more money on property taxes.
FRIEDMAN: Bill, that's true, but at the same, you know, Bill, if you look at some of the schools in some of our impoverished neighborhoods, OK.
O'REILLY: Well, make them special enterprise schools. I'm for that but you can't raise any more taxes on the folks. I went over this last night. I hope you saw it. You can't tax the folks anymore. And Obama is saying, oh, yes I'll cut the payroll tax. Well, fine. They just raised the tolls in New York City to $14, OK? You can't do it anymore. Everybody is up to here.
This brings me to your gasoline business and here you go absolutely crazy, Mr. Friedman. $4 gasoline is killing the working man, killing the working man. You want to raise it higher because you don't want to consume gasoline. I understand that but we don't have any other alternatives. They've tried. They don't work. It's not here yet. You can't add more gasoline tax.
FRIEDMAN: Well, Bill, you know, first of all, we're going to have to cut something, all right? Now, do you want your Social Security cut? You want your Medicare cut?
O'REILLY: I'm not even going to take my Social Security.
O'REILLY: I'm lucky enough where I'm going to give it right back to the government.
FRIEDMAN: You and I maybe have that advantage. But a lot of people don't.
FRIEDMAN: And so we're going to -- Bill, we've got to get revenue from somewhere.
O'REILLY: You can get revenue if you flat fair tax it. That's the way to it, not gut -- not gut the working man.
FRIEDMAN: Yes, right.
O'REILLY: Not paying -- make him pay more in gasoline, more in tolls, more in this, more in that. That's got to stop.
And finally in the "Talking Points Memo," the anger. Do you understand the anger growing in America? And unfortunately President Obama is going to -- is going to take that anger.
FRIEDMAN: I'm from the Midwest. I get the anger, believe me. I feel some of it myself.
O'REILLY: Your odds of him being re-elected?
FRIEDMAN: You know, I think whether the president gets re-elected will depend I think entirely whether he can come up with a program for cutting spending, raising revenue and investing in our formula for success that the people believe is credible.
O'REILLY: All right. Well, he better hurry up, Mr. Friedman. That's all I can say.
O'REILLY: The book is "That Used to Be Us." We appreciate you coming on tonight.
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