This is a rush transcript from "Your World," October 5, 2011. This copy may not be in its final form and may be updated.
NEIL CAVUTO, HOST OF “YOUR WORLD”: Cain rising. There’s a brand-new poll out today you might have heard something about that Herman Cain, yes, Herman Cain, is tied with Mitt Romney for first place among Republicans vying for the presidency of the United States. Texas Governor Rick Perry coming in at 12, but is all this momentum too much to keep up?
CAVUTO: Do you worry that the bubble bursts?
HERMAN CAIN (R), PRESIDENTIAL CANDIDATE: No. And here’s why. Let’s start with that Florida straw poll. It sent two real clear messages.
Number one, the voice of the people is more powerful than the voice of the establishment media. You and I both know that the mainstream establishment media was trying to make it into a two person race, governor against governor. That’s all we heard about for about...
CAVUTO: It was all Mitt Romney and Rick Perry.
CAIN: Romney and Perry. That’s all -- it was dominated for two weeks.
Then, the week of the debate, Romney and Perry, then we went to Florida, trying to influence the outcome of the debate. They spent a considerable amount of money.
We rented a bus, went all over the state and talked to people, laying out...
CAVUTO: It looked like a very nice bus.
CAIN: It is a very nice bus, OK?
I know how to go in style with buses.
CAVUTO: All right.
CAIN: All right?
We rented a bus, went all over the state talking to people, saying here’s what I would do relative to the economy, 999. We’ll come back to that.
Here’s what I would do about solving Social Security instead of talking about we need to do something for it. Here’s what I believe we need to do on illegal immigration. Here’s the approach that I think we need to use for foreign policy.
I’m giving people specific solutions to problems and it’s resonating because they all are based upon my common sense approach. That’s what I believe is happening.
The other thing that happened in Florida is that I didn’t just wait until debate week to go down, I have been speaking in Florida since last fall, Lincoln Day Dinners, rallies, Americans for Prosperity rallies all over the state.
CAVUTO: Yes, but back then, they thought you were sort of this anomaly...
CAIN: They thought I was...
CAVUTO: ... this sort of sensation.
CAVUTO: But now, something has changed.
CAVUTO: I don’t know whether it started with the 999 Statement or the fact that you were direct and you -- you didn’t, you know, fumble in -- in these debates, as did Rick Perry.
What has happened to him, though, because his loss has been your gain?
CAIN: You are right. The debates have been my friend. I mean even in the ones that I personally didn’t believe that I did as well as some others; overall, I have had a solid performance. I have been able to answer the questions and deliver something specific in almost every answer.
And people are starting to see that.
Here’s what I observed with Governor Perry. I don’t think he took the debates seriously, in all honesty. When you go to the second debate and you’ve been talking about your jobs record in Texas and then when Bret Baier says, well, what’s your national jobs plan, that’s the biggest domestic issue we have.
And to have a response, well, I don’t have one yet, we’re working on it, is not good enough for the American people.
I put my plan...
CAVUTO: Do you think he’s finished?
CAIN: Now, I wouldn’t say that. But it is going to be very difficult for him to overcome the fall that he has experienced because of a lot of controversy relative to providing in-state tuition for children of illegals. Conservatives don’t like that position. He’s not real strong on the need to further strengthen the border. Conservatives don’t like that position. And then to not have a real jobs plan when you’re supposed to be Mr. Jobs, this is what the people are saying.
So I think all of that has hurt him.
CAVUTO: He got in a heap of trouble for saying the actions of Ben Bernanke were treasonous. This was the first brouhaha, just as he was launching his campaign.
CAVUTO: But you’ve been a critic of the Federal Reserve. You haven’t used terms like treasonous or what have you, but now we see Ben Bernanke back at it, Herman, promising something -- you know how this crowd goes, give us some quantitative easing three or whatever, anything to help us out. And they were jumping for joy, reversed what looked like a bear market.
CAIN: The problem with the Fed is that they are not working on the right problem because the administration is not working on the right problem.
CAVUTO: What would -- what would and should the Fed do?
CAIN: First, we must grow this economy. This administration has failed. A trillion dollars wouldn’t do it. Now he wants to spend $400 and -- another $450 billion. It will not work. The actions of the Fed, they are trying to get creative to make up for the failure of this administration’s policies.
Secondly, what’s happening now that wasn’t happening in the ‘90s when I served on the board of the Fed, in the 1990s, people from other countries were lining up to buy our debt.
Today, they are cooling off on buying our debt, which is why Bernanke and the Fed are coming up with all of these creative ways to prop up the failures of the policies of this administration and trying to...
CAVUTO: But they’re...
CAIN: ... prop up...
CAVUTO: ... there...
CAIN: ... the...
CAVUTO: ... there...
CAIN: ... the Treasury Department.
CAVUTO: ... are many in the markets, Herman, say he’s the last adult standing, he’s the only one at least trying to get something done because of the -- the fiscal stuff you -- you talked about.
Hardly treasonous behavior.
What do you say?
CAIN: I don’t think it’s treasonous.
CAVUTO: But Rick Perry says he would not appoint him again. He would fire him.
What do you say?
CAIN: Well, I would not appoint him, either. I would also fire him, within whatever the powers I had as president. I already have some people in mind that I would replace him with...
CAIN: ... and his -- I can’t give you his name yet because I haven’t gotten him to say yes yet.
CAIN: I have somebody...
CAVUTO: So you have someone in mind for the Fed?
CAIN: I have someone in mind for that job as we speak.
CAVUTO: Well, was it something you announced during the race or...
CAIN: I will...
CAVUTO: ... until you become president?
CAIN: I will -- no, I will announce it during the race as soon as I have confirmed. I don’t want to compromise his identity until I know for sure.
CAVUTO: Is he a Wall Streeter?
CAIN: No, he’s not a Wall Streeter.
CAVUTO: Is he a restaurant guy?
CAIN: He’s not a restaurant guy.
CAVUTO: Tell me it’s the White Castle dude.
CAVUTO: If it’s the White Castle dude, tell me.
CAVUTO: All right, so...
(LAUGHTER)CAVUTO: ... all right, so that’s -- that’s...
CAIN: That is something that I have to keep. That is something that I have to keep under wraps for now, OK?
But here’s the -- it’s not treasonous. I think that word was too strong. I think it was ill-advised.
Here’s what you need to do in order to get the Fed back on track, in my opinion.
As you know, back in about the mid-1970s, Congress gave them the ability to use monetary policy to try to keep unemployment down...
CAIN: ... and price stability. That’s like trying to hit two targets with one arrow. It doesn’t work. Get rid of that second target. The Fed worked best, throughout its history, when it just had to focus on price stability and sound money.
Now, why didn’t this come up -- become a problem in the ‘90s?
Real simple. In the ‘90s, we didn’t have a $14 trillion national debt. We have a $14 trillion national debt. People -- the people are cooling off on buying our debt. That’s a problem. And in the ‘90s, the economy was growing at 4 or 5 percent.
CAVUTO: But it -- our debt is going to grow, at least initially, even under your 999 plan -- 9 percent personal flat tax, 9 percent corporate tax, 9 percent sales tax. Everyone likes the sound of it. I like just the sound 999.
CAVUTO: It’s very easy for me to comprehend.
CAVUTO: But here’s -- with any tax cut, as you know, as a pretty savvy businessman in your own right, before you make money, you have to spend money.
CAVUTO: In other words, before you see some bang for the buck, you have to lose some bucks. So those taxes go down. The deficit and debt gets temporarily worse, right?
CAIN: We expand the base. Because we bring in the sales tax component, we...
CAVUTO: And the sales tax is going to make up for everything else you’re losing?
CAIN: Yes. This is designed -- the way we came up with the nine is what rate do we need on those three components to make it revenue neutral?
This is how we calculated the 999. It wasn’t just some number that was made up.
So, no it is intended to be revenue neutral because of the replaced payroll tax, a capital gains tax, corporate income tax, personal income tax and the death tax. All of those...
CAVUTO: With all that money in the underground economy, no, I see the wisdom of that.
CAVUTO: It comes out. That -- that’s fine.
CAVUTO: Many of your critics, Herman, have looked at that and said, well, it’s unrealistic; it can’t be done in this environment. We have an established tax code. Say what you will, the other guys are sort of lowering those existing rates.
CAVUTO: But Herman is going off into Never Never Land.
CAIN: What those other guys are doing is that they are swapping out one set of loopholes for another set of loopholes.
CAVUTO: All right, the pizza guy is doing well. As I said, he is tied with Mitt Romney among Republicans vying to become the next president of the United States, so the guy once dismissed hardly dismissed anymore. We shall see.
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