Gingrich accuses Romney of 'carpet bombing' opponents; Rep. Paul Ryan talks debt reduction

GOP presidential candidate on 'Fox News Sunday'


The following is a rush transcript of the January 29, 2012 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.

Florida gets ready to vote in the biggest contest so far in the Republican race for president.

He came into the Sunshine State riding high. But can Newt Gingrich keep his momentum going?

We'll ask the candidate about his chances for victory Tuesday and beyond. Newt Gingrich on "Fox News Sunday."

Then, congressional Republicans get ready to battle the president over his agenda for the nation. We'll get an exclusive first look at GOP plans from Paul Ryan, chairman of the House Budget Committee.

Plus, the president takes the State of the Union address out for a test drive, but hits a bump in the road. We'll ask our Sunday panel on whether the president's message will help him win reelection.

And it is winner-take-all in Florida, so stakes couldn't be higher on the trail.

All right now on "Fox News Sunday."

And hello again from Fox News in Washington.

On Tuesday, the Republican presidential candidates face their biggest test yet in Florida's winner-take-all primary. Joining us now from Tampa is one of the two front runners, former House Speaker Newt Gingrich.

And, Mr. Speaker, welcome back to "Fox News Sunday."


WALLACE: Mr. Speaker, you came out of South Carolina with a big head of steam, according to the Real Clear Politics average of recent polls. Earlier this week, you were leading Romney by seven points. But now, he's leading you by eight points. Question: what's happened?

GINGRICH: Look, Governor Romney has the ability to raise an amazing amount of money out of Wall Street, from Goldman Sachs, to all the major banks.

And he has a basic policy of carpet-bombing his opponent. He doesn't try to build up Mitt Romney. He just tries to tear down whoever he's running against, and it has an effect. And we are in a very tough campaign down here. Ironically, if you look at the three national polls this week, every place elsewhere that he can't carpet bomb, the ideas I'm representing, the scale of change I represent, the conservative movement I represent, we actually have been pulling away from him in national polls. Down here, one of our challenges, two major conservative candidates, between us, clearly beat Romney who is splitting the conservative vote. And I think that's a challenge.

I have been honored to have Rick Perry, the governor of Texas, to drop out and endorse me. Last night, I was delighted to have Herman Cain endorsed me and Sarah Palin has said very positive things. Yesterday, Rudy Giuliani compared me favorably to Reagan and compared Romney unfavorably. So, we're seeing the conservative movement start to come together.

But I give Governor Romney's campaign respect for the sheer volume of negativity that they use and the sheer amount of money they raise on Wall Street.

WALLACE: Six days before the South Carolina primary, you predicted correctly and I think you can sense the momentum there that you were going to win that race and, in fact, you won by 12 points. All right. It's two days before the Florida primary, what's going to happen in Florida?

GINGRICH: I think it is going to be very close. We had a poll a day before yesterday that we were tied. Santorum and I collectively are bigger than Romney, but Romney beats me as long as we split the conservative vote. And we have a tremendous effort underway to reach out to conservatives to get them to see that the only effective to stop a Massachusetts liberal from becoming our nominee is to vote for Newt Gingrich.

I think it's going to be very, very close. We have a good turn out mechanism here. We're very fortunate to have Jose Mallea who ran Marco Rubio's campaign. He's running our campaign. He knows the state really well.

We're going to have Michael Reagan here on Monday, along with Herman Cain. Fred Thompson has been here helping.


GINGRICH: Todd Palin has endorsed me.

So, all these things coming together, I think it will be much, much closer at these polls, we have a shot at winning. But, frankly, it's uphill against the sheer weight of Romney's money and the negativity of his campaign.

WALLACE: Well, you talk about the negativity of his campaign. This week, you and Romney have run blistering ads against each other. And let's take a look.


AD NARRATOR: If we can't trust what Mitt Romney says about his own record, how can we trust him on anything?

TOM BROKAW, NBC NEWS: By an overwhelming vote, they found him guilty of ethics violations. They charged him a very large financial penalty and they raised several of them raise questions about his future effectiveness.


WALLACE: Now, you say that Romney lies repeatedly and that ad, that we show the first one, you say he can't be trusted -- is Governor Romney fit to be president, sir?

GINGRICH: Well, let me just take those two ads. NBC is asking to take down the ad of Tom Brokaw on it.

The fact is Romney knows that ad is misleading. CNN has done an entire package pointing out on every single count, I was exonerated. I never paid a fine which the term Romney uses over and over again. I did not resign at the time. I served two more years.

We passed the largest capital gains tax cut in history. Unemployment came down to 4.2 percent. We passed the balanced budget act in 1997 and we balanced the budget out as a result of that, for four straight years, the only time in your lifetime.

Romney knows all these things are true. He's running an ad that's factually false.

Now, let's take my ad. Every single thing in my ad is true. And, frankly, the reason that I was relatively flat on Thursday's debate is I don't know how you debate a person in the civil -- being civil, when he stands there and just blatantly doesn't tell the truth.

And I'll give you just one example. Romney said he only voted for Paul Tsongas in the Democratic primary in 1992, the most liberal Democratic running because there was no alternative.

Larry Sabato of Virginia sent out a tweet during the debate and said that was just a falsehood, that, in fact, he could have voted for George H.W. Bush or Pat Buchanan at the same day.

There are time after time after time when you try to engage Governor Romney -- we just learned yesterday, there are 23 foreign accounts that he did not reveal back when he filed his disclosures that have now shown up because he finally revealed his taxes.

And, you know, this guy is supposed to be a great manager. He misses 23 foreign accounts that just happened not to be disclosed.

WALLACE: Let me -- Mr. Speaker, let me ask about one of -- in your ads, what you say one of Romney's alleged lies is, and that is a radio ad he ran charging that you once called Spanish the language of the ghetto. I understand in the debate, he said he doubted it was his ad and, of course, it turned out it was. But isn't the basic charge he made in that ad true?

GINGRICH: I never used the word Spanish in the conversation. I was talking -- I was giving a speech talking about the importance of everybody learning English. There are 94 languages in Miami-Dade College. I gave this talk the other day with students from Miami-Dade with the president of Miami-Dade there, and they all nodded yes. And I said, we don't want anyone trapped -- anyone, this was not a reference to any one language.

We don't want anyone trapped in America not able to speak English because English is the language of commercial success. English is the language that gives you a better job.

Now, he turned that on its head and basically suggested something that was simply, plainly not true.

WALLACE: Well, all right. Wait a second. Here is what you actually said. Here is the clip from 2007. Let's take a look.


GINGRICH: We should replace bilingual education with immersion in English so people learn the common language of the country and so they learn the language of prosperity, and not the language of living in a ghetto.


WALLACE: Now, Mr. Speaker, you are quite right. You never said the word Spanish. But Spanish is, in fact, by far, the language that's most widely spoken in this country, and after there was an uproar about it, you apologized for your comments in Spanish.

GINGRICH: That's right. And I did so deliberately because it had been taken out of context. And if you look at my apology, I tried to make it clear it was not a reference in Spanish.

First of all, and you talk about -- as you know well, ghetto originally was a term for Jewish neighborhoods in the Middle Ages. The idea of -- the question was whether you're -- whatever your language background, this country has over 200 languages and frankly Spanish is the least isolated because it has the largest number of people who speak it. You have all sorts of people who speak in very small languages --

WALLACE: But, sir --

GINGRICH: So, here's the great irony -- here's the irony and here's why Romney's behavior is so outrageous. As governor guess what he was in favor? Immersion in English. He has said this on the debate stage. So, here's a governor who's for immersion in English who attacks because I'm for immersion in English and it's a way for him to try to divide people in a fundamentally false way.

WALLACE: I want to ad move, but I just want to -- just to button this up, because I did look at what you said. I can't -- you said in Spanish, I had it translated. You just said that the words you chose were inartful. You never said that you weren't talking about Spanish.

GINGRICH: Well, that was inartful. I wasn't talking about any single language. And you can go back and read the text. You admitted yourself, I don't reference any single language.

As I say, English should be the language of every single student because it's the language of getting ahead in America. I stand by that. And I think Romney's misuse of it is outrageous.

WALLACE: You have been going after you called the elites in this country. And, in fact, you said they are hurting America. Let's take a look at what you said this weekend.


GINGRICH: Under the elites, the people who oppose me, some in the Democratic Party, some in the Republican Party -- under these elites, we have become the America that couldn't.


WALLACE: Who are the Republican elite and how are they hurting the country, sir?

GINGRICH: Well, I think you can take a fairly large list of Romney's key supporters. They are the people who, in fact, operate inside the old order. They are the people who want to keep the old order comfortable.

I don't -- I want to change Washington and I want to change it decisively. I've said publicly that I made this part of the campaign, I'd like to see all of the decision documents at Treasury and Federal Reserve for the last three years published. Now, this goes back to the Bush administration.

I'd like to find out why a Goldman Sachs got $13 billion in the backdoor from AIG from the American taxpayer. How was that decision made? Why do they Parisian bank get $19 billion from the U.S. taxpayer? Who has helped, who wasn't help and why?

I think it is astonishing that you have a country in which enormous amounts of money have gone to very, very big, big institutions.

The Dodd-Frank bill has actually increased the size of the largest banks. The banks are a problem. The Dodd-Frank bill is actually crushing small independent banks, and yet the Washington power structure seems incapable even of having hearings to look at this.

And, frankly, if you look at the list of Romney's fundraisers, they're all from Wall Street. They're all from the old establishment. They all have a vested interest in protecting the old order. And I think that's a mistake. We need to change Washington, not keep it in its current form.

WALLACE: Let's talk about one member of that Washington power structure part of he Republican elite, and that's Bob Dole, who was the Senate Republican leader at the same time that you were the speaker of the House. And he put out a statement this week about you.

Here it is. "He," referring to you, "He was a one-man band who rarely took advice. It was his way or the highway. Gingrich had an idea every minute and most of them were off of the wall."

Sir, how do you respond the charge? And you know it's come from a lot of people who worked with you in the trenches, in Congress, in the mid-'90s, that you were a great insurgent, you were the man who brought the Democrats back to the majority for the first time in 40 years, but you couldn't manage the House, let alone the presidency?

GINGRICH: Look, we have tried a moderate in 1996, and we couldn't debate Bill Clinton effectively and he lost. We tried a moderate in 2008, we couldn't debate Obama effectively and we lost. I think if we nominate a moderate this year, the gap between Romneycare and Obamacare is about that big. I think it would be very hard for Romney to defend himself.

But let's take the case of Senator Dole, who I respect a great deal, I campaigned for in '96. The fact is, I led the House Republicans to the first reelection as a majority in 1996, the first time since 1928. I did it knowing that we were going to have to run ahead of Senator Dole. He said I wasn't effective. Welfare reform was the first entitlement reform in your lifetime. The first four balanced budgets came out of the 1994 act, the only four balanced budgets in your lifetime.

We had $1 billion plus-up of intelligence, which the 9/11 commissions called the Gingrich plus-up, and said was the only time the intelligence community was helped in the 1990s.

You go through after item by item. Do I ruffle feathers, you betcha. If I go to Washington as president on behalf of an insurgency of American citizens who are tired of being told that managing the decay is the best we can do, we're going to ruffle a lot of feathers.

This campaign is precisely about challenging the establishment. The establishment and I think Senator Dole is a quintessential part of the establishment. And I respect him as a person. We have fundamentally different views about the role of government.

I want a very different model than he does, and I'm willing frankly to have a lot more challenges to the old order than he would comfortable with. I respectfully disagree.

WALLACE: Well, and let me just say, wrapping this up, Mr. Speaker, that I take your point that when you talk about my lifetime, you are talking about a very long period of time, sir.


GINGRICH: I didn't quite mean it that way, Chris.

WALLACE: Well, that's all right.

Mr. Speaker, thank you. Thanks for talking with us.

GINGRICH: Thank you.

WALLACE: We'll be tracking what happens Tuesday in Florida, sir.

GINGRICH: Good. Thank you.

WALLACE: Up next -- House Republicans are set to do battle with the president over his agenda. We'll sit down with Paul Ryan, the GOP's top voice on the budget and our national debt.


WALLACE: President Obama laid out his agenda for 2012 in the State of the Union speech. Now, Republicans are preparing to issue their plan in the new budget. The man behind the plan is Congressman Paul Ryan, chair of the House Budget Committee.

And, Congressman, welcome back to "Fox News Sunday."

RYAN: Good to be back.

WALLACE: Let's start with the president's State of the Union's speech this week, and a central argument the Democrats are looking out for the middle class while Republicans want to protect the rich. Take a look.


PRESIDENT BARACK OBAMA: We can either settle for a country where a shrinking number of people do really well while a growing number of Americans barely get by. Or we can restore an economy where everyone gets a fair shot and everyone does their fair share and everyone plays by the same set of rules.



WALLACE: Isn't that a strong, at least a strong political message?

RYAN: The irony of this is the president's policies do the exact opposite. What we got -- I was there. So, I heard the speech a couple of times now.

We basically got this: the president can't run on his record. It's a miserable record. He's not going to change his tune and moderate like, say, Bill Clinton did in 1996, because he's really stuck with his ideology. So, he has no choice but to divide.

And so, he is going to run a very divisive campaign for political gain, and he has this concept of fairness and equality where he uses the kind of rhetoric we use, but the policies he's producing will result in crony capitalism, will result in giving more power to the government to supervise our lives, to give us a stagnant economy, where the rich and the powerful are the ones who are picking.

So, I'm trying to say is, he is giving us a future of debt, doubt and decline. He barely even mentioned the budget, the deficit, or the fact that that was the day which marked 1,000 days since the Senate bothered to even passing a budget. It's record they can't run on.

So, the president is going to use this divisive rhetoric and the outcome of these policies is to consolidate power in Washington where you have crony capitalism, which his rhetoric tries to decry.

WALLACE: All right. Let me pursue this. The president is proposing the Buffett Rule, the idea that if you're making at least $1 million a year, that you should pay at least 30 percent tax rate, and he's proposing this just as we find out that Mitt Romney, who's a multimillionaire, was paying a 15 percent tax rate.

Again, isn't that, on just the simplest basis, fair?

RYAN: If you over-simplify, you can probably make that case. I can get into the text, I can get into the fact that the effective tax rates people pay at the higher are still higher than everybody else. But let's just look at the math. All these tax increasing that the president is talking about, they only cover 8 percent of his proposed spending increases. The other 92 percent of the president's spending increases are borrowed money.

So, even if -- it doesn't even add up. It doesn't even go to the deficit. More to the point, instead of raising taxes, which unfortunately hits small businesses -- you got to remember, eight out of 10 businesses in America file their taxes as individuals.

So, the president saying bringing their top tax rate to 45 percent, which is the current schedule, is not high enough. I want to go higher than that. That would simply crush job creators, crush job creation.

RYAN: I have a better idea -- instead of raising taxes on producers and small businesses, why do we stop subsidizing the wealthy? Stop the crony capitalism. Stop the corporate welfare, income tax or entitlements. We get far more saving in the budget without choking off economic growth.

WALLACE: What do you make of the fact that the White House has basically said that the Buffett Rule, this idea of a 30 percent minimum tax rate is not going to be in the president's new budget and they have no idea what it would mean in terms of the deficit?

RYAN: What we have learned with the president time and again is he is going to put some kind of poll-tested line in the State of the Union address and have no follow up whatsoever. We have learned already that the president who's had three years to try and propose real solutions to fix our fiscal crisis is ducking it. He hasn't put a plan on the table yet. He formed commissions and super committees, so he sort of outsourced the leadership only to decry their results.

So, we are not getting the kind of leadership we need from the outside. At the time when America needs it the most, we have a debt crisis on our horizon. The Senate hasn't budgeted for 1,005 days now. The president is not even proposing to tackle this fiscal crisis.

And so, what we need is a new president and a new Senate, and we need to give the country a very specific plan, a set of ideas of how we're going to solve these problems and let the country choose in November what they want America to become. And we're going to do that.

WALLACE: The president, as you pointed rightly, did not even mention deficit reduction until more than

RYAN: Not at all.

WALLACE: -- well, he did at all, but it was more than halfway to his speech, and then it was only a passing reference. Let's take a look.


OBAMA: When it comes to the deficit, we've already agreed to more than $2 trillion in cuts and savings. But we need to do more. And that means making choices.


WALLACE: But no mention at all of entitlement reform. He talked about using the savings from the wars that we are not fight any longer, at least in part, for more spending on infrastructure, which raises the question -- is reducing our debt in a serious way, is not just off the table for 2012?

RYAN: It appears to because if the Senate is not going to pass the budget, like they had for 1,005 days, then nothing happens. That's the process works. The House has to pass a budget, according to the law, by April 15th.

WALLACE: Let me pick up on that, because the Democrats say that this argument, you said it several, times about 1,000 days, is bogus argument. They say, we passed the Budget Control Act as part of the debt ceiling -- I don't want to get too much to the weeds here -- but as part of the debt ceiling agreement in August and, in fact, that that act had even more, was a budget and had even more teeth than a regular budget.

RYAN: If that's our solution to our fiscal crisis, then heaven help us. It doesn't come close to fixing the problem.

The reason I say not all with the president, all these war savings, it's mythical money. It's all borrowed money. It's basically saying, we're not going to spend all this extra money in Afghanistan and Iraq in the future, and therefore we're going to take that money we would have otherwise borrowed and spend it on all these other programs.

The president isn't leading. The president isn't being truthful with the American people about what kind of fiscal train wreck is coming we are going to be. And we're going to pass budgets to show the country exactly how we purpose to fix this problem.

And you know the thing that's frustrating about this, Chris, is there an emerging bipartisan consensus on how to fix these big problems. There are Democrats who agree with us on how to do tax reform -- get the loopholes out, lower the rates.

We're getting a bipartisan consensus on Medicare reform. The problem is the president and his party leaders are out on the left standing in the sidelines looking in.

So, what we clearly need is a new White House and a new Senate and then we can realize this emerging bipartisan consensus on how to fix these problems.

WALLACE: OK. Let's talk about the Republican agenda. The House passed your budget plan last year. It didn't go anywhere in the Senate, so obviously didn't become law.

But let's look at what you guys passed last year -- $5.8 trillion in spending cuts by 2021, eliminate $800 billion in tax increases by repealing Obamacare. Tax reform, eliminate deductions while setting a top tax rate both for individuals and businesses of 25 percent. And major entitlement reforms. I know that you are a couple of weeks away from putting out your budget. And you've said to me here in the green room that you haven't even written it yet, but will it be the same plan or will there be something new?

RYAN: We're going to be working off it. We're not going backwards, we're going forward. We're not backing off of any of our ideas, any of our solutions. But we simply haven't written it yet because -- not to get technical -- we haven't got the base line from the Congressional Budget Office.

So, I and my members of the Budget Committee will write this budget in March and then we're going to bring it to the floor. We think we owe the country actual solutions based upon our founding principles to get this country on the right track.

The president has dodged, his entire presidency. And the Senate hasn't budgeted for 1,000 days. And the BCA is hardly a budget.

WALLACE: Budget Control Act.

RYAN: The Budget Control Act, that's hardly a budget. It's really devolving and delegating to others to lead.

We're going to lead. We're going to pass a budget. And we're going to build upon the kinds of reforms we proposed last time.

WALLACE: Well, let's talk about that, because there are some political problems, if not some substantive problems.

Democrats are now saying that they're going to go after anyone who voted for your budget, the Republican budget.


RYAN: -- a Republican.

WALLACE: OK. Who voted for it last year because it would shift Medicare from a guarantee for seniors, into -- some would say, you call it premium support, they call it a voucher -- but would give seniors money that they could use to buy a private plan and a Congressional Budget Office says over time that this premium support is going to mean that seniors will have to pay $6,000 more a year for health care.

RYAN: The Congressional Budget Office also says Medicare is going bankrupt in 2021. The trustees at Medicare say that there's $37 trillion unfunded liability.

If you take a look at our reforms, which don't change any Medicare benefits for a person 55 or above, and says for people 54 and below, when they'll retire, they'll have a list of guaranteed coverage options over by Medicare just like we do it in Congress and federal employees have, and we're not going to subsidize the wealthy as much as everybody else. And we're going to subsidize the poor even more. That saves Medicare. That fixes Medicare. Put that in comparison to the president's health care law. This year, he appoints 15 unelected, unaccountable bureaucrats to a board called the IPAD, Independent Payment Advisory Board, and their job is to put price controls and therefore rationing on Medicare for current seniors.

So, the president's law takes half a trillion dollars out of Medicare to spend on Obamacare and now he's putting this new rationing board in place, which will lead to denied care to current seniors.

So, if you want to compare plans, our plan to save and shrink the program, not change benefits for anybody 55 and above, and the president's plan to start rationing current seniors while still allowing the program going to bankruptcy, I'm happy to take that debate.

WALLACE: But, briefly, the Democrats think that if they play --

RYAN: They do.

WALLACE: -- you guys are going to kill Medicare, or you're going to endanger Medicare and you're going to make it more expensive for seniors, even if it's 10 years now, that's a political winner for them and a loser for you.

RYAN: They think so. But I would simply say, there's an emerging bipartisan consensus that we're on the right track. And the point is, we should be offering solutions to our problems in our country. We shouldn't just be demagoguing other people and offering no solution.

And, unfortunately, that's what the president and his party leaders are doing.

WALLACE: All right. I want to talk about demagoguing. You are not endorsing any candidate in the presidential race. But I want to ask you about the tenor of the campaign.

You've got Republicans attacking other Republicans now for how they made money, how they have invested their money, how much they are paying nothing taxes -- is that the right conversation for Republicans to be having when they are running for president? Especially --


WALLACE: Pardon?

RYAN: No, go ahead.

WALLACE: No, go ahead.

RYAN: I don't think so. Actually, I don't think so. I'm chairman of the presidential trust at the RNC. So, therefore, I had to be neutral. But we need to defend the morality of the free enterprise system and upward mobility. We need to defend the morality of a system in America that says you are free to take risk, to make money, to create jobs, and to do it however you want to so long as it's legal. That's something we should be proud of.

We should be proud of people being successful because we want people who've never seen success to become successful.

So, it does bother me when some candidates -- and there's more than one -- go after each other based on their success in the free enterprise system.

That's not who we are. That's what Barack Obama is doing to us. And we shouldn't be doing to ourselves.

WALLACE: So, are -- and let's be specific -- are Newt Gingrich and Mitt Romney playing into Barack Obama's hands?

RYAN: I think, at the end of the day, this is going to be -- the dust is going to settle. What matters to me more --

WALLACE: But right now, are they doing it?

RYAN: Right now, they're going after each other in a heated debate. You know, look, Rick Perry was saying this stuff about Mitt Romney. But I think when the dust settles, what I care about is, are we giving the country a real affirming choice?

We don't want to win an election by default. We don't want to simply run against the president and his stewardship of the economy, which is abysmal. We want to give the country a clear choice of two futures, do you want the opportunity society with a safety net, or the president's path of debt and doubt and decline, the welfare state? That's what we think we're going to be able to do.

And if we give the country that legitimate choice of two futures, and we win that election, then we have the moral authority and the obligation to save this country.

WALLACE: When you see the tenor of this campaign and what they are talking about. Any second thoughts about not getting --

RYAN: I'm not like that. Look, don't underscore the importance of Congress. And I feel I have a very important role to play in Congress. And Congress is going to have a huge say so in the next few years. We really only have a small window of opportunity to save this country from a debt crisis and I'm in the middle of that, and I feel like I have a great chance to play a big role that in Congress.

So, I don't have those kinds of regrets. I don't think like that anyway.

WALLACE: Do you think anybody new could get into this race?

RYAN: Look, I'm not one of these pundits. I guess your panel will probably get into this. I doubt it. I think, you know, deadlines are passed. I think there are very few states you even could get in anymore.

So, I think the field is set. I think it's going to work itself out. And yet, it's the heat of battle and they are saying things they probably shouldn't be saying about each other.

But what matters in the end of the day here is: we are running against Barack Obama and not against each other. But we're not running necessarily against somebody. We're running for reclaiming the American idea at a time when it's threatened more than it ever has before in this country.

WALLACE: Congressman, we want to thank you so much for coming in. We also want to note that it's your birthday.

RYAN: That's right.

WALLACE: Your 42nd birthday. And we have --

RYAN: You go to be kidding me. Oh, my God, where did you get this?

WALLACE: We actually -- I was up all night making it. You want to cut into that sucker.

RYAN: I don't eat sweets.

WALLACE: It is the federal dollar. Don't you want to...

RYAN: Yeah, I see that. Well, we need to make more of these for people in this country. Not cakes, dollars.

WALLACE: All right, do me a favor. Cut into it.

RYAN: All right.

WALLACE: You don't have to eat it. I'm not going to -- you don't eat sweets, really?

RYAN: I gave up sweets a long time ago.

WALLACE: Up to now I very much enjoyed your acquaintance, sir.

Congressman, thanks very much. Happy birthday.

Coming up, the Sunday panel -- oh, what we'll do for a photo op.

On the scorched rhetoric Republicans are using against each other in the Florida primaries.



MITT ROMNEY, REPUBLICAN PRESIDENTIAL CANDIDATE: I am going to make sure we take down Barack Obama and take back the White House.


GINGRICH: We have four days to win Florida. If we win Florida, I will be the nominee with your help.


WALLACE: Mitt Romney and Newt Gingrich trying to rally voters ahead of Tuesday's crucial Florida primary. And it is time now for our Sunday group. Brit Hume Fox News senior political analyst, A.B. Stoddard of The Hill newspaper, Paul Gigot of the Wall Street Journal and also the host of The Journal Editorial Report on Fox News Channel, and Fox News political analyst Juan Williams.

Well, Brit, as we discussed with Speaker Gingrich, he seems to have come out of South Carolina with a lot of momentum. That momentum seems to have stalled. Where is this race right now?

BRIT HUME, FOX NEWS SENIOR POLITICAL ANALYST: Well, it appears that, unless the polls are dramatically wrong, and there are two fresh ones out today, which will push the rear clear politics average that you showed earlier when it's readjusted later today to a double digit lead for Mitt Romney.

WALLACE: Yeah, but there is a new NBC/Marist Poll 15 points.

HUME: 15 points. And there's a new Rasmussen, 15 point lead. So this -- he could -- Romney could win this going away.

What I will say about this is two things. One is, I think what happened in South Carolina was that the Romney campaign made the mistake of leaving Newt Gingrich for dead after his fifth place showing in New Hampshire. He wasn't dead. And he came into South Carolina and began to move. And by the time they realized it, the Romney people, that he was coming they had stopped the ads against him, they stopped all the stuff that had beaten Gingrich down in Iowa.

And they didn't make that mistake in Florida. He came out of Florida with a big head of steam and they started pounded right away. Gingrich has vulnerabilities. Some of the ads may not be fair, but they are not false. And the result is what you have seen. Gingrich is vulnerable.

But I don't think Gingrich, if he loses even by double digits in Florida, is dead yet. He is a wily, resourceful, very bright guy who has shown the ability to -- shown the perseverance on the ability to recover and it won't be over yet.

WALLACE: Let's hope not as political pundits and reporters.

A.B., there are a lot of factors. One of them is, you are talking about two different electorates. South Carolina is more conservative than Florida. In South Carolina evangelicals make up 60 percent of the GOP vote, in Florida 40 percent of the vote. And as Brit pointed out, the debates went differently.

How do you weigh what's happened -- the difference between South Carolina and Florida.

A.B. STODDARD, THE HILL: I think it is a combination of the Romney campaign getting its act together after having poor responses to his 15 percent tax rate and his record at Bain Capital and all the criticism the Gingrich campaign and the Perry campaign unloaded on him in the South Carolina campaign. Mitt Romney got his act together certainly 15 to 1 spending. Does work in Florida in this media markets? But it is a different make up. Even the Latino vote in Florida is so disparate, a Cuban in one part of the state different than a Cuban in another. Republicans, Democrats -- it is a very tough place to try to match a South Carolina victory in.

And so since the Gingrich campaign has died twice and is always evolving, a Romney campaign had been banking absentee ballots in Florida, really panning well on ground there. They were able not only to execute their original plan, but to shift gears into full attack mode, a very expense one, against Newt Gingrich. And with two new debates -- with a new debate coach and two good debates, he also managed to sort of steal the thunder there. And that was Newt's secret weapon.

WALLACE: Paul, let's assume, and that's probably a dangerous thing in this crazy cycle, but let's assume the polls hold up and Romney wins a convincing victory in Florida. How commanding of a position does that put him in in the race for the nomination?

PAUL GIGOT, WALL STREET JOURNAL: I think a very strong position, because he has the wherewithal, the money and the organization to play everywhere and Gingrich does not. So Gingrich will have to or Santorum if he can rally, will have to win somewhere else. And they have to do it fairly soon.

I mean, I think this will go at least until early March and Super Tuesday.

But before that time Gingrich will have to show that he can win in some other state. And whether he can do that will be difficult, because he doesn't really have money -- as much money at least as Mitt Romney and he won't have I think more than one debate in February. I think that may be the only schedule now.

So it is going to be difficult for him to do it. And so this does put Romney in a commanding decision.

Let's put it this way, Romney is not making a case for himself this last week, this has been a systemic demolition of Gingrich. He's not really saying this why I want to be president, he's saying this is why this guy shouldn't be president.

WALLACE: Juan, the landscape does change after Tuesday. In February, there are fewer primaries, some of them tend in places that you would think would favor Romney -- Nevada with a bit Mormon population, Michigan which is his home state. He was outspending Gingrich 5 to 1 in all of the TV ads and Super PAC ads in Florida. You would think money would become an issue as I think A.B. pointed out.

Only one debate, February 22. Does that make it much harder for Gingrich?

JUAN WILLIAMS, FOX NEWS CONTRIBUTOR: Well, I think it's terrifically hard. And I mean, hats off to Mitt Romney's campaign team. They have done an excellent job of encouraging the front loading of this process in such a way as to drive the media narrative. The media narrative will be that Mitt Romney keeps winning. He had a hiccup in South Carolina, but looks like he will win Florida. It looks like he'll win in Nevada and Michigan. And then you go to that February 2 debate. Remember Gingrich has relied on his success in the debates to try to change the tempo and change the argument, get a lot of free advertising to counter Romney's advantage with money. But if there are no debates how is he going to change the narrative? How is he going to do anything headed towards Super Tuesday on March 6?

WILLIAMS: It looks to me very difficult.

I think Gingrich has pledged this morning to stay in the race. But, gosh, stay in the race just to be, it seems to me, you know, kind of a figurehead of the Tea Party opposition to the establishment Republican Party. At that point, it becomes an exercise in ego.

WALLACE: Well, the only thing we do have to say, in fairness, this guy has died twice and he's been resuscitated.

WILLIAMS: And I've been wrong because -- I said he was dead twice.


WALLACE: Right. So, you know, I wouldn't be writing him off.

Let me just pick up on one last thing, Brit, and that is the conversation I was having at the end with Paul Ryan.

I mean, primary fights are nasty. This one seems to have gotten awfully personal. And it seems to be about, kind of, strange subjects for Republicans, how did you make your money; were did you invest your money; what are you paying in taxes?

Are they cutting each other up in a way that you think could have lasting damage and help Obama or does this all just get forgotten?

HUME: Well, at the end of -- at the end of this process, the winner is going to want to try to unite the party, which means that Mitt Romney is going to have to reach out to Newt Gingrich and his supporters. And his supporters...

WALLACE: Or Gingrich is going to have to reach out to Romney.

HUME: Exactly, but, you know, either way, whoever wins. Romney will need to reach out to Gingrich.


There's been a lot of harsh things said. Now, this is a function -- and Paul's point is well taken that Mitt Romney hasn't made a very good case for himself.

But, remember, in these primaries, these candidates don't really disagree very much about very much. The result is that, when you go on the attack, you're usually looking for things that are apart from the main issues, and that's why you get into these arguments, the way, for example, just to cite one case in the past, I remember Walter Mondale and Gary Hart, who were in, kind of, a death struggle for many months back in 1984.

They were arguing over who came out first for the nuclear freeze. They were both for it. It was about who came out first. This went on for weeks. It was, kind of, ridiculous, but that's what happens in these primaries sometimes.

WALLACE: And this one's gotten a lot more nasty and personal than that, with talks about lies and failed leadership and disgrace.

Anyway, we have to take a break here. When we return, the president's agenda as he laid it out in the State of the Union address. Is it good for the country? Will it help him win reelection?



OBAMA: We were sent here to serve the American people. And they deserve better than gridlock and games.



SEN. MARCO RUBIO, R-FLA.: What does he plan to do now that he didn't do before? Well, we got our answer Tuesday night. He plans to divide us against each other.


WALLACE: President Obama and Republican Senator Marco Rubio with very different views about who's responsible for the gridlock in Washington these days. And we're back now with the panel.

Paul, what did the president's State of the Union speech this week tell you about how he plans to run for reelection and where, if he wins reelection, he would take the country over the next four years?

GIGOT: I don't know that it tells you anything about where he would take the -- the country over the next four years. I do think it tells you what he thinks he can run on and can't run on. And that is, he can't run on his record, so he's going to run against Wall Street, against bankers, against a very unpopular Congress.

But if you talk to Democrats privately about health care, for example, they say it's his greatest achievement; it puts him in the FDR pantheon. Juan probably says that himself. This is a wonderful achievement.


And you go -- listen to the State of the Union and the Affordable Care Act is in the federal Witness Protection Program. He doesn't want to mention it. He doesn't want to talk about it.

So I think the speech revealed a lot about his weakness, as well as the kind of arguments he's going to make. But he will win on the class argument, the class war argument, the fairness argument, if Republicans don't have a nominee who can argue back in moral terms, not just practical terms, "I can create jobs," but make the moral case for free markets and capitalism.


WILLIAMS: Well, I'm stunned to hear you say that he will win that argument because I hear from lots of Republicans...

GIGOT: It was conditioned.

WILLIAMS: Yeah, but if...


But the likely nominee is Mitt Romney, as we've been saying this morning. And again, we could be very wrong, but if you look at Mitt Romney, the idea that he's been forced by Newt Gingrich to release his tax returns, the fact that he's paying a very low percentage on taxes, the fact that he's got assets hidden in the Cayman Islands and Europe -- I mean, people are just looking at that and I think you see his favorables dropping in the polls -- Mitt Romney's favorables dropping.

Meanwhile, Barack Obama's numbers in the polls are going up, going up strongly. And I think that's a big, big plus for Obama as a result of this Republican infighting that has been, I think, to reach the point where you have to wonder if Republicans don't see it as well and have a tremendous concern about the possible future with Obama gaining power as the economy, on its own, is improving.

WALLACE: You know, beyond the question, though, of taxes and things like that, there's a question of policies. And the president is saying, Brit, our policies -- we Democrats, we will protect the middle class and Republicans will protect the rich.

One, is it true? Two, is it smart?

HUME: No, it's exaggerated, but look -- but I think it's utterly secondary. I think that what will happen in this election is what will happen -- is similar to what happens in most presidential elections when the incumbent -- particularly when an incumbent is running, which is that, as Election Day approaches, people will begin to make decisions and will finally make a decision about whether they want to make a change or not.

And the president can be talking about whatever he wants. But if the conditions in the country are deemed to be disagreeable by a majority of the public, the majority of the public will decide it's time to make a change. Then the only question is, does the other party present an alternative that people feel is acceptable, a plausible president, someone that they're not afraid to -- to -- to put in the White House?

And this is where the dilemma for the Republicans becomes very clear. A lot of Republicans think Obama is so weak that they ought to nominate the most conservative person they can find because they can't lose. I think they can lose if they nominate somebody who can be successfully painted as an extremist or an exotic character not worthy of the trust needed for the Oval Office.

So I think that the argument the president makes on class warfare and rich versus poor and all that may rally his base, but it's not going to win this election.

WALLACE: A.B., let's actually talk about governing the nation for the next year so that 2012 isn't a completely lost year. When both parties say -- and leaders from both parties said to me this week, our top legislative priority for 2012 is to extend the payroll tax holiday, does anything get done this year?

Maybe that gets done, but does anything serious get done about a country that's got a $15 trillion dollar debt, that has, what, over 10 million -- 11 million, 12 million people unemployed?

WALLACE: Does anything serious get done?

STODDARD: No, the goal is to get that done by the end of February, and that will be another way of avoiding--

WALLACE: The payroll tax cut.

STODDARD: The payroll tax cut extension, another way of avoiding -- another year of avoiding what would now be nearly 30 percent cuts to Medicare providing doctors. And also an extension of the unemployment insurance that is going on--

WALLACE: I understand. But my question is, no deficit reduction?


WALLACE: No tax reform, no programs to put Americans back to work?


STODDARD: The only thing they anticipate being able to work on is the avoiding the phony trigger from the super committee's failure, known as sequestration. It amounts to a lot of cuts to defense that scares people in both parties. The Republicans see a need to get going on this right away. Even though you can fix it in a lame-duck session next December, they don't kick in until January 13th -- they feel the Pentagon has to begin its planning, and that is literally the only immediate matter on their table for this year.

WALLACE: Paul, as a financial maven in our group here, the U.S.--


WALLACE: That is what we call a compliment here. The U.S. economy grew by 2 8 percent in the fourth quarter, which is the best number in 18 months. Does -- is the economy, one, the recovery beginning to take hold? And two, isn't that to the degree that (inaudible) is really going to be a referendum on Obama's record? Isn't that going to help him if you see this continuing job growth and an uptick in GDP growth?

GIGOT: The recovery is slow enough, though, that I think that it is not going to be a clear case where like, say, 1980, where the public said Jimmy Carter has failed utterly. There's still going to be a lot of anxiety, however, because growth is really slow. I mean, growth in 2011 was 1.7 percent. That is a Japan-like malaise figure. We are not used to recoveries being that weak. 2.8 percent this quarter -- a lot of inventories, a lot of looked like one-quarter effect. So we don't know exactly how strong the recovery is going to be.

My guess will be it's going to kind of bounce along the way it is, which means that politically, the Republican candidate is going to have to make the case for voters rejecting the president. It is not going to be an automatic thing that he's just going to be able to walk in. He's going to make the case for why the president's policies made things worse or didn't make them better, and why his policies going forward would make them worse.

WALLACE: Juan, I want to get into one last thing with you. On his trip this week after the State of the Union, the president had a dust-up with Arizona governor, and here is the famous picture, Jan Brewer, on the airport tarmac in Phoenix. What do you make of the incident and the controversy over whether she was rude or he was thin- skinned?

WILLIAMS: Well, I think this goes back to an argument over immigration policy, and she had a meeting at the White House where the president felt he was trying to be constructive and work with her. She of course has put in place policies that had been challenged by the Justice Department with regard to the ability to stop and check on people who are illegal immigrants. The president feels he's put more boots on the ground and the rest. So she writes in a book that this was a meeting in which she felt a little threatened, she was unhappy--

WALLACE: He was lecturing her.

WILLIAMS: Yes, and the president gets off the plane, says, you know what, I didn't like it, I didn't like what you said about me, et cetera, and I am trying to work with you, what are you doing? And she gets in his face with her finger. Well, obviously, I don't think sticking your finger in the president's face is anything but rude. But nonetheless, he did react angrily apparently, according to her, and walked away from her.

Now, I think this is really, you know, Jan Brewer, who I think is a pretty weak politician, gaining stature by fighting with President Obama, and that certainly helps her with the very conservative base. They love a fight with President Obama. But the fact is that President Obama has done more in terms of illegal immigration, that we have fewer people crossing the border now, and she is just I think fed, you know, red meat to the kind of talk show conservatives.

WALLACE: Ten seconds for a rebuttal. Let's begin.

HUME: The whole thing is much ado about not very much.

WALLACE: Well, that is not a very good answer.



HUME: Five seconds.

WALLACE: It was short, but we need to feed the beast. Thank you, panel. See you next week. Don't forget to check out panel plus, where our group picks right up with the discussion on our web site, We'll post the video before noon Eastern.

Up next, some not so sunny words in the Sunshine State, on the trail.


WALLACE: There are more delegates on the line in Florida than the three previous states combined. The stakes are high and the campaigning has been intense, on the trail.


ROMNEY: Fifteen years after he left the speakership, the speaker has been working as an influence peddler in Washington.

GINGRICH: I understand your technique, which you used on McCain, you used on Huckabee, you used consistently. The American people see through it.

SANTORUM: There is no difference between President Obama and these two gentleman, and that's why this election here in Florida is so critical.


UNIDENTIFIED MALE: Sanctions for ethics violations. Gingrich resigned from Congress in disgrace.

GINGRICH: This is the desperate last stand of the old order.

UNIDENTIFIED MALE: Why is Mitt Romney attacking Newt Gingrich? Ask John McCain.

SEN. JOHN MCCAIN, R-ARIZ.: The best indicator that I am doing very well is when you are attacked by Romney.

We need Mitt Romney as president of the United States as we have never needed that kind of leadership in the White House in our history.

ROMNEY: We are getting ready for another debate tonight. I can't wait. It is going to be fun again, you know what?

The idea that I am anti-immigrant is repulsive. Don't use a term like that. And I think you should recognize that having differences of opinions on issues does not justify labeling people with highly charged epithets. GINGRICH: If we had a handful of serious prizes, you'd see an extraordinary number of people out there trying to get to the moon first.

PAUL: I don't think we should go to the moon. I think we maybe should send some politicians up there at times.

SANTORUM: You guys keep demanding my taxes, so I've got to go get them.

HERMAN CAIN, FORMER PRESIDENTIAL CANDIDATE: I hereby officially and enthusiastically endorse Newt Gingrich for president of the United States.

GINGRICH: The only effective, practical, conservative vote on Tuesday is for Newt Gingrich.

ROMNEY: This will be a historic election, and we need to have someone who has been a leader and succeeded at being a leader. I have, and I will lead America back to strength.


WALLACE: On Tuesday night, we'll see where this roller-coaster of a campaign goes from here. As always, Fox News Channel is the best place to get the results. Coverage begins at 6 p.m. Eastern Tuesday night.

And that's it for today. Have a great week. And we'll see you next "Fox News Sunday."

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