Romney-Paul secret deal in the works?

This is a rush transcript from "Hannity," March 16, 2012. This copy may not be in its final form and may be updated.

RICH LOWRY, GUEST HOST: Rumors have been swirling on the campaign trail about a secret deal between a current Republican frontrunner, Mitt Romney and Congressman Ron Paul. It speculated this deal would include Paul announcing his support for Romney in exchange for some sort of legislative promise or the selection of Paul's son Kentucky Senator Ron Paul as Romney's VP nominee.

Now, with the race as close as it is, Ron Paul's delegates could go a long way towards putting Governor Romney over the top. Yesterday, on Fox News radio, Romney denied that he entered in the talks with Paul's campaign.

And here with more on these rumors is Kentucky Senator Rand Paul. Senator, thanks so much for being with us.

SEN. RAND PAU, R-KY.: Good evening.

LOWRY: Now Senator, as you know a lot of speculation about this. The latest this week, Time Magazine had a story where it quoted your father's top campaign aide saying, one of the things he would want if he eventually were to go with Romney and that circumstance would possibly be the vice presidency. And when anyone says, anything like that, speculation immediately comes in points right at you. So, let me ask, do you have any interest in being Romney's number two, should he be the nominee?

PAUL: Well, I think what is funny about it is that I think the deal must be so secret that no one has told me about the deal yet.

(LAUGHTER)

So, they're going to have to maybe sometime let me in on this. Yes, it's so secret, I don't know about it. But no, you know, I think that they have been friendly throughout the campaign. And then a lot of this has been more strategy that people haven't figured out is that Romney has had a solid block of votes and there has been everyone competing to be the more conservative or the anti-Romney candidate. So, a lot of times you've seen Ron Paul go after Gingrich and after Santorum, but really for strategic reasons more than anything else. I think he does get along with Governor Romney, they have both been married for a long time to the same person, we have five kids, they have five kids.

But we've met in passing. I've never sat down with Governor Romney. I don't think my dad has ever sat down with him. But they are friendly and I think that's about all it is. But no secret deal unless it's secret to me. It would have to be a secret to my dad too because he says, there is no deal either, so.

LOWRY: So, a lot of people of remark though during the debates where even people who don't support your dad found him very endearing and instructive at times but he is really -- he's been willing to take on the other guys but not Romney so much, that's because in your view that he is competing with those other candidates for votes more than he is with Governor Romney?

PAUL: Well, I think so. And also, you know, I was there in 1976 when my dad was one of four congressmen to endorse Ronald Reagan. He was head delegate from Texas in 1976. He is the Reagan conservative. So, you have to see that it annoys him a little bit when Santorum says, oh, I'm a Reagan conservative and yet, he supported Arlen Specter who became the 60th vote for Obamacare. We kind of see that as not being real or there being a little bit of a disingenuous this to that. And so, you know, Ron Paul is the Reagan conservative. And so, we compete for that wing of the party.

LOWRY: Now, can you say there have been no discussions between the two campaigns about any possible deal? Because not having a deal is one thing but not talking about a deal at all or considering it at all is another?

PAUL: You know, I haven't been intimately involved in the campaign. I have gone and, you know, campaigned in Iowa and New Hampshire, South Carolina, I've been different places, I introduced my dad recently in Virginia. But the day to day discussions, I haven't been involved with.

I do know that they talk. And like for example, if they are both on the road and they're both saying, someone is saying we want to have a debate on "X" date and they are on the road campaigning, I think they have gotten together, not them but their campaigns have talked and said, you know, what? We don't feel like doing a debate on March 19th because we're both going to be campaigning. And in that sense, I think there is cooperation.

But I think there is also discussion between the Gingrich campaign and the Santorum campaign just on logistics of things. But I think it's overstated and I think sometimes, it's other people looking for excuses for not getting what they want.

I think Romney definitely is the frontrunner, and so the frontrunner gets attacked and accused of things. But no secret deal. It's also sort of contrary to my dad's nature. I mean, you know, that was one of the comments I did like from Tim Pawlenty. He said, you know, the last person in Washington you would ever imagine to make any kind of deal is Ron Paul. He is really been famous for his own compromising stand for limited government, he's not really the kind of trade his vote or to trade anything. So, it would be very unlikely and unlike him.

LOWRY: Senator, we're almost out of time. So, I want to at least give you a chance to give us the headline from the new budget you just introduced.

PAUL: Our budget balances in five years. It's the only budget that's consistent with the balanced budget amendment. We want to approve that you can do it. It's different than most others budgets because you have to eliminate some departments like Reagan said, let's get rid of the Department of Education. Ron Paul is the one offering it, ours is the only budget offering it. Ours is also the only budget that does a flat tax, 17 percent across the board, and has entitlement reform. It's where we ought to be as Republicans and so we have laid it out there as a marker.

LOWRY: Great, Senator. We'll be seeing you in Tampa I assume regardless. And it could be very interesting. Thanks so much for being with us.

PAUL: Thanks, Rich.

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