Gingrich: 'Republicans need to take a big step back' on 'fiscal cliff' talks

This is a rush transcript from "Hannity," November 30, 2012. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: And tonight, the cost of President Barack Obama's arrogance could very well be a trip off the 'fiscal cliff.' Now, his true nature is being revealed in the aftermath of the election. Now, he is deeply liberal, deeply ideological, reckless, irresponsible and he has no interest in seriously negotiating with the Republican Party. And he's now putting partisan politics ahead of what is good for America.

Now, even the Washington Post is calling him out saying, he has no intention to negotiate. Writing quote, "The offer lacks any concessions to Republicans, most notably on the core issues of where to set tax rates for the wealthiest Americans."

Now, let me repeat, "The offer lacks any concessions." Now, if you want the most recent concrete evidence of just how irresponsible President Obama is, you need look no further than his opening bid in these budget talks. Now, the Obama proposal which was offered to Republicans late yesterday courtesy of Treasury Secretary, you know, tax cheat Tim Geithner, it calls for the following -- a $1.6 trillion tax increase, increasing tax rates on incomes over $250,000. A $150 billion in new public stimulus spending of which 50 billion would be spent next year. Another extension in unemployment benefits, well, that would cost 30 billion. And the new power to raise the federal debt limit without Congressional approval. In other words, an Obama blank check. Now, that's awful, but it's not all. President Obama also wants the estate tax to be levied at 45 percent on inheritances, and that is a step that even several Democratic senators, they are balking at this.

Now, the current tax on inheritance is 35 percent. Now, the Obama offer contained no serious cuts, no serious reforms to entitlement programs and no serious proposals of tax reform, and this president had the gall to once again count savings more than $1 billion from ending wars in Iraq and Afghanistan even though no one on the planet has proposed war spending over the next decade. And by the way, that includes cuts to domestic programs that were agreed to last year, you know, that's fuzzy Washington math. What this really is, is Obama's budget propose last year, which by the way received zero votes in either the House or the Senate.

Now, this is disguised as a so-called compromise offer. Don't be fooled by this, it is no such thing. Now, Obama's so-called offer was in fact nothing less than a disgrace, what he did yesterday with Tim Geithner. The proposal was as dishonest and misleading as the day is long.

So, the question now tonight is, how should the GOP respond to this travesty? Now, Republicans I think should do several things. First, is do what Senator Mitch McConnell did yesterday, which is literally laughed at the Obama proposal. Now, the second, is refuse to negotiate with Obama, seriously over this proposal.

In other words, essentially Republicans have got to walk away, it is up to Obama to make a serious proposal. Instead of well, pretty much dealing with a joke. They also need to tell secretary tax cheat Tim Geithner in the middle of this in the most direct way that this proposal is dead on arrival and he can save himself time and energy next time by not even submitting an Obama plan like this to Republicans.

The bottom line is this, it is just not serious. And they should have no interest -- Republicans that is -- in playing stupid games with the administration.

Now, third, Republicans need to shine a bright light on the Obama proposal to ensure that the American people just know how insane and ludicrous this is. And fourth, Republicans need to use the opportunity to pass their own agenda, they need to show that they are not simply obstructionists, that they themselves have a positive, a forward-looking agenda that they are proud of, very eager to take to the country. So, Republicans need to make the case morning, noon and night, that it is Obama who seems absolutely determined, for political reasons, to take the country over the 'fiscal cliff.'

Now, our first guest tonight is the author of "Victory at Yorktown," he is live tonight in Richmond, Virginia as part of his American legacy tour, former presidential candidate, former Speaker of the House Newt Gingrich. Mr. Speaker, welcome back.

NEWT GINGRICH, SPEAKER OF THE HOUSE: It's good to be with you.

HANNITY: All right. So --

GINGRICH: Interesting times.

HANNITY: What did you say?

GINGRICH: I said, they're interesting times.

HANNITY: You have a smile on your face. There are a lot of our friends --

GINGRICH: Sure.

HANNITY: -- that are not happy about this.

GINGRICH: Look, one of the reasons I write historical fiction is to remind people that sometimes freedom is difficult, crossing the Delaware on Christmas night in a snow storm was very difficult. Marching nine miles with a third of the army wearing burlap bags because they had no boots leading a trail of blood, that's difficult. Now, where are we today? You have a president who believes that he can bully and out-maneuver and out-propagandizethe Republicans. He clearly believes the Republicans will cave. And he's treating them with a level of disdain and arrogance that is I think is breathtaking.

The Republicans need to take a big step back, rethink the role of the legislative branch, and understand that they have gone down a trail that has no positive outcome. A legislative branch does five things, it appropriates, it legislates, it has oversight, it communicates and it negotiates. They have been overwhelmingly fixated on negotiate. But their real power is appropriate, legislate, oversight and communicate. And I would urge the House and Senate Republicans to take a deep breath, pull all the way back, say when you have a serious proposal, send it up, we're not going to be with Geithner. We're not going to be with anybody. We'll look at a proposal, we both have fax machines, we both have e-mail, we have lots of ways of delivering things. And then I would focus on one, how are they going to control appropriations? Obama can't spend a penny if the Congress doesn't give it to him. The House Republicans don't have to give the Senate Democrats a penny. Two, what do they need oversight on? Because if every committee and subcommittee was looking at how bad this administration is wasting our money, the president wouldn't have the gall to ask for more stimulus money.

Three, what legislation do they want to move? And I don't think they should move big bills, they should move lots and lots of small bills. Make the Democrats block over and over in the Senate, set a stage for an obstructionist Democrat re-election effort in '14. And then frankly, they need to get their act together on communication. It is pathetic, how badly Republicans do whether it is the presidential campaign or trying he's trying to govern when they are competing with the news media and Obama, which is essentially the same thing. They have got to really rethink their entire communications strategy.

HANNITY: Well, I got to tell you, I think I like your proposal better than mine. Especially what you said about -- well, because I said one piece of legislation. You are right, I'm wrong. I think a series of --

GINGRICH: Well, thank you very much. I'm very grateful, that's nice.

HANNITY: No, I'm listening very closely to what you are saying. Because I think that is a far more effective way, strategy and tactic than what I proposed, which is one piece and say, all right, we'll now deal with that. I think to show what the very things the Democrats are against is a good idea.

I have one question, Howard Dean and some of the people on the hard left, they've actually come out and said that this is a good thing. Because the thinking is, they get sequestration, they get to gut the military, they get to raise everybody's taxes but they don't get the blame for it and they get to blame Republicans. Do you think this is maybe the strategy of the president considering how awful and insulting that plan was that he offered?

GINGRICH: I think it could be his tactic and his goal. But look, I think Republicans ought to eliminate the term 'fiscal cliff.' I just wrote my newsletter the people can get, Gingrichproductions.com. And the entire newsletter designed to say, there is no 'fiscal cliff.' This is fantasy. What you have today is the Washington elite chanting 'fiscal cliff, fiscal cliff, fiscal cliff,' hoping to convince Republicans to do something really stupid because the alternative would be going off the 'fiscal cliff.' The 'fiscal cliff' is an invention of people. The very people were trying to bully us right now.

All you have to say is let's break it down into 12 or 15 foothills, no cliffs. Now, let's one by one, solve each of the smaller problems until we get to some solutions. You don't have to panic over this but I want to confess something here, Sean. What I outlined for you, I actually copied from Tip O'Neil. When O'Neil was faced with Ronald Reagan in 1981, he knew that he couldn't beat him in head-to-head negotiating but he thought he could preserve the Democratic Party and preserve the welfare state in a long battle of attrition.

And so, O'Neil who had a Republican Senate, a Republican president, used the power of House over and over again to slow down the momentum.

I think the Republicans got to understand, they are not going to get any good deal from Barack Obama. He has contempt for them. He shows that contempt on a regular basis. He's a hard-line left winger. And so, they've got to think through the American people have chosen him, he's going to be our president for four years, what does an effective conservative house do in a period where it is having to maneuver against both liberal Democrats in the Senate and a very, very liberal president? And frankly, it may surprise you, but Tip O'Neil is a pretty good person to study to see how he did it in the 1980s.

HANNITY: I think I agree with you. How would you deal with the communication problem that you mentioned? Because I agree with you, it has been atrocious.

GINGRICH: Well, first thing I do, was I would see how many of the House and Senate Republicans are prepared to sign up for serious communications. And I'd actually build a methodical plan. When we took on reforming Medicare in 1996, which was a huge challenge with a Democrat in the White House, we trained every member of the House caucus to be able to go out and to talk about Medicare, in an intelligent, effective way. We knew what we were trying to say. And I would tell you, the Congressional campaign, committees campaign in last year on the Medis-care project, they beat the Democrats in virtually every district where that became an issue. So, I would start with the national Republican Congressional campaign approach. But then I would grow it dramatically in a much more comprehensive effort to communicate to every single American of every background.

HANNITY: All right. Mr. Speaker -- I'm feeling better about what the Republicans can do.

(LAUGHING)

HANNITY: You have done a great job. And I tip my hat.

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