This is a rush transcript from "Special Report," October 6, 2011. This copy may not be in its final form and may be updated.

BRET BAIER, ANCHOR: We begin a new segment called "Center Seat." We've invited the Republican presidential candidate s to appear with us to answer questions from our panel. Our guest this evening, Minnesota Congresswoman Michele Bachmann. Thank you very much, congresswoman, for being the first in here in the panel.

MICHELE BACHMANN, R - PRESIDENTIAL CANDIDATE: Thank you. I'm pleased to be part of it. Th ank you.

BAIER: Let's start it. Dan, why don't you begin?

DAN BALZ, WASHINGTON POST: OK. Congresswoman, I think we want to start on the economy. One of the things you've said is that the way to get the economy moving right now is to start cutting spending in significant way. I'm wondering if you can point to some examples where there has been success in producing economic growth by sharply cutting spending at a time when the economy is either in recession or teetering on the brink of going back to another one.

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    BACHMANN: Well, I'll tell you what I hear talking to business people, especially all over Iowa. The business people are telling me they don't feel like people in Washington, D.C. have a clue as to what is really going on in the real world. And they see all of the out-of-control spending. They are the ones telling me they want to see significant spending cuts in Washington, D.C.

    They also want to see the tax cuts for job creators lowered. I agree. I'm a federal tax lawyer. We're the second highest in the world and we should be one of the lower ones in the world.

    But then also, regulations, and they see that as well as being a huge problem. One guy in Iowa told me that he has a plant up in Canada, and he said the tax rate was 18 percent last year. He said I had a decision to make. I bought a million dollar piece of equipment and I could either put it in my Canada plant or I could put it in my Des Moines plant. I took a look at all of the out-of-control spending, I saw that you guys in Washington aren't going to do a thing and so I'm putting my plant up in Canada. That wasn't just machine that went. It was jobs that went. And this happens 10,000 times every day.

    BALZ: So cutting --

    BAIER: Go ahead.

    BALZ: So cutting spending in and of itself isn't really what you're --

    BACHMANN: That is not the whole package, absolutely not. That is part of it. We know we have to cut back on spending because we are spending 40 percent more than what we are taking in. That is one part. That is one aspect. Cutting back on taxes on job creators is another. Killing Dodd-Frank and killing Obamacare is a major issue.

    And then also I want to pass a mother of all repeal bills on job killing regulations and then pass the already negotiated three free trade agreement. That should have been long ago. Then we also need to legalize American energy production. And I would zero out the repatriation tax on American earnings earned overseas. That would be a good beginning I think to get it going. It's a package. It's not one silver bullet. It's a number of things we have to do for job creation.

    BAIER: Steve?

    STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: I'd like to ask you, congresswoman, about entitlement reform in the context of national debt. We haven't seen much specificity from Republican presidential candidates on entitlement reform. Mitch Daniels, who is not running for president, just told your friend Scott Hahn that the Republican candidates in the race now are missing clarity, specificity and boldness on entitlement reform. What are a couple of things you'd do specifically on entitlement reform?

    BACHMANN: I think, I would point back to Governor Daniels' speech that he gave at CPAC. It was a brilliant speech that he gave. And he had several very good, cogent paragraphs dealing with entitlement reform. He talked specifically about Medicare. He talked about taking care of people who are currently on it, but also moving toward health savings accounts. He said that's what he did in Indiana.

    He also talked about Social Security reform, making sure we keep promises with people who are currently on the system, but people who aren't, we need to also keep the promise with people who are younger. And so he was specific, I think. And I thought that Mitch Daniels had wonderful ideas. I think they're well worth exploring. I think Mitch Daniels is someone that I would like to bring on my team as a very sharp mind to deal with this issue, because, you are right. That is the driver right now. Because not only is it just Medicare, and also Social Security, but it's Medicare part D and now it's Obamacare.

    CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: But on Social Security, would you raise the retirement age or would you means test? Specifically?

    BACHMANN: I think with people who are currently on the Social Security system, we need to keep that promise as it is. We have can't change those terms. People who are not yet on it, I think people don't realize how serious our debt problem is coming up. We will have to act fairly quickly. We need to act in conformity with new longevity levels that we have.

    But also I think means testing is something at least for Medicare that we may be looking at in the future. And Social Security, again, this would be dealing with people and I want to be very clear to people who are watching. This is people who are currently not on the system. It's for the future.

    KRAUTHAMMER: Would you say to a person in their 20's or their 30's the retirement age is gonna be higher when you get there than it is now under your -- if you were president?

    BACHMANN: I think it will be very likely, that it will have to be higher. I started studying this back in 1987. I was at William and Mary, I was doing a post-doctorate degree in tax law. I had a baby born that year and I was very nervous about what his Social Security burden and what it would be. He is now 24. And it's sobering, what his generation will have to pay in Social Security taxes going forward. And so we have to do something. There is no question.

    BAIER: Congresswoman, this goes back to Dan's question and the president was hammering Republicans today on the jobs bill, the second stimulus as Republicans call it. Take a listen to his statement and your response to it.


    PRESIDENT BARACK OBAMA: Go ask the Republicans what their jobs plan is, if they are opposed to the American Jobs Act, and have it scored, have it assessed by the same independent economist that assessed our jobs plan. I'll be interested in the answer.


    BAIER: So his question I guess is what can you do right now if the economy is teetering? And he says that this jobs plan is the answer right now. What is your response?

    BACHMANN: Well, of course it isn't. I'll tell you the answer that one job creator in Iowa told me. He has 500 employees, he said one word -- "disaster." This jobs plan is a disaster, because look at the three component parts. Number one, he wants to continue with the payroll tax deduction. There is not a shred of evidence that that created a single job.

    He wants to continue to prolong the unemployment benefits. There is not a shred of evidence that that creates jobs.

    And then number three, he wants more stimulus projects for more Solyndras of the world. I mean let's face it, that hasn't created jobs.

    And how is he going to pay for it? He wants to take away the deductions for the three most popular deductions that people have, the home mortgage interest deduction, the charitable deduction, and the deduction for state and local taxes. This is a disaster, his plan. That's why it's dead on arrival. It's a joke for people who actually create jobs.

    BAIER: But his question is what is your plan? If you're not gonna approve his plan, what is your plan if the economy is teetering on the precipice?

    BACHMANN: My plan is what I told Dan. It isn't just one silver bullet. There is a lot of actions we need to take, one of which again would be very simple, legalize American energy production. And that would begin job creation almost immediately.

    BALZ: But a lot of those are long-term ideas, not immediate.

    BACHMANN: Well, it's amazing when you send a signal how quickly things change, because, again, UBS did a study three weeks ago that said the number one reason why employers aren't hiring is Obamacare. The one thing the president could do that would be very helpful, he could issue immediately a moratorium on implementation of Obamacare, of Dodd-Frank, he could put a moratorium on regulations and at the EPA in particular. And, as a matter of fact, he could go one farther and actually just cancel some of those rules and regulations that are in place. That would send a very strong signal.

    I'm a job creator, my husband and I. That sends a strong signal when we know we either A, aren't going to be paying increase taxes or B, we won't have to be in compliance with job killing regulations. It's very real.

    BAIER: We are going to take a break here. More "Center Seat" with presidential candidate Michele Bachmann. And don't forget that we'll also be continuing the conversation into a special edition of "Special Report" online. You can log in now at foxnew.com/sronline. We'll take your questions and comments. Stay with us.


    BAIER: And we're back with our panel and special "Center Seat" guest Congresswoman Michele Bachmann. This round we'll start with Charles.

    KRAUTHAMMER: Congresswoman, when "Don't Ask, Don't Tell" was repealed and we had a long debate about it, one of the arguments of those who wanted to keep it intact was you don't want to change the culture of the military in the middle of a shooting war. If you won the presidency you would be inaugurated in January of 2013, the abolition of "Don't Ask, Don't Tell" would already have been in place for almost a year-and-a-half. So reinstating it would mean a change again in culture of the military. Would you abolish it? Would you reinstate "Don't Ask, Don't Tell" if you were elected president?

    BACHMANN: I would reinstate it because the military is not a social experiment. It is a very serious duty of the United States government. We need to maintain order and decorum in the United States military. There was disagreement on this policy and I would reinstate it.

    KRAUTHAMMER: But what if it were shown in the ensuing 18 months between now and then that there was no disruption of decorum and order?

    BACHMANN: Well, of course we'd have to take that into consideration, but if you're asking me today what I would do, I would reinstate it. But, ya know, that's another day.

    BAIER: Dan?

    BALZ: I'd like to turn to Afghanistan if we could. Two questions. One is, how would you define a successful mission in Afghanistan at this point? And then secondly, what do you think of the Obama timetable for the drawdown of troops?

    BACHMANN: Well, I think I'd have to go back just a little bit in time. Because had President Obama been willing to give General Petraeus his original order of the resources that he requested, when he did, we may well have seen a better ending at this point, because again, the effort was to have a two-prong war, one in the southern province in Helmand and then one in the eastern province and fight them both at the same time.

    Because the president chose to delay and chose to give a reduction in the number of troops we could only go to the south. And we are having problems there. There is no question that we are.

    And so the other problem that we have, quite frankly, is Pakistan, the proxy wars that Pakistan continues to fight in Afghanistan. There are problems there. They need to be addressed. But I have a great confidence in General Allen. And what I would do as commander-in-chief is have a short conversation, invite both of the gentlemen in, even though General Petraeus is now at the CIA, and ask them for their advice. What can we do? Can we end this? How quickly, what do you need to have it done?

    BALZ: At this point do you think the president's timetable for drawing down troops is too fast? Would you accelerate it? Would you slow it down? How would you handle that?

    BACHMANN: I think it is too fast. I think that's -- some of the back channels that we're hearing. But again, I want to know from the real people who are involved on the ground what they are seeing. I think that right now we don't see the stability. We don't see it in the Karzai government. We just aren't seeing that level of stability. It's a volatile situation.

    But again, Afghanistan does not stand alone. Pakistan is playing out proxy wars. And of course, they're worried about the influence of India, once the United States pulls out. This is not a good situation. I wish it was better than what it was, but it isn't. And so, it's going tol take some more attention to detail. It's not a glib answer on Afghanistan.

    BAIER: Steve?

    HAYES: Congresswoman, I'd like to shift to politics here, and ask you about some comments you made recently about the Republican field.

    BAIER: Take a listen.


    BACHMANN: Why would we settle? Why would we settle on a moderate? Why would we settle on someone who is not clear on the issue of life, on the issue of religious liberty, on the issue of marriage between a man and a woman?


    HAYES: Who were you talking about?

    BACHMANN: Well, there are candidates in the race that aren't clear on those issues. And I think of all years, Republicans shouldn't settle on the nominee. Because --

    HAYES: Which candidate specifically? Just in conversation?

    BACHMANN: I will -- we're among friends, right?

    BAIER: It's the panel.

    BACHMANN: It's the panel, we're among friends. And I think that is what is wonderful about the debate and the entire vetting process, because then the voters get to see for themselves where the candidates stand on this issue.

    And my point is, quite simply, what I'm seeing on the ground is that President Obama will be a one-term president. And that's just among Democrats let alone independents and Republicans. So we should not settle. In this year of all years we can have it all in our nominee. We can have a true fiscal conservative, a true national security conservative. We can have someone who is a social conservative and a Tea Partier. We can have the whole ball of wax. We can win this thing and actually change the agenda here in Washington.

    HAYES: Some people have speculated that you were talking about Mitt Romney there. And my question is if Mitt Romney were the nominee, would we a year from now see you out on the campaign trail fundraising for him?

    BACHMANN: Well, that would be an absurd question for me to answer, because I am running to be the Republican nominee and I'm running very seriously. I'm running very strongly and we're getting a marvelous response on the ground.

    BAIER: Well, let me follow on that. Since the Iowa straw poll win, in the polls you have been down in single digits, depending on the poll you look at. The latest one was the Washington Post/ABC News poll which has you down at seven percent. What do you think has happened? And what do you see happening?

    BACHMANN: Well, of course, the media every day wants to decide who the next President of the United States will be, but the American people aren't going to let that happen. Surely there is a change. Governor Perry entered the race. That changed the dynamic. And of course, the dynamic has changed also in the last three to four weeks. And so we are seeing a roller coaster like we have never seen before. I'm hanging on for the long haul. That is what the American people are. At the end of the day, people want to know who is the serious candidate who's gonna turn the economy around. And who can they trust? And I'm that candidate.

    BAIER: Congresswoman, thank you very much. We're going to continue this conversation online. Stay with us.

    That is it for the panel here, but stay tuned for some digital hijinks that have made for funny kickers in recent days. We'll see if this one works or not.

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