This is a rush transcript from "Hannity," March 4, 2011. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: Former Speaker of the House Newt Gingrich was the talk of the political world this week as rumors swirled that a major announcement was imminent. And on Thursday, in Atlanta, Georgia, Speaker Gingrich revealed that he's one step closer to challenging "The Anointed One" in the year 2012 and it is forming a presidential exploratory website. Let's take a look.


NEWT GINGRICH, FORMER SPEAKER OF THE HOUSE: We will look at this very seriously. And we will very methodically layout the framework of what we'll do next. And we think that the key is, to have citizens who understand this is going to take a lot of us for a long time, working together. There will be many more chances to have conversations. I simply want to give you that. And I think you will have more than enough to write about in the near future.


HANNITY: Now the former speaker was a bit cryptic about his future in politics yesterday. But tonight, we've got the man himself right here in our studio to help set the record straight. Former Speaker of the House Newt Gingrich, Mr. Speaker.

GINGRICH: Good to be here.

HANNITY: Mr. President?

GINGRICH: Well, that's up to God and the American people. But Callista and I were grateful yesterday because we had Governor Deal, and we had the lieutenant governor and the speaker of the House, all three with us. And all three supportive of what we are doing. And I think, at this point we have an exploratory website NewtExplore2012.com. And we're getting a lot of responses on it. And my expectation is by the end of this exploratory process, they will have an announcement and we'll be in the race. And I think it is very daunting, but it's also very exciting.

HANNITY: All right. So, there are reasons why you took this step rather than an exploratory committee. Can you talk a little bit about that?

GINGRICH: Well, first of all, technically under the Federal Election Commission, it doesn't matter. It's exploratory process whether you have a committee or not. We are still in the process of wrapping up several things in our businesses. And for example, I'm -- this is the first time in I think 10 years I've been here as a guest and not as an analyst.

HANNITY: I think that is true.

GINGRICH: Because Fox News said, got it, you're not here anymore.


GINGRICH: The American Enterprise Institute very similarly, I've been a senior scholar there, and as of yesterday I'm not senior scholar there. So, there are things like that we are working through. We also wanted to have an ability to listen to the whole country. That's why we are using a website approach. Because we want people anywhere who want to be part of this to let us know and to be engaged with it. And I think that there's a real hunger for an articulate expression of American exceptionalism of how free enterprise creates jobs, of what we need to do to balance the budget once again as we did when I was speaker, to get power out of Washington and back home to the states and the people thereof and implement the 10th Amendment. And so, and frankly to protect us in foreign policy and the national security. So, I think the potential for a positive, solutions-oriented alternative to Obama, is very, very real. And that's where we're going to start outlining on Monday when I'm in Iowa.

HANNITY: Right. In Iowa, then New Hampshire and South Carolina?

GINGRICH: Absolutely.

HANNITY: But this is an important question, you started your political career back in 1958, that's when you began.

GINGRICH: That's right.

HANNITY: OK. You worked your way all the way up to the Speaker of the House of Representatives. And as I was reading the articles as the news was coming out this week, you know, you've been out of power in Washington, what, 17 years now.

GINGRICH: Well, 12 years since I left the speakership.

HANNITY: But 17 years when you became a speaker. That's my math.

GINGRICH: That's right.

HANNITY: What's the difference, because a lot of people saying, all right, well, does Newt still bring some -- you know, we are going to go back 12, 14, 15, 16 years and every article raises well, can Newt overcome the past in terms of the fact that you were, quote, "deemed" by the media a controversial speaker. What do you...

GINGRICH: Well, I think, first of all, if you think it is controversial to balance the federal budget for four straight years and pay off $400 billion, to have the first tax cut in 16 years and what Arthur Laffer called the largest capital gains tax cut in American history, to see unemployment go down from 5.4 percent to four percent while I was speaker. To strengthen defense, to have the largest entitlement reform in history, welfare reform -- two out of three people went to work or went to school. If those things are controversial, then it was controversial.

But I think the biggest advantage of the 12 years that I had at the American Enterprise Institute, at the Center for Health Transformation, developing ideas, making movies with Callista, writing books, I had time to think about, and frankly thanks to the Bush administration allowing me to be a volunteer adviser in defense, in intelligence, at the State Department, in health care, I had a chance to see the executive branch from the inside.

And I think I have a much deeper and more fundamental understanding today of the changes we need to be successful. You know, I'm in the Reagan tradition, I think our best years are ahead of us, not behind us. I think we have a chance to break out and have an extraordinary 20 or 30-year run, leave China and the others way behind, and be the most dynamic, you know, most prosperous and safest country in the world. That requires the kind of changes -- I don't know coming out of the speakership that I would have had anything like the depth of understanding I have now about how big the changes have to be, and how you could actually get it done.

HANNITY: Yes. What I'm hearing is, if you win the primary, what you're setting up is really compare and contrast. Two very distinct, different visions. Barack Obama wants to transform America. And you are in many ways saying you want to transform America.

GINGRICH: Well, I think President Obama wants to change America into a different country. I want to renew the American dream that all of us are endowed by our creator with certain alienable rights, that we have the right to pursue happiness. He wants to redistribute wealth. I want to make sure everybody has a chance to create wealth. You know, if somebody hasn't created it, you can't redistribute it.

I saw him today talking about how no school is going to fail. The sad fact is, his administration backs things like the New York City union, which wants to fire the 5,000 most newest, most aggressive, most energetic, most dedicated teachers on behalf of mediocrity. And I think that we ought to be clear about this. If you want people not to fail, then you better have a standard of measuring success. You better have a standard of encouraging people to do their best. And the president unfortunately actually backs bureaucracies that guarantee we are not going to succeed.

HANNITY: What do you think, for example, when you have a $14 trillion debt -- by the time the next president gets in the office, it will probably be somewhere around $18 trillion -- how do you -- with the numbers so big and so massive, how do you get to a balanced budget and then start paying down that debt?

GINGRICH: Well, first of all, when I became speaker, people thought you couldn't balance the budget at all. It was common wisdom among all of our elites.

HANNITY: What was the deficit then? What was the debt then?

GINGRICH: Debt, a couple of hundred billion dollars. The deficit was probably a third of what it is now. But here's my point. It is just a question of scale. We actually got to a balanced budget in three years. Now, there were a couple of things you would do immediately. First is, you'd pass very dramatic tax cuts to create economic growth, because if you go from nine percent unemployment down to four and five percent of the American people go back to work, they come off Medicaid, they come off food stamps, they come off unemployment, they start paying taxes because they have a job. That's step number one to a balanced budget.

Second, quit spending. I mean, this new budget the president sent in is a joke. He ought to call Governor Cuomo and Governor Brown, who are Democrats, and ask their advice because both of them are trying to get to a balanced budget because they have to. And his budget is a disaster. See, just stop spending.

Senator Manchin, who as the Democratic conservative governor of West Virginia, with a $4 billion dollar state budget, had $1 billion rainy day fund. He said, the first thing he did when he became governor is he stopped hiring. He said, there's about a 10 percent turnover in a year, and if you just stop hiring, within two years, you have a dramatically smaller government. So, you can -- my message is simple. I have done it with the help of a lot of people, John Kasich among others. We can do it again. A balanced budget is possible. And that should be one of our goals.

HANNITY: All right. We're going to take a break. More with the former Speaker of the House coming up right after the break.


HANNITY: And welcome back to "Hannity." We continue now, joining me in studio, former Speaker of the House, Newt Gingrich. I just -- one little point on this. So, you have this website, NewtExplore2012.

GINGRICH: Yes, .com.

HANNITY: OK. When will the decision, the final decision come?

GINGRICH: Oh, I think it is going to take a fair amount of time, at least a number of weeks, maybe six or seven. Because you want really -- this is such a big decision if you're serious about it. And it covers so many different requirements. If you look at what Obama spent last time, I think a billion dollars. And if you're serious about trying to not just run, but to both win the nomination and win the presidency, you really need to take some time to lay the groundwork, think it through. Explore the possibility before you make the final decision.

HANNITY: All right. Obviously, we are getting close to that time. And all right, how would a Gingrich administration look different from an Obama administration? And I mean on three major fronts, on economic issues, homeland security issues, foreign affairs? How would it be different?

GINGRICH: Well, first of all, what we ought to do this year is we ought to pass a permanent tax program and not have just this two-year extension. Notice that we got a two-year extension and the economy improved overnight.

HANNITY: You mean the Bush tax cuts?

GINGRICH: The Bush tax cuts. Literally, December we got it, all of a sudden you have unemployment coming down. We are going to run into the same problem in 2012, because it ends in 2012. The Republican House ought to pass the permanent extension of the current tax code so we get that out of the way so there's stability for businesses to invest, so we can continue to create jobs.

Then we ought to review what China, India and Germany are doing. We ought to reform litigation, regulation, taxation, education, health, energy infrastructure, and we ought to say, our goal is to be the most dynamic, job-creating society in the world. Because that creates the prosperity that pays for Social Security, pays for our health system, enables us to be a successful country.

HANNITY: Can I gently disagree with you? The unemployment numbers, we only created 192,000 jobs. That's not enough to bring the unemployment number down. Isn't one of the big issues that we are not facing, that this under-employment issue? And also we stop counting people that stop looking for work, and if you look at that number, we are at 17, 18 percent.

GINGRICH: If you -- and this is going to be the challenge for the Obama administration -- if you look at all the people who would have been employed three or four years ago, you've had a dramatic shrinking in the total number of Americans at work. And that's going to have a big impact as people start to come back into the market. But I don't think, if they were still fighting over the Bush tax cuts, you wouldn't even have the current job creation, that's my only point.

HANNITY: All right.

GINGRICH: But they did have -- the Bush tax cuts once again had a positive impact on creating jobs.

HANNITY: Would you try and reduce taxes further?

GINGRICH: Absolutely. I am for zero capital gains tax, which is the Chinese model, a 12-and-a-half percent corporate rate, which is the Irish corporate tax rate. And I would be for 100 percent expensing to write off new machinery. So, every year, you could write off all the new machinery, so American workers would have the best machinery in the world to be the most productive, to have the best jobs.

HANNITY: What do you make of all that is now happening in the Middle East? And reports that the president is now putting pressure, I mean, we almost had the United States go against Israel in the United Nations, as you know. And now the pressure to put Jerusalem on the table, coming from the Obama administration, and again, concede land for peace. And add to that, all the instability in the Middle East as it affects oil and gas prices.

GINGRICH: You know, this is an administration which was very aggressive about an American ally, Mubarak in Egypt. And very confused about an American opponent, Qaddafi in Libya. This is an administration which doesn't notice the demonstrations in and the brutality in Tehran. And it confuses Israelis building apartments with Iranians building nuclear weapons.

And I think it is very, very dangerous. People need to understand there's a huge impact potentially on our energy prices. Gasoline prices are already up 85 percent since Obama became president. And there's a grave danger that you're going to see a dramatically higher increase. And if something goes bad in the Middle East, we will understand the cost of left-wingers who oppose using American energy.

HANNITY: So, a Gingrich presidency would have had a stronger voice when the Iranian dissidents were protesting. A Gingrich presidency would immediately allow drilling in ANWR, the 48 states off the coast, nuclear reactors?

GINGRICH: Absolutely.

HANNITY: Coal mining--

GINGRICH: I am for every American form of energy in order to save $400 billion a year here in the U.S., to create jobs here, instead of creating jobs in Venezuela, or Saudi Arabia or Iran. But I go a step deeper. We ought to have an active strategy of undermining and defeating the Iranian government and replacing it with a rational, moderate, reasonable government without using military force, which is what Reagan did to the Soviet empire with enormous success.

Also, I would say, on the very first day, and I voted for this as speaker and were I in the White House, I would immediately issue an executive order saying that every country gets to pick their own capital. And we will put our embassy where their capital is. Israel is the only country in the world that the United States does not allow to design their own capital.

HANNITY: How would you prevent Ahmadinejad, Iran from getting nuclear weapons? What pressure can you bring to bear? We know what would happen. I believe he would use them if he had them.

GINGRICH: You know, Callista and I did a movie on Ronald Reagan and a movie on Pope John Paul II going back to Poland. In both movies we showed how diplomatic, political, intellectual pressure brought to bear against the Soviet Empire. Ultimately broke it. Broke it very -- at a speed no liberal thought was possible. Iran is not that powerful a dictatorship. We should be aggressively every morning, we should have a very powerful Voice of America program. We should have subsidies going in covertly, to help people organize.

HANNITY: Can I run that one day?

GINGRICH: I think -- it would be, I think you would have so much fun it would be dangerous.

HANNITY: I think you are right.

Well, this is a fascinating time. I will say one thing, as these debates emerge, I think it is going to be extraordinary for the country. And a great contrast to where we go. And would you look forward to debating Obama if you won the primary?

GINGRICH: Oh, I think, no -- as Ronald Reagan once said to Walter Mondale, I will try not to hold his youth and inexperience against him.


HANNITY: OK. Mr. Speaker, good to see you.

GINGRICH: Good to see you.

HANNITY: We'll follow the process.

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