This is a rush transcript from "Hannity," May 17, 2011. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: Donald Trump and Mike Huckabee shook up the GOP field in recent days, but it looks like Republicans may already be in for more surprises.

Now sources close to Minnesota Congresswoman Michele Bachmann said earlier today that she will make an announcement about her candidacy by the end of this month.

And lots of GOP chatter is also buzzing around Indiana Governor Mitch Daniels whose announcement about his 2012 intentions is also expected in the coming weeks.

And within the current field, the Republican contenders are already jockeying for position. Now, former Massachusetts Governor Mitt Romney raised a whopping $10.25 million yesterday, and that was at a fundraiser in Vegas where he brought together many of his high profile donors.

And former Minnesota Governor, Republican presidential candidate Tim Pawlenty is also attracting his own group of major donors. And he joins me now with his analysis of the GOP field.

Governor, welcome back, thanks for being with us.


HANNITY: All right. Trump out, Huckabee out. Looks like fellow Minnesotan Michele Bachmann is going to get in. Looks more likely Daniels gets in and maybe John Huntsman. What do you make of the new field?

PAWLENTY: Well, I think the field will settle in and, you know, I think it will be a great debate. There's a lot to pick from there. But I think when people look at these candidates, look who has had the executive experience, who's delivered on reducing spending, and taxes, and government reform in a blue state and who can market conservative principle across the country and win the election. I think that road leads to my campaign. So, we feel really good about that.

HANNITY: What are the issues that you think? How do you differentiate yourself from the Republican candidates? I would argue all the candidates want to cut taxes, they'll all want more drilling in America, the energy independence, stronger national security. You know, where do you think you are going to show a difference? How are you different from these other candidates?

PAWLENTY: That's a great question. And I think a lot of Republican candidates will sound similar. They're all going to stay there for cutting taxes, reducing spending, reforming schools, with accountability and choice, market-based health care, being tough on terrorism, public employee reform, pension and benefit reform and the like.

The real question Sean isn't so much wide differences in those issues, there will be some, but probably not wild differences. The real question is going to be is. Do you have the fortitude to actually do it or you just flapping your jaw like another politician? Have you done it? And have you done it in a way that attracts people in and allows us to accomplish it and govern? In Minnesota, I did in probably one of the most liberal states in the country as a movement conservative and the Cato Institute gave me an A grade, one of only four governors in the country to get that grade. The other three aren't running.

HANNITY: If you said that -- if you want the loudest candidate, it's not me. If you want somebody's bombastic, it's not going to be me. Maybe, subtly, you were referring to anybody in particular at that moment?

PAWLENTY: No. But I want to share with you this. Look, the country is facing big and serious trouble. So, if somebody wants an entertainer in chief or somebody who's going to be the biggest or most bombastic candidate, that is not me. But I don't think that person is going to get put in the Oval Office and given the responsibility to be commander in chief and leader of the free world and president of the United States. They are looking for somebody who has a record of accomplishment, and seasoned steady hand on the throttle, and somebody who's got the courage and the fortitude to actually do this stuff. I had the first government shutdown in my state in 150 years, set a record for vetoes, unallotted using the executive powers, more money out of my budget in my time as governor than all the other governors combined in my state. The next president is going to have to do tough things and he or she is going to have to demonstrate an executive experience with a record, I did.

HANNITY: One of the toughest positions I think you are now taking is interesting to me. On the 2011 budget, you thought the Republicans probably when the details came out should have shutdown the government. You are saying now that you would not support raising the debt ceiling. We were told today was supposed to be doomsday. We'll have more on this later in the program. But guess what, we survived the first day after having reached our debt limit. You are saying you wouldn't raise the debt limit.

So, I want you to explain both those things and how if you were president, you would handle these things?

PAWLENTY: Sure, well, President Obama has set up a false choice between America defaulting on its outside obligations which we simply can't do or shouldn't do and raising the debt ceiling. But that's not really our choice. Many months ago I wrote an op-ed, I think the first one published by a national voice saying there is enough cash flow and money coming in for at least a good while of extended period of time to pay all of our outside debts. And then in the meantime, roll up our sleeves and do what the real work of entitlement and spending reform that's real, meaningful and permanent. And they told us, well, the sky was going to fall here in mid May. Well, guess what? It is mid May. And now they are saying, well, it is August. And beyond August, they may have even more time, but in that time, before they raise the debt ceiling, and they shouldn't, fix the problem. And the underlining problem is, they are spending too much.

HANNITY: Yes. Well, Ryan is now proposing dollar for dollar. Do you think that is a good proposal or is that not go far enough? Do you have to deal with the entitlements? Do you have to deal with them now?

PAWLENTY: Yes. You can't look at a chart, federal outlays with the numbers and conclude that you can fix this long term or really without tackling entitlements, it is not easy to do but it must be done. And if we are not willing to say it specifically, then we all just wasting our time. And I think for the raising the debt ceiling question, the Republicans should be putting on the table permanent changes. Like a constitutional amendment to balance the budget, U.S. constitutional amendment or permanent caps on spending with specific reforms in entitlements. If they don't get something like that, Sean, then we just continue this drift. And America, the hour is late. And this country is in trouble. And we need to act now.

HANNITY: Well, it could take a long time for that constitutional amendment, as you know, the process is arduous, it's difficult, got to get the states in the end for that to happen. So, in the short term, you are saying that if they don't get spending caps built into this bill, you would urge Republicans not to support it?

PAWLENTY: It would depend what kind of caps. You know, if they're real caps with real targets and specifics around it and they're really enforceable that would be good, it's not ideal. But we know from the past when they put in these congressionally mandated caps, they can be congressionally removed. I think the real answer is, can you get some significant permanent entitlement and spending reform. And not just some amorphous caps that, you know, may kick in three or four years from now that are non-specific and kind of aspirational.

HANNITY: There were 204 brand new Obamacare waivers that were granted in April. Thirty eight of those 204 or 20 percent came from let's see, Nancy Pelosi's district. What does that tell you about first of all, all the companies wanting waivers, some companies granted waivers, a lot of unions have been granted waivers, and then Nancy Pelosi's district is one of the biggest beneficiaries of waivers for health care? What is your reaction to that?

PAWLENTY: Well, it tells us what we already know, that this is one of the most misguided pieces of legislation in the modern history of the country. It is heavy handed. It's going to further corrode our economy as we've already mentioned. I met a person the other day in Arizona who told me he is moving his whole company out of the country. He's got about 300 jobs there, 300 employees, just because of Obamacare. He can't afford the mandates. So, that story repeats itself.

HANNITY: Why does the word corrupt come to my mind when I hear that there's any waivers for any person anywhere? I mean, you know, I understand why McDonald's wanted a waiver, I understand why some companies want it. But, you know, the idea that some people are going to be subjected to this law, you know, it seems like this may even hit the equal protection clause by the time this is all said and done.

PAWLENTY: Another example of really crony politics or crony capitalism, if you got the right connections, the right lobbyists, the right interest group, you get your special deal, and the rest of us get our wallet out, and that's in the tax code, it's in earmarking, and now you see it in Obamacare. And I don't blame people for trying to get out from underneath it, that it is an awful law. But when you have that many needs for exemptions, it tells you that the law, it is a warning sign that the law is broken and doesn't work.

HANNITY: All right. Governor, good to see you. We'll talk to you often throughout the campaign, I appreciate you being with us.

PAWLENTY: Thank you.

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