Sarah Palin Talks Tough on Debt Ceiling, Reveals Timeframe for 2012 Decision

This is a rush transcript from "Hannity," July 13, 2011. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: The great debt debate rages on tonight on Washington, D.C. as congressional leaders and President Barack Obama have once again failed to reach a deal on how to remedy America's fiscal crisis.

Now, that means, we are one day closer to the August 2nd deadline when it is believed that the U.S. will hit its $14.3 trillion debt ceiling.

And today, Moody's announced that it is placing American's AAA bond rating on review for a potential downgrade due to our risk of default.

At a wildly controversial attempt to avoid this, the Republican leader in the United States Senate yesterday offered up what he called a last choice option to the White House. Now in his plan, which has outraged conservatives, Senator Mitch McConnell would handover to President Obama the authority to repeatedly and unilaterally raise America's borrowing limit unless two-thirds of Congress votes again the hikes.

More On This...

    Now, in my opinion, he's essentially asking Republicans to surrender the very power that brought us to this crisis in the first place yo a man who knows no limits on spending your hard earned money.

    And joining me from Alaska with her take on all of this, Fox News contributor, former Alaska governor, Sarah Palin.

    Now, first of all, Governor, just standing back from all of this, did you ever imagine in America, $14.3 trillion and we have to raise more money because they can't live within their means?

    It's pretty daunting to me.

    SARAH PALIN, FORMER ALASKA GOVERNOR: It's absolutely nonsensical, the lack of planning that our leaders are exercising and showing their constituents coming out of D.C. right now, and the lack of understanding that too many have there in D.C., not understanding that Obama's big government, job-killing policies really are the antithesis of what our country needs to get back on the right track to allow us to be exceptional again.

    Remember, our country was built on a strong foundation of reward for work ethic and development of our natural resources. And here we've gone in the complete opposite direction under Obama with both those cornerstones. And we are where we are now with, as you mentioned in your intro, Moody's telling us that our AAA rating is under review now because we don't have a plan to get us back on that solid footing.

    HANNITY: All right, here's -- we've got to look at political reality and -- and we've got to look at reality in terms of what we can get done now with where we are. The Republicans only have one -- one piece of Congress. They have the House. We have the United States Senate, Harry Reid runs that. The president runs the White House.

    What would be acceptable -- because you're a conservative, you're well known in the Tea Party, you're a Tea Party leader. I'm a conservative, a registered conservative. I would prefer cut, cap and balance. But I mean cut now, not later, not 12 years down the road.

    If you can't get that through, the country can't default. I think that's a reality you agree with, is that correct?

    PALIN: Sure. We cannot default, but we have to -- we cannot afford to retreat right now, either. Now is not the time to retreat.

    HANNITY: Right.

    PALIN: This is the time to reload. And we reload with reality by giving facts and numbers to the American public so that those of us across the U.S. can start chiming in and letting our representatives know that we will not capitulate, we will not hand over more power, which I believe is unconstitutional, to President Obama to further manipulate our economy.

    You know, Article 1, Section 8 of our Constitution spells out that Congress has the power of the purse strings. So this plan of -- of McConnell's I think makes no sense, because it does cede power to our president and takes away that authority that is inherent in Congress to control the economic decisions that have to be made when it comes to debt.

    HANNITY: Yes. I don't want them passing the buck and handing the keys over to Barack Obama. All right, maybe he has to make dollar for dollar cuts, but he's going to use phony accounting methods. He's going to gut our Defense Department. And I wouldn't cede that responsibility to him. It's like handing the -- the keys to the car to a teenager who doesn't have his learning permit.

    PALIN: Yes, absolutely. And -- and, again, as I pointed out, the numbers speak for themselves. When you look at our economic woes and things that have gotten so much worse under President Obama, we -- we cannot trust him to further manipulate our economy, to further manipulate our U.S. energy supply and the value of our currency via his support of the Fed's monetizing our debt and QE2 and now talk of QE3 and perhaps QE4, just printing more money out of thin air to service our debt.

    But the plans under Obama are making absolutely no sense. And that is why McConnell and Boehner, our leaders in Congress and in the Senate, have to be stronger than ever -- no retreat, no capitulation -- but allowing President Obama to understand some free-market, time-tested principles that work for a pro-private sector agenda that we need to get the economy back on the right track.

    HANNITY: Right.

    PALIN: We cannot afford to back off and just hand him, with the white flags waving in front of him, a white flag saying, here, Mr. President, we trust you, you take over --

    HANNITY: Yes, I agree with you.

    PALIN: -- you do it. Because our president has failed in that arena.

    HANNITY: I -- all right. Now, as it --- as it relates to what you said, retreat, capitulation, here's what the president's strategy has been -- class warfare, even -- even if he raised taxes on people with private jets, it's $300 million. It's nothing. Scare the elderly. Scare veterans. Scare the disabled.

    It seems to me that there's a way to put the shoe on the other foot here. And I think what Congress -- I have a plan and an idea where Congress would go ahead and they would protect Social Security, raise the debt ceiling, put the cuts in place, at least dollar for dollar, make sure that they are immediate, and then hand it off to the Senate and the president. And then, if they failed to pass it and sign it, then it's on their shoulders.

    Does that seem like a good short-term plan until the election?

    PALIN: Well, you know, I'm still not one to buy into this notion that we must incur more debt, we must increase the debt ceiling by August 2nd, otherwise, you know, there will be catastrophe. I -- I still don't believe that that's necessarily the case. And we --

    HANNITY: I agree with you.

    PALIN: -- we have the $200 billion coming into the federal government every month. It takes $35 billion --- I'm sorry, billion dollars -- we have $35 billion that we must use to service the debt, $50 billion that we must use to write those Social Security checks, $2.9 billion to pay for our military personnel, and then other essentials.

    You prioritize. Our president essentially suggested the other day that he's not able to prioritize. As the chief executive of our nation, he cannot prioritize, and that's why he suggested that Social Security checks may not be written come August 2nd if that debt ceiling isn't increased.

    No. You pay for the essentials first and then the non-essentials have to get cut. They have to wait. That -- that's --

    HANNITY: So you would --

    PALIN: -- just reality.

    HANNITY: -- so, Governor, you wouldn't raise the debt ceiling at all?

    You'd -- like I have the numbers in front of me. For example, we take in $200 billion every month. We have $29 billion in interest on the debt, $49 billion for Social Security, $50 billion Medicare/Medicaid, $2.9 billion, as you pointed out, for the active military, Veterans Affairs, $2.9 billion. So there's only $39 billion left.

    So basically, you know, the FBI, the CIA, all these agencies then, would -- would risk shutting down. Now, I wouldn't mind the EPA, perhaps.

    But there is a risk there at that point politically, is there not?

    PALIN: But see, Sean, there are departments that can be revamped and -- and some bills that can wait. And, again, it's our president's job, as the leader of the executive branch, to prioritize and administer those dollars that Congress has allocated. And our president obviously isn't capable of doing that, because he has no plan that he can even put forward to say here are my priorities.

    Instead, he -- as he did some months ago when he said that government would shut down if X, Y and Z weren't accomplished, the military wouldn't get paid, they'd be thrown under the bus. And then he says the other day, oh, this next go around, it's going to be our seniors who get thrown under the bus.

    HANNITY: Yes, it -- it's a --

    PALIN: He said Social Security checks --

    HANNITY: This is all a lie.

    PALIN: -- may not go out.

    HANNITY: I agree. And that lie needs to be highlighted, as we point -- as I just pointed out and you've been pointing out, we're not going to go bankrupt. We're going to pay our debts. The senior citizens are going to get their Social Security no matter what. And I think it's, you know, so indefensible, what he's doing by trying to use seniors as a pawn in this debate.

    Do you agree with that? Do you think what he's done is calculated?

    PALIN: I believe that it's absolutely shameful that he is trying to scare our esteemed seniors, who built this country and have contributed and invested in this country over all these years, that he would threaten to throw them under the bus and not write them their Social Security checks. That fear-mongering, we just can't buy into that.

    HANNITY: Yes.

    PALIN: And, again, it -- it leads me to remind you and remind viewers that we can't just wave a white flag and surrender and say, oh, heaven forbid that those threats that our president is throwing out there --

    HANNITY: Right.

    PALIN: -- against our seniors --

    HANNITY: Hang on, Governor --

    PALIN: -- or our military or those disabled who need a safety net, that they're not going to be taken care of by their fellow citizens --

    HANNITY: All right --

    PALIN: -- all because --

    HANNITY: We --

    PALIN: -- our president has no plan to deal with an economy that is going bankrupt.

    HANNITY: All right, Governor, I still have a question or two on this.

    And, by the way, I was shocked the governor actually had a favorable piece in the -- what she calls lamestream media.

    We're going to have much more with Governor Palin coming up right after the break.


    HANNITY: And welcome back to "Hannity."And continuing to join me tonight is Fox News contributor and former Alaska governor, Sarah Palin.

    All right, one last question on this, because this is really important. You're right, the president is purposefully being dishonest with the American people over the numbers. We take in $200 billion. We can pay for Social Security, pay down the debt, pay for these services that we just listed in the last segment.

    The question is, what would be acceptable if, from your perspective, I know you want to fight this and not -- are you saying that you will -- you want the Republican Congress to say not a penny in raising the debt ceiling, period, end of sentence?

    Is that -- am I hearing you correctly?

    PALIN: It's -- if I were in Congress, I would not vote to incur more debt, not under this president. I -- I do not trust him.

    However, as I've gone on record saying previously, I believe that it will be increased, because too many in Congress believe that the -- the president must have that allowance of increasing the debt.

    So, having said that, what I would accept, knowing that it's going to be increased anyway, is DeMint's plan to cut the cap and to balance our budget. We do that in our state governments. We do that in our city governments. It's time that the feds do that, too.

    HANNITY: Yes, that's my plan, as well.

    Would you support, dollar for dollar, debt increase with spending cuts, real cuts, immediate, not down the road, and a separate bill on balancing the budget?

    PALIN: You know, Sean --

    HANNITY: That balanced budget amendment?

    PALIN: -- we're not -- that's not a realistic proposal that you're laying out there on the table, because what Obama seems to be willing to accept is perhaps talking about cuts someday down the road.

    Yes, if there were a way to guarantee that he would have to, as the executive, make cuts in his departments all throughout the federal government now, immediately, then, yes, we could talk reasonably about a plan like that.

    But again, as I say, I don't trust this president to not only not -- he doesn't know how to make those cuts, he's never had to do this before. He's always been one to just spend other people's money, even if that money is just borrowed money or printed out of thin air. He's never had to exercise real executive authority like that.

    HANNITY: It's -- it is amazing. And I've got to tell you, if he blames George Bush one more time, my head is going to explode. I've never seen such a crybaby executive in my life, that just -- he can't take it. He's been president nearly three years and he still can't take responsibility.

    Let me ask you this, you said to Newsweek, now, were you happy with the Newsweek piece? Because I've read a lot of pieces about you and I thought of all the pieces, this was actually somewhat favorable. What did you think?

    PALIN: You know, the reporter --

    HANNITY: Or fair -- fair --

    PALIN: -- Peter Boyer --

    HANNITY: -- OK, not favorable, fair.

    PALIN: Well, the reporter, Peter Boyer, no doubt, he is facing the wrath of --

    HANNITY: Yes.

    PALIN: -- some of his colleagues and the liberals in the mainstream media, because he did attempt a fair piece there. And I appreciate it.

    He wanted to talk about a successful executive's record, my team here in Alaska, and what it is that we could produce with reining in the growth of government and allowing a pro-private sector, pro-job creation agenda. And he focused on that. And it was refreshing to not have a hit piece written.

    HANNITY: Yes. Well, you did say in this piece -- and there's the title, "I Think I Can Win." And I know it's the million-dollar question. It's the source of great speculation about what your plans are. Now, I did have the pleasure of -- of meeting your daughter, Bristol. And she said you had already decided.

    PALIN: You know, I did say in that article that I believed that I could win, and then I went on to say but it doesn't have to be me. I'm not so egotistical as to believe that it can only be me to turn this country around. You know, if there are those who are out there willing to serve, with good executive experience, who have that servant's heart and -- and know not to be so excessively partisan that they can't just do what's right for the people who have elected them, then I would certainly find that person and support them and do all that I could to make sure that they defeat Barack Obama in 2012.

    HANNITY: Do you --

    PALIN: Now, I'm not wholly confident that we have that field set yet, that that one individual is in the field. So I'm still thinking about being one who would offer myself up in the name of service, knowing confidently that I have those common-sense, fiscally conservative, pro- private sector policy experience and ideas that can be put to good work for this country.

    HANNITY: Is there any timeframe, Governor, that -- in which you're thinking about maybe making a final decision?

    PALIN: Well, legally, of course, there are timeframes. And that -- that time is -- is -- it's coming rapidly in front of all of us. You know, August and September, you do have to start laying out a plan if you are to be one to throw your hat in the ring. So that -- that's basically the timeframe.

    HANNITY: All right, Governor. We always appreciate your time. Thank you for being with us. We look forward to that decision, by the way.

    Content and Programming Copyright 2011 Fox News Network, LLC. ALL RIGHTS RESERVED. Copyright 2011 CQ-Roll Call, Inc. All materials herein are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of CQ-Roll Call. You may not alter or remove any trademark, copyright or other notice from copies of the content.