"FOX NEWS SUNDAY" HOST CHRIS WALLACE: Well, Republicans voted in three states this week. On Saturday in the Nevada caucuses, former Massachusetts governor Mitt Romney got more than half the vote, this after he scored a big victory Tuesday in his home state of Michigan.
And last night John McCain won the crucial South Carolina primary by a narrow margin over Mike Huckabee.
We continue our series "Choosing the President" now with Mitt Romney, who joins us from the campaign trail in Florida.
And, Governor, welcome back to "FOX News Sunday."
REPUBLICAN PRESIDENTIAL CANDIDATE MITT ROMNEY: Thanks, Chris. Good to be with you.
WALLACE: After the split decision yesterday in South Carolina and Nevada, it seems that you and John McCain are now the frontrunners in this scrambled GOP field. What's the choice for voters between you and McCain?
ROMNEY: Well, I think if people want somebody who has been in Washington all their life and understands Washington's ways and has been part of the Washington scene for a quarter of a century, then John McCain will be their person.
If they want somebody instead who's been in the real economy over the last 25, 30 years, who understands why jobs come and why they go and understands what it takes to grow an economy, then I think I'll be their person.
And I anticipate that given the challenges we face in our economy right now, I'm going to get the nod.
WALLACE: Governor, you got into a dust-up with a reporter this week over your comments that you don't have lobbyists running your campaign and, as you just suggested, that you would change Washington. Here's what you've been saying.
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ROMNEY: I intend to deal with the fact that Washington is broken and that is by cutting through the partisanship, and the bickering, and the score settling, and all the politicians with all their connections with all the lobbyists that have been there for years.
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WALLACE: But, Governor, Ron Kaufman, who's a D.C. lobbyist, is one of your advisers. Another lobbyist, Vin Weber, is chairman of your policy committee. And lobbyists have reportedly donated hundreds of thousands of dollars to your campaign.
So, Governor, don't you have close links to this very same Washington establishment that you say you're going to shake up?
ROMNEY: There's no question in a campaign of 200 staff and probably 100 advisers that you're going to have a number who are registered lobbyists. I have a former senator, for instance, who's a registered lobbyist.
But my campaign is run by my team from Massachusetts and some other folks that we brought in. And this is very definitely an outsider's campaign, let me tell you. It's not inside the Beltway. And my life has not been spent inside the Beltway.
And I'm very proud of the fact that, you know, I've lived in the private sector. I understand jobs. I understand how the economy works. I've been traveling throughout the world over the years, negotiating, running businesses in some cases, and that's taught me a lot about what it takes to build a strong economy.
And I just don't think that somebody who has spent their life inside Washington, that has lobbyists on every elbow, that's been chairman of one committee or another, and has all those connections, all the favors that are owed and are owed in return, all of the scores to settle -- I just don't think that's going to get Washington fixed.
Washington fundamentally is broken, and people in this country want to see change in Washington, and that's not going to happen by somebody who's been there, for whom Washington is a way of life.
WALLACE: As you talked about, the economy is now job one, issue one, for voters. Politicians are scrambling right now to announce, each of them, their own economic stimulus package to avoid a recession.
You announced yours yesterday -- a number of tax cuts for individuals and businesses, and the price tag for your plan would be $233 billion, which is much bigger than the plan that President Bush announced on Friday.
So are you saying that his is too small to do the job?
ROMNEY: Well, I like mine better. I'll tell you that. And there are two reasons. One is mine has a very large dose of long-term growth incentives. It's not just designed to be a short-term stimulus, but rather a long-term growth boost.
And that's not only by allowing capital expenditures to be expensed over these next two years, but also lowering the corporate tax rate so that we can get more businesses to stay here and grow here.
And then, something I'm particularly fond of, it says for anybody in the workforce 65 and older, neither the company nor the individual is going to have to pay Social Security payroll taxes -- FICA, if you will.
And by virtue of that elimination, you're going to have more people stay in the workforce. That's going to help grow our economy. So I'm proud to have a number of pro-growth features that will build our economy long term.
So you really have to divide my incentive plan between those things that are long-term in nature and those things that are short- term and stimulative. And I think it probably divides about 50-50.
WALLACE: Democrats say that your plan and also President Bush's don't give any money to the 50 million Americans who at this point don't pay taxes.
And according to the Democrats, not only could those 50 million Americans use it, but they're also more likely to spend the money, which is the whole point of a rebate system.
ROMNEY: Well, my system is primarily based on trying to create jobs, not handing out cash to individuals. I do lower the lowest income tax bracket from 10 percent to 7.5 percent. And that helps, of course, people at the low economic level.
But also for individuals 65 and older, the fact that they're not going to be paying any Social Security or Medicare taxes anymore, no more payroll taxes, means that that's going to be a break for them.
But the heart of what I'm doing is trying to get businesses to become more active, buying capital equipment, trying to get businesses to grow in this country and to create more jobs, because the best -- obviously, the best antidote to having an economic slowdown is growth in the business sector, creating jobs, putting more people at work and, of course, that generates more income for everybody.
WALLACE: But what about those 50 million -- or perhaps it would be less with your Social Security break -- who don't pay any taxes? Nothing for them?
ROMNEY: Well, it's jobs. It's focused on jobs. And certainly, what you want to do is provide the incentives to help companies to be creating new jobs.
I think the number of 50 million strikes a little high. But for those that are not paying any taxes at all, simply writing a check doesn't seem to me to be the right course to follow.
WALLACE: You won in Michigan this week, among other things, pledging to offer a $20 billion package to help out the auto industry with energy research and new technology.
Conservative columnist Cal Thomas didn't like this idea much, and here's what he had to say. "Is that what a Republican should do, bail out a private industry rather than endorse capitalism, free enterprise, and encourage Detroit to build the kinds of cars that people want?"
Governor, are you going to offer billions of taxpayer dollars to every industry that's in trouble in this country?
ROMNEY: Well, let me get it quite straight here so we can be talking from the same fact base. We spend about $4 billion a year right now on energy research to try and help us become more energy -- or less energy dependent on foreign sources.
Some of that is on developing new sources of energy, some is on developing efficiencies in automobiles, in homes, appliances and so forth.
And I think over the coming years we need to increase our investment to become energy independent from about $4 billion a year to about $20 billion a year.
And that, obviously, has got to grow gradually because there are not a lot of places now that do the kind of research we need to do to get ourselves energy independent.
But that's not just to bail out the automobile industry. That's not what I have in mind. I'm not looking for a bailout at all. Instead, it's saying that where we invest, we tend to do very well.
We invest in defense technology, and we lead the world in defense products. We invest in health care technology as a nation, about $50 billion a year or more, and we lead the world in developing cures and, of course, in health care technologies.
And then we develop -- or put a lot of money into space, and that has some spinoff of various kinds, into the private sector as well.
I think we have to make a far more substantial investment in becoming energy independent. We send over a billion dollars a day to countries outside this one to buy energy from them. And it's time for us to start spending here on research so that we can free ourselves of dependence on foreign oil.
And that's, of course, going to benefit the auto industry along with many, many others. But most importantly, it's going to benefit this entire country economically, from a foreign policy standpoint, and I think it will help our environment as well as we find ways to become more energy efficient.
WALLACE: As you push your record as an economic manager, people are taking a closer look at what you did as governor of Massachusetts.
The Boston Globe looked into this and they said that job growth during your years in office was the third lowest of any state in the nation, and manufacturing employment declined more than 14 percent -- again, the third worst in the country.
Governor, why should voters think that you're going to do any better for the country's economy than you did for your own state of Massachusetts?
ROMNEY: Well, the record is much better in the own state of Massachusetts, and so I'll take exception with the Boston Globe.
When I came into this state, not only were we facing a $3 billion budget shortfall in state revenues, but we were losing jobs every single month, month after month after month.
And Massachusetts is a high-tech state, as you know, and a capital goods state. And that's a sector of the economy that responds very slowly to turnarounds, and so we worked very hard to re-stimulate the economy there and to encourage job growth.
And I was very pleased that by about 2.5 years into my administration, we were able to turn that job decline around and we started adding jobs. Virtually every single month we saw good job growth.
And something else I'm proud of -- even though when I came in there was virtually no pipeline of companies trying to think about coming to the state or expanding in the state -- we had, I think, less than a dozen companies that were working with the state to try and consider ways of moving there.
By the time I left, we had over 200. And some of the most notable successes -- for instance, Bristol-Myers Squibb building, I believe, the largest biotech center, biotech manufacturing facility, in the country -- that was awarded during my term.
We fought very hard for it and got it. But they haven't even completed construction yet. So those jobs are going to continue to come year after year after year.
And my expectation is you'll see Massachusetts continue to perform very well for a number of years to come, in large measure because of the work that I and the legislature did together to build a strong base for our economy.
WALLACE: But, Governor, a lot of states -- first of all, when you came in, there was a national recession, so everybody was losing jobs and a lot of states had their own problems.
But the fact is that across the country during the four years you were governor, jobs grew by a rate of 5.5 percent, but in Massachusetts they grew by one-half of 1 percent, and that was the fourth worst record.
The only states that did worse than Massachusetts during the four years you were governor were Michigan, which everyone says had a one- state recession because of the auto industry; Ohio, which has lost a lot of manufacturing jobs; and Louisiana, which was hit by Hurricane Katrina. Then Massachusetts came fourth.
ROMNEY: Well, we'll do it again. Let's go back and take a close look, and that is that I came into a state that had no pipeline, no sales force -- believe it or not, they had literally no sales force that called on companies and encouraged them to come into the state.
There was no activity of any significance to bring jobs to the state. And we went to work, legislature and I, to try and change that. It took us a while to get all the incentives in place.
We put in place a permanent investment tax credit. We put in place a manufacturing credit that said if you brought in medical manufacturing jobs, we'd give you a very substantial tax incentive.
And these features began to work, and I was very pleased that by the time my term had ended after four years that we'd been able to dramatically change our pipeline, bring in some key new industries -- or some key new players into the state and began to grow jobs.
But I also note that because we're a capital goods economy, a high-tech economy, we responded more closely -- or, excuse me, more slowly to the reversal in the overall national economy.
But look. Massachusetts is doing real well. Every year we saw surpluses in our budget that I was in office. We grew our pipeline of companies considering coming to the state, and many of those won. And we're continuing to see success.
And I'd also note that the entire region benefited from the success of Boston and the growth of Boston. Places like New Hampshire saw a great deal of growth during that term as well.
WALLACE: Governor, we have less than two minutes left. You also talk about your experience in private business.
You were an enormously successful businessman in the '90s as the head of Bain Capital, a private equity firm. Your critics point out that you took over a company called American Pad & Paper. That company ended up closing two plants and laying off 385 workers.
Bain also bought a company called Dade International, which ended up laying off some 1,900 workers. You didn't save those jobs, Governor.
ROMNEY: No, there's no question that if you're in the business world and you're trying to save a business that's in trouble, that you're not going to be successful 100 percent of the time.
And I'm very proud of the fact that we were successful many, many times. We grew jobs quite dramatically in many settings. But oftentimes, when an enterprise is in real trouble, you have to try and cut back to save it.
And I'll tell you, when you look at Washington and how badly broken Washington is, you're going to have to have somebody who can go there and say, "You know what? There are too many bureaucrats. There are too many employees in government. We're going to have to cut back in Washington."
I know how to do that and get Washington back on track. This is fundamentally, I believe, an election about changing Washington, about doing to Washington what has to be done to get America back on track so that we can regrow our economy.
And I'll tell you one thing, Chris, the only way you're going to have somebody who understands how to rebuild an economy is to have somebody who's been in the economy, who knows what it's like to see jobs come and go, who's fought to try and build businesses and build jobs.
We're competing around the world now with China and India, tougher competition than we've ever faced before.
It's going to be helpful to have a president who, when we're looking at agreements to work out with other countries on trade -- that knows what impact those agreements will have on American jobs, who knows, for instance, when there are tax incentives put in place, how it's going to change jobs in this country.
I am intimately familiar with how our economy works. I'm working very hard to make sure that the workers of this country have a brighter future. And I will never accept the idea that jobs are gone in America. I'm going to fight to bring back jobs and to grow this country.
WALLACE: Governor Romney, we want to thank you so much for talking with us. I hope to talk to you again soon, sir, and good luck on the campaign trail.