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Aired January 26, 2012 - 20:30   ET


FORMER GOV. MITT ROMNEY (R-MASS.), PRESIDENTIAL CANDIDATE: Well, I think you know that Fannie Mae and Freddie Mac were a big part of why we have the housing crisis in the nation that we have. And we've had this discussion before.

Speaker Gingrich was hired by Freddie Mac to promote them, to -- to influence other people throughout Washington, encouraging them to -- not to dismantle these two entities. I think that was an enormous mistake. I think, instead, we should have had a whistle-blower and not horn-tooter.

He should have stood up and said, look, these things are a disaster; this is a crisis. He should have been anxiously telling the American people that these entities were causing a housing bubble that would cause a collapse that we've seen here in Florida and around the country. And are they a problem today? Absolutely. They're offering mortgages, again to people who can't possibly repay them. We're creating another housing bubble, which will hurt the American people.

The right course for our -- for our housing industry is to get people back to work so they can buy homes again. We have 9.9 percent unemployment in Florida. It's unthinkable, 18 percent real unemployment here. Get people back to work. We'll get people into homes. Get the foreclosures out of the system. Let people get into homes, rent properties if necessary and get America's housing industry growing again.


FORMER REP. NEWT GINGRICH (R-GA.), PRESIDENTIAL CANDIDATE: Let me start by saying, Florida is one of the two or three most hard hit states on foreclosures. How many of you know somebody who has had a house foreclosed? Just raise your hand. Raise your hand.


GINGRICH: Okay. The governor has cheerfully -- the governor has cheerfully attacking me inaccurately and he knows it. The contracts we released from Freddie Mac said I would do no consulting, wrote in, no -- I mean no lobbying, none. But this is a more interesting story. We began digging in after Monday night because frankly I'd had about enough of this. We discovered to our shock, Governor Romney owns shares of both Fannie Mae and Freddie Mac. Governor Romney made a million dollars off of selling some of that. Governor Romney owns share -- has an investment in Goldman Sachs, which is today foreclosing on Floridians.

So maybe Governor Romney in the spirit of openness should tell us how much money he's made off of how many households that have been foreclosed by his investments? And let's be clear about that.


ROMNEY: First of all, my investments are not made by me. My investments for the last 10 years have been in a blind trust, managed by a trustee. Secondly, the investments that they've made, we've learned about this as we made our financial disclosure, have been in mutual funds and bonds. I don't own stock in either Fannie Mae or Freddie Mac. There are bonds that the investor has held through mutual funds. And Mr. Speaker, I know that sounds like an enormous revelation, but have you checked your own investments? You also have investments through mutual funds that also invest in Fannie Mae and Freddie Mac.


ROMNEY: Let me -- let me -- I've got more time. Let me -- let me -- let me just -- let me just continue. There's a big difference between buying like U.S. savings bonds and getting a return. That's a -- that's not taking money out of the United States, that's loaning money to the United States. And what my trustee did, is he loaned money to Fannie Mae and Freddie Mac and -- and they got paid interest of course, just like if you buy U.S. savings bonds. But what the speaker did, was to work as a spokesman to promote Fannie Mae and Freddie Mac. To protect them from those people that wanted to take them down.

He got paid $1.6 million to do that. He said his first contract indicated there would be no lobbying. But his second contract didn't have that prescription taken out of it. And so you have to ask yourself why is that? What he was doing was clearly promoting Fannie Mae and Freddie Mac, in this case Freddie Mac to the tune of $1.6 million. That is one of the reasons we're in the trouble we're in.

BLITZER: Go ahead.

GINGRICH: Well, first of all, you'll notice that the governor wasn't aware of the ad he was running. He's not aware of the investments that were being made in his name.

ROMNEY: Of course, I can't it's a blind trust.


GINGRICH: my investments with his is like comparing a tiny mouse with a giant elephant. The fact -- the fact is...


GINGRICH: ...that there is a very substantial question. You didn't give any instructions to -- to say, gee, let's not do this or let's not do that? You're very quick to draw the widest possible exaggeration. The fact is, the only time I ever spoke to the Congress about this issue was in July of 2008. The New York Times reported it. I told the Republicans in the House, vote no. Do not give them any money. They need to be reformed. And in answer to the question earlier, I would break each of them up into five or six separate units.

And over a five year period, I would wean them from all federal sponsorship because we need to get away from this gigantic systems.

BLITZER: Let me bring Congressman Paul, then Senator Santorum.


BLITZER: A follow up question to you both specifically. It seems they both acknowledge they both made money from Fannie and Freddie. Should they return that money?

REP. RON PAUL, R-TEXAS, PRESIDENTIAL CANDIDATE: That -- that subject really doesn't interest me a whole lot.


PAUL: But the question does. The -- the question is, what are we going to do about Fannie Mae and Freddie Mac. It should have been auctioned off right after the crash came. It would have been cleansed by now.


PAUL: It should have been sold.


PAUL: But maybe it's my physician background, but I think an ounce of prevention is what we ought to talk about so we can quit doing this. But we know how the bubble came about. It was excessive credit, interest rates held too low, too long, the Federal Reserve responsible for that.

Community Reinvestment Act, which is Affirmative Action telling banks they have to make these risky loans. And at the same time, there was a line of credit which allowed Fannie Mae and Freddie Mac to, you know, make more money. And it was -- it was assumed that they would always be protected.

Now, you can't argue. I've talked a long time about cutting off that credit from the Fed. I was trying to prevent this stuff.


PAUL: Also, I opposed the Community Reinvestment Act, as well as I had legislation in 10 years before the bust came to remove that line of credit to the Treasury.

BLITZER: Senator Santorum?

FORMER SEN. RICK SANTORUM, R-PA., PRESIDENTIAL CANDIDATE: Well, I would just say, in answer to the question, that as I mentioned last debate, in 2006, I went out and authored a letter with 24 other senators asking for major reform of Freddie and Fannie, warning of a meltdown and a bubble in the housing market. I stood out, I stood tall, and tried to get a reform, and we couldn't do it. The reform we'd need is to gradually decrease the amount of mortgage that can be financed by Freddie -- or underwritten by Freddie and Fannie over time, keep reducing that until we get rid of Fannie and Freddie.

The bigger issue here is, these two gentlemen, who are out distracting from the most important issues we have been playing petty personal politics, can we set aside that Newt was a member of Congress and used the skills that he developed as a member of Congress to go out and advise companies -- and that's not the worst thing in the world -- and that Mitt Romney is a wealthy guy because worked hard and he's going out and working hard? And you guys should that alone and focus on the issues.


BLITZER: We're going to take a quick break, but we have a lot more to discuss. Coming up, the debate questions go to space, the final frontier.

Stay with us.


BLITZER: We're continuing the debate here in Jacksonville, Florida.

Let's get to the issue of transparency, because voters out there, they want to know as much about you four gentlemen as possible before they vote.

Tax returns -- let me bring this to Speaker Gingrich.

Earlier this week, you said Governor Romney, after he released his taxes, you said that you were satisfied with the level of transparency of his personal finances when it comes to this. And I just want to reiterate and ask you, are you satisfied right now with the level of transparency as far as his personal finances?

GINGRICH: Wolf, you and I have a great relationship, it goes back a long way. I'm with him. This is a nonsense question.


GINGRICH: Look, how about if the four of us agree for the rest of the evening, we'll actually talk about issues that relate to governing America?

BLITZER: But, Mr. Speaker, you made an issue of this, this week, when you said that, "He lives in a world of Swiss bank and Cayman Island bank accounts." I didn't say that. You did.

GINGRICH: I did. And I'm perfectly happy to say that on an interview on some TV show. But this is a national debate, where you have a chance to get the four of us to talk about a whole range of issues.

BLITZER: But if you make a serious accusation against Governor Romney like that, you need to explain that.

GINGRICH: I simply suggested --


GINGRICH: You want to try again? I mean --

ROMNEY: Wouldn't it be nice if people didn't make accusations somewhere else that they weren't willing to defend here?


GINGRICH: OK. All right.

Given that standard, Mitt, I did say I thought it was unusual. And I don't know of any American president who has had a Swiss bank account. I'd be glad for you to explain that sort of thing.

ROMNEY: OK. I will. I will. I'll say it again.

I have a trustee that manages my investments in a blind trust. That was so that I would avoid any conflicts of interest. That trustee indicated last week, when he was asked about this, he said that he wanted to diversify the investments that I had. And for awhile he had money in a Swiss account, reported in the U.S., full taxes paid on it, U.S. taxes.

There's nothing wrong with that. And I know that there may be some who try to make a deal of that, as you have publicly. But look, I think it's important for people to make sure that we don't castigate individuals who have been successful and try and, by innuendo, suggest there's something wrong with being successful and having investments and having a return on those investments.

Speaker, you've indicated that somehow I don't earn that money. I have earned the money that I have. I didn't inherit it.

I take risks. I make investments. Those investments lead to jobs being created in America.

I'm proud of being successful. I'm proud of being in the free enterprise system that creates jobs for other people. I'm not going to run from that.

I'm proud of the taxes I pay. My taxes, plus my charitable contributions, this year, 2011, will be about 40 percent.

So, look, let's put behind this idea of attacking me because of my investments or my money, and let's get Republicans to say, you know what? What you've accomplished in your life shouldn't be seen as a detriment, it should be seen as an asset to help America.


BLITZER: Mr. Speaker, I'm ready to move on, if you are.


BLITZER: I said I'm ready to move on to the next subject if you are.

GINGRICH: I'm happy to. I'm happy to simply say, you know, it would be nice if you had the same standard for other people that you would like applied to you and didn't enter into personal attacks about personal activities about which you are factually wrong. So I would be glad to have a truce with you, but it's a two-way truce.



ROMNEY: I'm happy on any occasion to describe the things that I believe with regards to the Speaker's background. We'll probably get a chance to do that as time goes on.

BLITZER: Mr. Speaker, explain why you think the money that he made over these many years, recent years, under your tax -- hold on. Mr. Speaker, under your tax plan -- we're talking about taxes right now. This is substance. Under your proposed tax plan, he would pay zero taxes. Explain that.

GINGRICH: Well, it would depend on whether the particular kind of payments he made were counted under that plan as capital gains or whether they were counted as regular income. But even as regular income, he would pay about the same. And I've said this.

This is where I'm the opposite of Obama. I believe we need to have somebody who fights for hardworking taxpayers.

My interest is in reducing everybody's tax here to 15 percent, not trying to raise his to the Obama level. So I proposed an alternative flat tax --


GINGRICH: You know, I have proposed an alternative flat tax that people could fill out where you could either keep the current system -- this is what they do in Hong Kong -- keep the current system with all of its deductions and all its paperwork, or you'd have a single page -- I earned this amount, I have this number of dependents, here is 15 percent. My goal is to shrink the government to fit the revenue, not to raise the revenue to catch up with the government.

And I'd be happy...


Let me just say, I'd -- I would be happy to have the Mitt Romney flat tax for every American to pay at that rate, and I haven't complained about the rate he pays.

BLITZER: Senator Santorum, most of the polls, almost all of the polls, want the wealthiest Americans to pay more in taxes in order to balance the budget. Why are they wrong, in your opinion?

SANTORUM: Because we need to have as much money funneling through this economy as possible. And the people who make those investments are people who have resources and wealth, and we want them to deploy that wealth in the most productive way possible.

And when you increase tax rates and you make things much more expensive to do -- in other words, the rate of return is not as profitable, then they tend to do things like investing in -- in nontaxable instruments and other things that don't employ people.

And so what I believe is we need to reduce taxes. I don't -- look, I'm honest. I don't reduce the higher -- top rate as much as these other folks do. I take the Reagan approach. Ronald Reagan had a 28 percent top rate. If it was good enough for Ronald Reagan, it's good enough for me. And that's what we put the top rate as.


And -- and we have a bottom rate of 10 percent. I believe in a differential. I don't believe in a flat tax. I believe in a simplified tax code with five deductions and -- and focus on simplify, creating two rates.

I disagree with Newt also on this. I don't believe in a zero capital gains tax rate. I don't think you need to get to zero to make sure that there's an efficient deployment of capital and investment.

I think, if you get to zero, then, in fact, guys like Mitt Romney, who, again, I give him -- I wish I made as much money as Mitt Romney, but...


But -- you know, but he wouldn't probably pay much at all in taxes. And I think that, as long as the tax is not one that deters a proper investment to be able to deploy capital and to get jobs created, then lower rates are better than zero when it comes to the issue of capital gains.

BLITZER: Are you with Ronald Reagan as far as the tax rates, as Senator Santorum has suggested, Congressman Paul?

PAUL: No, he taxed too much. My goal is to get rid of the 16th amendment. And the only way you can do that...


The only way you can do that is not run a welfare system and a warfare system in policing the world.

But I do want to address this subject about taxing the rich. That is not a solution. But I understand and really empathize with the people who talk about the 99 percent and the 1 percent.

Because there's a characteristic about what happens when you destroy a currency. There is a transfer of wealth from the middle class to the wealthy. And this has been going on for 40 years. So the middle class is shrinking. They are getting poorer and they're losing their jobs and they're losing their houses. But Wall Street isn't getting poorer. And they are the ones who are getting the bailout.

So we have to address the bailout and the system that favors a certain group over another group. If you don't have sound money and if you have a welfare state, no matter whether the welfare state is designed to help the poor, you know, the welfare system helps the wealthy.

And there has been this transfer of wealth. So, if we could stop all of these transfers to the wealthy class, but the solution isn't to tax the wealthy. If you give an honest product and customers buy that product, you deserve to keep that money and earn that money. But there's a big difference between those who earn money and those who rip us off through the government and the monetary system.


BLITZER: Congressman Paul, you're a physician. You're 76 years old. You would be the oldest president of the United States if you were elected. Are you prepared to release your medical records so voters out there know what your health is?


PAUL: Oh, obviously, because it's about one page, if even that long. But...


But I'm willing to...


I'm willing to challenge any of these gentlemen up here to a 25- mile bike ride any time of the day in the heat of Texas.


And, you know -- you know, that subject has come up and sometimes in fun but sometimes not in fun. But, you know, there are laws against age discrimination, so if you push this too much, you better be careful.

(APPLAUSE) BLITZER: I raise the question because you remember, four years ago, the same question came up with John McCain and he released his records, finally. I remember our own Dr. Sanjay Gupta spent hours reviewing those records.

So let me go down and ask all of you. Are you ready to release your medical records?

ROMNEY: Happy to do so.

GINGRICH: I'm happy to. And I also want to attest I'm confident that Dr. Paul is quite ready to serve if he's elected. Watching him campaign, he's in great shape.



BLITZER: All right, we have another question from the audience. I'll look forward to seeing your medical records.


Go ahead.

Let's take a question right now. Please introduce yourself, as well.

QUESTION: Good evening. My name is Matthew Bathel (ph). My question is, what would your plan be for the future of manned space flight and the future of NASA?

BLITZER: All right, let me go to Governor Romney on this one. An important issue, especially here in Florida where a lot of people have lost their jobs as a result of the decline of the space program. Yesterday Speaker Gingrich outlined a -- a pretty long plan on what to do about it and he said that by the end of his second term, if he were elected president, there would be a permanent base on the moon. Good idea?

ROMNEY: That's an enormous expense. And right now I want to be spending money here. Of course the space coast has been badly hurt and I believe in a very vibrant and strong space program. To define the mission for our space program, I'd like to bring in the -- the top professors that relate to space areas and physics, the top people from industry. Because I want to make sure what we're doing in space translates into commercial products. I want to bring in our top military experts on space needs.

And -- and finally of course, the -- the people from -- the administration if I had an administration. I'd like to come together and talk about different options and the cost. I'd like corporate America as well as the defense network and others that could come together in a -- in a part -- in, if you will, a partnership basis to create a plan that will keep our space program thriving and growing. I -- I believe in a manned space program. I'd like to see whether they believe in the same thing.

I'm not -- I'm not looking for a -- a colony on the moon. I think the cost of that would be in the hundreds of billions, if not trillions. I'd rather be rebuilding housing here in the U.S.

BLITZER: We have a question. I want to speaker to weigh in as well.


BLITZER: This question is related from -- we got it from Twitter. Speaker Gingrich, how do you plan to create a base on the moon while keeping taxes down in eight years?


GINGRICH: I think, look it's a great question. You start with the question, do you really believe NASA in it's current form is the most effective way of leveraging investment in space? We now have a bureaucracy sitting there, which has managed to mismanage the program so well that in fact we have no lift vehicle. So you almost have to wonder, what does the Washington office of NASA do? Does it sit around and think space?


GINGRICH: Does it contemplate that some day we could have a rocket? My point in the speech I made yesterday, which is on CSPAN and I'd love to have all of you look at it. It's based on having looked at space issues since the late 1950's when missiles and rockets was a separate magazine. And working with NASA and others. I believe by the use of prizes, by the use of incentives, by opening up the space port so that it's available on a ready basis for commercial fight, by using commonsense for example the Atlas-V could easily be fixed into a man capable vehicle so you didn't have to rely on -- on a Russian launch or a Chinese launch.

There are many things you can do to leverage accelerating the development of space. Lindbergh flew to Paris for a $25,000.00 prize. If we had a handful of serious prizes, you'd see an extraordinary number of people out there trying to get to the moon first in order to have billed (ph) that. And I'd like to have an American on the moon before the Chinese get there.

BLITZER: Senator Santorum?


SANTORUM: I -- I believe America's a frontier nation and obviously the frontier that -- that we're talking about is -- is the next one, which is space. And that we need to inspire. One of the big problems we have in our country today is that young people are not getting involved in math and science and not dreaming big dreams. So NASA or the space program where space is important, NASA is one component that -- our -- our space defense is another area. I think both of -- both of which are very, very important. I agree that we need to bring good minds in the private sector much more involved in NASA than the government bureaucracy that we have. But let's just be honest, we run a $1.2 trillion deficit right now. We're -- we're borrowing 40-cents of every dollar. And to go out there and promise new programs and big ideas, that's a great thing to maybe get votes, but it's not a responsible thing when you have to go out and say that we have to start cutting programs, not talking about how to -- how to -- how to grow them.

We're going to cut programs. We're going to spend -- under my administration, we're going to spend less money every year -- every year. Year, to year, to year the federal government amount of spending will go down for four years until we get a balanced budget. And you can't do that by -- by -- by grand schemes. Whether it's the space program or frankly whether it's the Speaker's Social Security program, which will create a brand-new Social Security entitlement. Those are things that sound good and maybe make big promises to people, but we've got to be responsible in the way we allocate our resources.

BLITZER: We're going to get to that in a moment, but...


BLITZER: Congressman Paul, Texas, the space program very important there as well. Where do you stand on this?

PAUL: Well, I don't think we should go to the moon. I think we maybe should send some politicians up there.


PAUL: But I went -- I went into the Air Force in 1962 and studied aerospace medicine. Actually had a daydream about maybe becoming the first physician to go into space. That -- that didn't occur, but I see space -- the amount of money we spend on space, the only part that I would vote for is for national defense purposes. Not to explore the moon and go to Mars. I think that's fantastic. That's -- I love those ideas. But I also don't like the idea of building government business partnerships. If we had a healthy economy and had more Bill Gateses and more Warren Buffetts, the money would be there. It should be privatized, and the people who work in the industry, if you had that, there would be jobs in aerospace.

And I just think that we don't need a bigger, a newer program, when you think of the people -- I mean, health care or something else deserves a lot more priority than going to the moon. So, I would be very reluctant, but space technology should be followed up to some degree for national defense purposes, but not just for the fun of it and, you know, for -- you know, for scientific --

BLITZER: We're going to leave this subject, but before we do, I want Speaker Gingrich to clarify what you said yesterday in that major speech you delivered on space. You said that you would support a lunar colony or a lunar base, and that if 13,000 Americans were living there, they would be able to apply for U.S. statehood from the moon.

GINGRICH: I was meeting Rick's desire for grandiose ideas. But --

BLITZER: That's a pretty grandiose idea.

GINGRICH: But let me make just two points about this.

It is really important to go back and look at what John F. Kennedy said in May of 1961 when he said, "We will go to the moon in this decade." No American had orbited the Earth. The technology didn't exist.

And a generation of young people went into science and engineering and technology, and they were tremendously excited. And they had a future.

I actually agree with Dr. Paul. The program I envision would probably end up being 90 percent private sector, but it would be based on a desire to change the government rules and change the government regulations, to get NASA out of the business of trying to run rockets, and to create a system where it's easy for private sector people to be engaged.

I want to see us move from one launch occasionally to six or seven launches a day because so many private enterprises walk up and say, we're prepared to go do it. But I'll tell you, I do not want to be the country that having gotten to the moon first, turned around and said, it doesn't really matter, let the Chinese dominate space, what do we care? I think that is a path of national decline, and I am for America being a great country, not a country in decline.


BLITZER: We're going to move on, but go ahead, Governor Romney.

ROMNEY: I spent 25 years in business. If I had a business executive come to me and say they wanted to spend a few hundred billion dollars to put a colony on the moon, I'd say, "You're fired."

The idea that corporate America wants to go off to the moon and build a colony there, it may be a big idea, but it's not a good idea. And we have seen in politics -- we've seen politicians -- and Newt, you've been part of this -- go from state to state and promise exactly what that state wants to hear. The Speaker comes here to Florida, wants to spend untold amount of money having a colony on the moon. I know it's very exciting on the Space Coast.

In South Carolina, it was a new interstate highway, and dredging the port in Charleston. In New Hampshire, it was burying a power line coming in from Canada and building a new VHA hospital in New Hampshire so that people don't have to go to Boston.

Look, this idea of going state to state and promising what people want to hear, promising billions, hundreds of billions of dollars to make people happy, that's what got us into the trouble we're in now. We've got to say no to this kind of spending.


GINGRICH: I want to make two points.

First, I thought we were a country where one of the purposes of candidates going around was to actually learn about the states they campaigned in and actually be responsive to the needs of the states they campaign in. For example, the port of Jacksonville is going to have to be expanded because the Panama Canal is being widened, and I think that's useful thing for a president to know. I think it's important for presidents to know about local things.

Second -- and at the other end of the state, the Everglades Restoration Project has to be completed, and it's the federal government which has failed.

But, second, in response to what Rick said, when we balanced the budget with the 1997 Balanced Budget Act, and ultimately had four consecutive balanced budgets, we doubled the size of the National Institutes of Health because we set priorities. It is possible to do the right things in the right order to make this a bigger, richer, more exciting country.

You don't just have to be cheap everywhere. You can actually have priorities to get things done.


BLITZER: All right. We're going to move on.

But go ahead, Ron Paul.