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GOP Presidential Candidates Campaign in Iowa; Rick Perry Speaks to Crowd in Iowa; Rick Santorum Speaks to Crowd in Iowa; Callista Gingrich and Ann Romney Sometimes Introduce Their Husbands Before Speeches; Michele Bachmann's Iowa Campaign Co-Chair Joins Ron Paul's Campaign; Newt Gingrich Speaks to Crowd in Iowa

Aired December 31, 2011 - 14:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


ALI VELSHI, CNN ANCHOR: Have a great weekend.

FREDRICKA WHITFIELD, CNN ANCHOR: Hello, everyone thanks for joining us. I'm Fredricka Whitfield. We're going to look at the 2012 presidential contenders in this political hour. But first an update on some of today's top stories.

(BEGIN VIDEO CLIP)

CROWD: Three, two, one, happy New Year!

(CHEERS)

(END VIDEO CLIP)

WHITFIELD: It's already 2012 in some parts of the world. This is Sydney, Australia, where its estimated a million people watched a massive fireworks display over Sydney's Harbor bridge and its iconic opera house. And in New Zealand revelers turned out in Auckland, but heavy rain forced other cities to cancel outdoor celebrations.

And in Syria, huge crowds are turning out across the country again today. An activist network based in Syria says at least nine protesters died today, killed in clashing with security forces. Two opposition groups there reached a deal a few hours ago, making a plan that charts a course for democracy in case Syria's president steps down.

And back in this country, customer complaints pushed Verizon to drop its plan to start charging that $2 fee to pay bills. The nation's largest wireless company wanted to charge the extra couple bucks for one time payments online or by phone, but customers raised a stink, and it didn't take long for Verizon to listen up and drop the idea.

All right, we're going to be following the Republican contenders, live in Iowa today as they crisscross that state. "The Contenders 2012" starts right now.

CANDY CROWLEY, CNN CHIEF POLITICAL CORRESPONDENT: Good afternoon and welcome from Des Moines, Iowa this is "The Contenders 2012." I'm Candy Crowley. Today you are going to hear from the Republican candidates at their live events as they make their cases to the Iowa voters. Why should they be the next president of the United States? We have for you all of these contenders that are here in the state now. We also have Joe Johns who has been following Newt Gingrich, and Jim Acosta who has been with Rick Santorum this week.

Almost all the candidates are here in Iowa making the most of those three days remaining before the Iowa caucuses. This hour Rick Santorum is meeting voters in Indianola. Bachmann is making phone calls to voters along with her volunteers. And Newt Gingrich is holding a town hall meeting. Only Ron Paul and John Huntsman are elsewhere.

We want to start with the surprises this week. Mitt Romney in the lead, Rick Santorum up, and Newt down in the latest CNN/TIME/ORC polling. We want to bring in our correspondents now. Jim Acosta you have been with Rick Santorum. He's kind of been the guy this week.

JIM ACOSTA, CNN POLITICAL CORRESPONDENT: That's right. We're covering the surging Rick Santorum here in Knoxville, Iowa. Let me tell you where we're at right now. We're inside the national sprint car hall of fame museum here in Knoxville, and that is where Rick Santorum will be in about an hour from now. He's in Indianola, Iowa, at the moment. He's got a slew of events today. And as you said, he has been the it candidate. There have been a couple of polls that have come out, one by CNN, showing him moving up to third place. And so he's certainly a candidate to be taken seriously right now.

And it's interesting that he's coming to a sprint car museum because it's bean marathon for Rick Santorum. He's been the iron man of the Iowa caucuses. His visited every county in this state. He's arguably spent the most time here. So it will be interesting to see if all of that pays off for him on caucus night, Candy.

CROWLEY: Joe, I want to also bring in Joe Johns. Joe, you had another candidate who was in the headlines probably not for reasons he would like, and that is Newt Gingrich, who has fallen in the polls from the time when he started the climb. He looked like a real challenger to Mitt Romney and is now way down there languishing, at least in these Iowa polls.

JOE JOHNS, CNN SENIOR CORRESPONDENT: That's for sure, Candy. We're in Atlantic, Iowa, actually inside a soft drink distribution plant. And, you know, I just heard Jim talking about the significance of the location. In some ways Newt Gingrich was just about a month ago, the flavor of the month if you will, and now apparently no longer. Really in a competition for third place, he was leading just not very long ago.

He got hit by a number of really harsh campaign ads, huge money in fact spent by a political super political action committee that basically does things in the interest of Mitt Romney, and all these ads came flooding on the air waves. Newt Gingrich's polling numbers went down.

Now he's under pressure from the inside and also some of the supporters on the outside, saying you need to run some negative ads in order to catch up here. So far Newt Gingrich has really resisted all of that. He's just down the street. We're expecting to hear from him in a little while, and hopefully we'll hear from him on the issue of when Newt Gingrich might decide to go negative, Candy.

Joe Johns, one of many correspondents out there for us today. Of course the candidates across Iowa. Rick Perry is busy here. He started the day in Fort Dodge. Now he is in Boone. And we want to listen to him talking to the folks he hopes will come out for the caucuses Tuesday.

RICK PERRY, (R) PRESIDENTIAL CANDIDATE: -- the laws I've signed into law. I want to be the anti-establishment candidate that goes to Washington, D.C. and represents your values.

And I want to go and be there with a sense of purpose. And that purpose will be to make Washington, D.C. as inconsequential in your life as I can make it every day.

(APPLAUSE)

And I happen to think that the key to making Washington, D.C. as inconsequential in your life is putting in place, installing with a constitutional amendment, a part time Congress where they spend less time in Washington, they make less money, they have half the staff that they got at least, they spend their time back home in a real job back in the district living under the laws that they passed. That is a powerful message that we need to send during this election and this opportunity that we have.

Our country is calling us. Our children are waiting for us to answer that call. I think about the prophet Isaiah. As god was asking whom shall I send and who will go for us? And Isaiah said "Here am I. Send me." This is your country. Taking her back is our challenge. Taking her back is our chore.

(APPLAUSE)

I hope you'll join me in answering that call as well, and say "Here am I. Send me." And on the 3rd I'll make a pact with you. If you all will go and have my back this coming Tuesday, I'll have your back for the next four years in Washington, D.C. God bless you, and thank you all for coming out and being with us today.

(APPLAUSE)

CROWLEY: Once again you've been listening to Rick Perry. He's in Boone, Iowa along with our correspondent Peter Hamby. Peter, I was sitting here listening to Perry here's a guy who in August came in and almost immediately was the front-runner. He had a lot of money. He had a lot of mainstream support. And then he had a couple of really bad debates. And now he is struggling to kind of even stay alive in this race. What's the feeling inside the Perry camp?

PETER HAMBY, CNN POLITICAL REPORTER: What's interesting about the Perry campaign in Iowa is he's getting very big crowds. And there's a lot of sort of staff feuding and infighting. There's a lot of disappointment about the campaign. I can tell you his team here in Iowa is confident, Candy, about caucus night.

The fight for third place according to public and internal polling shows that fight for third be very fluid. And aside from Mitt Romney and Ron Paul, the candidate with the best ground game in Iowa is Rick Perry. So if he can get his volunteers to sign people up at these big events and get them out on caucus night, which they are saying they can, and quite frankly he has a very good staff here in Iowa, you know, he can move from, you know, fourth or fifth in the polls and try to slip into that third place finish. We keep saying you need a top three finish in Iowa. If he does that expect him to skip New Hampshire and move to South Carolina and plant himself down there.

So, you know, the Iowa ground staff is confident. You know, they know it's going to be a tough fight. In the end organization can only do so much as you know against momentum, and the three candidates in Iowa right now are Mitt Romney, Ron Paul, and Rick Santorum. So, you know, there's a lot that can happen in the next few days, but expect the Perry campaign to get their people in vans, speak up at caucus sites. You're going to see a lot of Perry people on the ground here Tuesday night, Candy.

CROWLEY: You're right, Peter. In real estate it may be location, location, location. In the Iowa caucuses, it's organization, organization, organization, which is why you're never totally sure what will happen on caucus night. Thanks so much Peter Hamby.

Coming up next you will hear an interview I did earlier this week with candidate Rick Santorum. He's been in this state longer than anyone else and is beginning the reap some rewards from that.

But before we go to break, we want to look at how Beijing is welcoming the New Year.

(CHEERS)

CROWLEY: The big celebration in the U.S. is just hours away. Our Anderson Cooper will be among the crowds in New York Times Square along with comedian Kathy Griffin. Together they will host CNN's special New Year's Eve coverage beginning tonight at 11:00 p.m. eastern.

(COMMERCIAL BREAK)

CROWLEY: Welcome back to this special hour of CNN Newsroom. We're taking time this afternoon to let you hear from the 2012 presidential contenders unfiltered, uninterrupted, in their own words.

As we've been reporting all week long, times have been very good for Rick Santorum. I want you to take a quick look at these poll numbers. He is now third in the latest CNN-TIME-ORC poll behind Romney and Ron Paul. I talked to Rick Santorum this week about the importance of these polls and about electability.

(BEGIN VIDEOTAPE)

CROWLEY: Senator, what are the other things in our poll was on that very important issue of electability. You know, we talk a lot about how campaigns, voters they sort of have a candidate of the heart, and then their head tells them I want somebody who can beat the other guy. When we ask likely Republican caucus goers who has the best chance to beat president Obama in November, Romney was at 41 percent and you were at four percent. So while you clearly have grabbed the hearts of some of these folks here in Washington enough to boost you into the top tier, only for percent of likely caucus goers believe that you actually could beat President Obama.

RICK SANTORUM, (R) PRESIDENTIAL CANDIDATE: Well, that's because most of the media says that Mitt Romney is the guy that can beat President Obama. What history does Mitt Romney have of beating anybody as a conservative.

CROWLEY: He's polling well.

SANTORUM: You realize that polling --- polls change. Convictions don't change. What we need is a conviction politician that the American people can trust. That's what we need in this election, somebody who draws a clear contrast, someone who has a bold plan to balance the budget in five years, someone who has experience on national security and has a track record of confronting radical Islam and being right on tissues when it comes to the security of our country and state of Israel. We need someone who understands the intrinsic value of the role of family when out and fought those issues when it wasn't popular.

I'm the candidate that actually was able to win in states as a conservative in getting Democrats and independents to vote for us when, you know, when I was out there fighting all these battles. Mitt Romney has no track history of downing that. In fact he's only run as a moderate or liberal. When he ran as a conservative in the primary last time he lost.

CROWLEY: So just to sum up you don't think that Mitt Romney could beat president Obama?

SANTORUM: I think I'm the best candidate not just to beat president Obama, but to do what is necessary to get this country going, conviction, a conservative who can rally the American people around a common set of values.

This is very much the 1980 election all over again. This is, do we go with someone who the pundits say can win, or do we go with someone who we know is the best person to govern this country? And I hope like we did in 1980 we choose the latter and it made all the difference.

CROWLEY: Do you think he could win?

SANTORUM: Look I think initiative Republicans have a decent chance of beating Barack Obama. That's not the question. The question is who is the best person who govern the country if we do win. We don't want a Pyrrhic victory. We want a victory that does the things that are necessary that make our country free, safe, and prosperous.

(END VIDEOTAPE) CROWLEY: In that same CNN-ORC poll that we've been telling you about, Mitt Romney was far and away the candidate that led when the question was who do you think is best able and best qualified to beat President Obama. So clearly electability seems to be moving the needle a little bit here in Iowa. It's such an important issue. We found it interesting today Rick Santorum was out today with another ad. Take a look.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Who has the best chance to beat Obama? Rick Santorum. A full spectrum conservative Rick Santorum is rock solid on values issues, a favorite of the Tea Party for fighting corruption and taxpayer abuse, more foreign policy credentials than any candidate. And rick's made in the USA jobs plan will make America an economic superpower again.

Rick Santorum -- a trusted conservative who gives us the best chance to take back America.

SANTORUM: I'm Rick Santorum and I approve this message.

(END VIDEO CLIP)

CROWLEY: And in the end, electability is almost everything when people go to those caucus or in New Hampshire go to vote in the primary. Key on the minds of Republicans who can best beat Barack Obama, and who can we best beat him with.

It used to be candidates spouse who sit in a chair and clap when their husbands said something applause worthy, smile at him. But that time is well gone. We now see the spouses becoming an integral part of their husbands' or their wives' campaign. Coming up next, the spouses speak out.

(COMMERCIAL BREAK)

CROWLEY: Welcome back to "The Contenders 2012." The Republican candidates for president have three days to convince Iowa caucus goers that they should be president. We are listening to them this afternoon as they make their cases.

Candidates wives haven't been speaking out that much on the campaign trial, but there were two notable exceptions this week. Callista Gingrich introduced her husband Newt at an event in Decorah, Iowa, and Mitt Romney's wife Ann took the mic and told personal stories in Clinton, Iowa. Let's begin with Callista Gingrich in Decorah.

(BEGIN VIDEO CLIP)

CALLISTA GINGRICH, NEWT GINGRICH'S WIFE: As some of you, Decorah is a very special place for me. I went to Luther college and graduated from Luther in 1988.

(APPLAUSE)

And one little known fact is I actually lived upstairs above Pete's Pizza as a senior, so it's very special to me.

(LAUGHTER)

A lot of people ask me why Newt would be a good president. And I really think that Newt has been preparing for this challenge his entire life. He has a proven record of national leadership, a thorough understanding of our nation's history, and a genuine love for our country. And I believe he is the best person to lead our country.

(END VIDEO CLIP)

CROWLEY: And a crowd was waiting to hear Mitt Romney in Clinton, Iowa when his wife Ann stepped up and took the mic. She got personal right at the top.

(BEGIN VIDEO CLIP)

ANN ROMNEY, MITT ROMNEY'S WIFE: I tell the longer story about our life and the personal side, which is a whole lot more fun, by the way, than talk about politics. So this is fun for me. And we'll just -- I'll just keep on talking until Mitt gets here.

So I'll tell the personal stories and the side of Mitt that some of you have not heard about or seen, and that is how he, what he's like as a husband and a father. We've been married for 42 years. We met in high school. We're high school sweethearts and we still are sweethearts, which is awfully nice. We have five wonderful sons. We have 16 grandchildren.

And I think some of you know the other sadder, tougher part of my life and some know, I see some women especially are shaking their heads yes right now. I was diagnosed with multiple sclerosis in 1998. And it was a devastating thing in my life. It was very tough. I went from being a very active, involved, and hands on mom to hardly being able to take care of myself. I couldn't get to the store, couldn't cook food, couldn't do anything, was in bed most of the time.

During this time Mitt was helping me out. And recognizing that I had sort of given up on life in many ways and thought my life was over. I so appreciate how he stood by me in my darkest hour and rallied me to the point of saying, look, a dinner is on the table every night. It doesn't matter to me. I'm happy with peanut butter sandwiches. He meant it. I love you. It's not that I love you make dinner. I love you. And we're going to be OK.

So I really appreciated that. He gave me the courage to start fighting the disease and to struggle on. I did. It was a struggle.

And, you know, I have to say one thing about having gone through this where my life -- I was in a pretty dark hole, pretty bleak. And one thing that has done for me, it's tempered my heart, recognizing that all of us have struggles. Mine happened to be physical. I see in this country right now people are struggling. People are afraid. People are out of work. We all have our struggles.

So, we are -- we are all going to learn from these experiences and it looks like there's more hubbub and commotion coming from across the street. But I so appreciate that he stood by me during my darkest hour. I'll tell you how great he was as a young father and when I was a young mom. Five boys was not easy. They were not easy. Aaron, how many in your family? Four. Just two boys. But you know what, five boys was not easy. And they were rambunctious and they were naughty.

And I love it now. Being a grandmother is the greatest thing in the world. When my grandchildren misbehave, it's the greatest day in my life. I love it. I look at my boys and they're exasperated, and I'm like, oh, boy do you boys deserve it. You deserve it.

(LAUGHTER)

But Mitt was great during those early years too, because he would remind me when I was exasperated that my job was more important than his job. And I love that. And the cool thing was he actually meant it. now, he was big hot shot consultant in those days and well paid and everybody thought he was the smartest guy in the room. But when he came in the door he knew that I ruled.

(END VIDEO CLIP)

CROWLEY: Some very personal reflections along the campaign trail.

Coming up back to hardball politics, that big defection in the Bachmann camp. We'll get Michele Bachmann's reaction to her Iowa campaign chairman endorsing Ron Paul.

(COMMERCIAL BREAK)

CROWLEY: Welcome back to CNN. We continue with "The Contenders 2012." We're taking the Republican candidates live as they move across Iowa talking to voters. Right now you're looking at Rick Santorum. His poll numbers bouncing upward. That's what you want to do three days before the caucuses. We want to listen in to Rick Santorum. He's in Indianola, Iowa.

SANTORUM: A couple folks are being interviewed out there. My daughter Elizabeth, I see her headband in the back, but she's being interviewed too. And we brought the family out for the straw poll. We've just worked very hard and we've made ourselves available to the people of Iowa. In groups as big as 300 to groups as small as well not a group -- one.

(LAUGHTER)

SANTORUM: And that's what we've done. And we've laid out a very clear vision. I would have to say that the people of Iowa have made me a better candidate. It's been an amazing experience. As I said to Chuck when I was driving from, to Sax City to crescent the other day about 12:00 at night, I'll miss what the state of Iowa. I won't be able to come back here until the fall.

(LAUGHTER)

(APPLAUSE) SANTORUM: And so, you know, I really have had a wonderful experience here and I will forever be a fan and a defender of the Iowa caucuses, because it does make you a better candidate. I think it makes you think about not just what you're saying and how you're saying it, but think about why you're saying it, you know, the tough questions and they are tough questions, and from a variety of different topics. It's been an incredible experience.

And I would say to any candidate who is going run for president, again, don't pass up that experience. Don't pass up the opportunity. It will make you not only a better candidate, I think it will make you a better president. And it's certainly made me an our family better people.

So I just want to say first and foremost thank to you the people of Iowa for what you provided for me. You've been welcoming. You've been tough. You've been obstinate and seven or eight times, nine times I have people at town hall come and say yes they are for me. But you made us go out and earn the vote, and I appreciate that very, very much.

And I have two things I want to leave with you. And that is, number one, don't pay attention to what the national pundits are saying as to, you know, who we need to vote for to win the race. I understand, you know, they are saying who can win and who cannot. Trust your own heart, trust your head, trust your gut as to who you believe is best. You fight to be the first in the nation.

How many people here have seen one of the other presidential candidates through the course of this time? Just about everybody in the room. And you know these candidates now better than the pundits who basically talk to themselves in Washington and New York. They are not out here listening to the candidates.

And we've had a few embeds who do follow us around and have fold us around, but by and large most of the press and most folks haven't been here and they haven't been listening. You have been. You've been measuring these candidates. Trust your judgments and lead. That's what you get an opportunity to do. You get an opportunity on Tuesday to lead, to let this country know who you believe is the best person, the person with the boldest ideas, because we've got a big mess in Washington, D.C. right now, and someone who can lead this country, someone who has the conviction and courage to do it, someone who has the world view and understanding of how we'll tackle this and paint a vision for the American public as to what America will look like and get folks to follow. That is what you have to determine here in the next couple of days.

The second thing I would say is don't settle for less than what this country needs in new leadership. Don't settle for someone, well, we may get this guy and he may win but have a Pyrrhic victory because the person may not do what is necessary to make the changes that we need.

And so lead and be bold. Isn't that what you're asking from your next president? Lead and be bold. And that's what I ask of you. Lead and be bold. And if you do, you will change the tenor of this race. You'll bring in a whole new realm a of new issues and a way of dealing with problems and energize this debate on the Republican Party, and as a result of that you will have done your role as Iowans.

You'll have done your role in putting your state -- Chuck always says, and I'll finish up and then I want to get a chance to say hi to folks and then maybe take a few pictures and the like. Chuck always says that the first vote in the Iowa caucus is a vote for president. And then you'll do a whole bunch of other things. And at the end of the day, the end of that caucus, you're going to pass planks about what your platform is going to be.

And I would just suggest to you that the Iowa platform is rock solid conservative up and down the line, across the board. And I would ask that you make your first vote in sync with your last vote. Let the Iowa platform be reflected in the vote that you cast at the beginning of the evening. If you do, you will send that message all across this country about what Iowa wants, what the heartland of America wants, and you will make a great contribution to this process, and I believe you will help elect the next conservative president of the United States.

I ask for your help and support. There are folks here that are signed up. We would love you to be a -- help us as a caucus captain. We have well over 1,000 caucus captains --

CROWLEY: That of course is former Pennsylvania senator Rick Santorum wrapping it up in Indianola, Iowa, asking folks to come and sign up and pledge to go caucus for him.

Two important points near and dear to the hearts of Iowan, particularly conservative Iowans, who are the bulk of his constituency. Number one he defended the Iowa caucus. Every four years there's a huge outcry about why Iowa which is not really representative of the rest of the United States, gets an important say so. He says I'll defend Iowa the right to be first because it's such a great place.

And second he made the argument, don't look at all these polls that say the only electable person is so-and-so. Vote for a bold plan, basically vote for me, and don't worry about electability because you're electable when you go up against President Obama. So two important issues which he'll be making across the state for the next three days five hours plus.

Now, when we come back, Newt Gingrich moves to Atlantic, Iowa. He was in Council Bluffs earlier today trying to stop his falling poll numbers.

First, however, one of the world's most colorful New Year's celebrations. You're looking at Vikings, that's right, Vikings. They are about to burn a Viking ship in front of thousands. That's how they do it in Edinburgh, Scotland, folks.

(BEGIN VIDEO CLIP)

CROWD: Three, two, one, happy New Year. (END VIDEO CLIP)

CROWLEY: And this is Sydney, Australia. Their clock struck midnight about seven hours ago. We'll be right back.

(COMMERCIAL BREAK)

CROWLEY: Welcome back to this special hour of CNN newsroom. We're taking this time-out this afternoon to let you hear from the 2012 presidential contenders, unfiltered, uninterrupted, and in their own words.

Here's a live look at two campaign events that's under way right now. Michele Bachmann's campaign is in Urbandale, Iowa. That event is scheduled to get under way momentarily. One of the big stories out of Iowa this week, Michele Bachmann's Iowa campaign chairman defects and endorses Ron Paul. Bachmann reacted by saying it was all about money.

(BEGIN VIDEO CLIP)

MICHELE BACHMANN, (R) PRESIDENTIAL CANDIDATE: He quit. And we've had Kent Sorenson's former campaign manager come out and say Kent told me flat out that he was getting money. He flat out told also Eric Woolson, who is the Iowa director, as well. He told a lot of people. There's people a mile long that he told he was getting money. And all of those people are coming out of the wood work making themselves available.

So Kent Sorenson and I had the conversation on phone. And yesterday Kent even came out to our stop in Indianola, Iowa. And he was there with me yesterday. He left our event and then went to the Ron Paul event. This is about money. This is about money. And this is about the Ron Paul campaign seeing the floor is coming out.

(END VIDEO CLIP)

CROWLEY: In fact Kent Sorenson had just attended a Bachmann event four hours before announcing his departure to a crowd of Ron Paul supporters.

(BEGIN VIDEO CLIP)

KENT SORENSON, FORMER BACHMANN IOWA CAMPAIGN CO-CHAIR: Tonight is a little tough for me. I've been serving as Michele Bachmann's state chair over the last year. And while Michele has fought tremendously for my conservative values, I believe we're in a turning point in this campaign. When the Republican establishment is going to be coming against him in the next few days I thought it was my duty to come to his aid.

(END VIDEO CLIP)

CROWLEY: Sorenson also said he feels loyalty to Paul because Paul campaigned for him in a contentious Senate bid.

Bachmann is working to drum up support in Urbandale, Iowa, right now not far from Des Moines. In our latest CNN poll she is second to last in Iowa, drawing just nine percent support. Only Jon Huntsman polls lower. CNN's Shannon Travis is following Bachmann in Urbandale. Shannon?

SHANNON TRAVIS, CNN POLITICAL REPORTER: Hey there, Candy. The congresswoman actually just showed up. We were told she was en route, but just moments ago the crowd of supporters here erupted, started applauding, and she's right behind me.

But just a little bit more about what you talked about earlier, that bombshell allegation, Kent Sorenson going over to the Ron Paul campaign, Michele Bachmann accusing him basically of accepting money to governor there. Of course he denies that. It's not the kind of thing that any campaign days before a critical contest like the Iowa caucus wants to focus on again with the polls with her being low in polls. So it's not the kinds of things she wants to focus on in the campaign.

But the campaign here in Urbandale is upbeat. There are a lot of people making phone calls, supporters asking will you go caucus to Michele Bachmann, will you be a caucus leader for Michele Bachmann. They feel there's a positive mood, festive mood. It's part phone bank, part pep rally. So they feel they have momentum heading into these final few days ahead of the caucus. And a lot of people here feel like they have energy and momentum on their side. Candy?

CROWLEY: Shannon Travis. Of course, we'll go back there when Michele Bachmann begins to speak.

Newt Gingrich is campaigning in Atlantic, Iowa. He has just arrived there we are told. He's now in fourth place in the polls. He dropped 20 points in the latest CNN poll. CNN's Joe Johns is following Gingrich in Atlantic. You know, Joe, I think this was even while we watched Herman Cain take a slide, Michele Bachmann take a slide, Rick Perry take a slide, the downfall of Newt Gingrich in these polls was in less than three weeks. It was pretty astonishing. Were they taken by surprise?

JOHNS: Well, I don't know if you can call it by surprise. I think he was pretty much prepared to see these kinds of attack ads. We want to listen to him while he's talking, by the way. If I can get out of the way you can look at him here.

NEWT GINGRICH, (R) PRESIDENTIAL CANDIDATE: This is Maggie our granddaughter. And this is Georgia who is her friend from Georgia.

(LAUGHTER)

GINGRICH: And behind them are my two favorite daughters, Kathy and Jackie.

(APPLAUSE)

And we're all thrilled to be here. I was here back I think in June. You're nodding. Some of you were here back then. So it's been a long six months. I am thrilled to be back, and to be in the closing phases of the campaign in terms of Iowa, which is the beginning of the campaign in terms of the whole country. And I appreciate you taking a few minutes out on New Year's Eve, both on a Saturday and on New Year's Eve all wrapped up together.

We just came from the farmer's restaurant, Farmer's Kitchen, which may have the largest slices of pie in the country.

(LAUGHTER)

It's unbelievable. Great food, lot of fun.

I think that this is going to be a very interesting Tuesday night. I do hope all of you will go to the caucus. And I think there's a chance that Iowa could send a very interesting signal to the country, because we've learned over the last few days that 45 percent of the ads that have been run in Iowa this year have been negative ads attacking me. And it will be interesting to see whether, in fact, the people of Iowa decide that they don't like the people who run negative ads, because you could send a tremendous signal to the country that the era of nasty and negative 30 second campaigns is over.

(APPLAUSE)

And in that sense you'd have a very, very big impact.

I've been focusing as all of you know, in a very positive campaign. I was positive in the debates. I've been positive in our advertising. Callista just released a music education video which is totally positive because of her background as piano player and French horn player and singer and her belief that music education helps young people develop all sorts of skills and habits that are useful. So we're going to stay positive.

We just opened a "Pets with Newt" page, where if you have a pet, your pet can be with me.

(LAUGHTER)

And part of the reason we did it is because pets do matter to people. And when I was speaker we actually helped change the law so that people in public housing could retain their pets. Up until 1988 if you went into public housing, if you were a senior citizen, for example, you couldn't take your pets. And yet we know mathematically that people with pets live longer and that actually is part of life.

So, these are not the normal things. I will continue fess I'm different than most politicians both in that I think we should be happy and positive, and I think we're faced with huge, huge issues. And this little moment when trying to get America back on the right track is an enormous undertaking.

Let me just ask you, how many you agree that America is on the wrong track?

(APPLAUSE) Now, here's where it gets trickier. How many of you agree even if we win the election that the people who have us on the wrong track will fight very hard to stop us from putting it back on the right track? So this is really a struggle in which the election is the beginning not the end.

And that's why I always tell audiences that I'm going ask you -- I'm not going ask you to be for me. I'm going ask you to be with me. And the reason is really simple. If you're for me, you vote, you go home, you say I sure hope Newt can fix it. The truth is no one person, not teen president can get this country back on the right track.

But if you'll agree to be with me, then if we stand shoulder to shoulder, reminding the Congress of what we want them to do, governor, the state legislature, the city council, the county commission, we can have a huge impact.

In addition, if you're with me, we're going make mistakes. You can't have this scale of change in perfection. When we make mistakes, we need your help and your advice in order to learn what's going on in the real world. And 537 elected officials in Washington aren't smart enough to move this country back in the right track by themselves, and that's why we need a citizen movement.

But there's one other reason. If we shrink Washington government by applying the 10th amendment and getting to a smaller government, we have to grow citizenship back home, because we're transferring responsibility from the Washington bureaucrat back to you. And that's why I ask you to be with me.

Now, probably the most important area that people need to focus on right now is the economy, because if you look at the world market and you look at the dangers in the Middle East, you look at the dangers in Europe, the fact is unless we're very, very careful, we can slide into a deeper recession and we can be in even more trouble by next summer. And the engine that pulls the world's economy is the U.S. We're still about one fourth of the entire world economy in this country. And so when we're not growing, when we're stagnant, we really provide, make it almost impossible for the world economy to fix itself.

So, I've been to discussion on jobs and our economic growth. And I can tell you that I was very pleased to have Art Laffer come in to Iowa to endorse me. Laffer was the economist who helped Ronald Reagan develop his job creation program in 1980. And it's a very simple program -- cut taxes, cut regulations, develop American energy, and favor, praise, be proud of the people who create jobs.

Obama has followed the opposite model. Where Reagan cut taxes Obama raises them. Where Reagan cut regulations, Obama increases them. Where Reagan favors American energy, Obama opposes American energy. Where Reagan praised people who created jobs, Obama engages in class warfare against people who create jobs.

Now, we know historically that Reagan succeeded because we began creating jobs under his program. In fact, in August of 1983 we created 1,300,000 new jobs in one month. If you take the Reagan recovery and you lay it over our current population, it would create 25 million new jobs in a seven year period. That's how big the dynamic was.

The fact is that after Reagan left office we had two increase. The economy began to stagnate. I won election as speaker, and we went back to the Reagan playbook -- cut taxes, cut regulations, focus on American energy and be positive towards job creators. We reformed welfare. We pushed very hard and had the first tax cut in 16 years, including the largest capital gains tax cut in history, and as a result unemployment dropped to 4.2 percent. Now imagine how we would feel today if we were at 4.2 percent?

Finally, we were able because when you have a big decline in unemployment you take people off of food stamps, off of welfare, off of unemployment, off of Medicaid, off of public housing. They are back earning living for their family, paying taxes, so revenue goes up and costs go down. As a result, we were able to balance the budget for four straight years and pay of $405 billion in debt. It's the only time in our lifetime we had four consecutive years of a balanced budget paying off the debt.

Now, in that setting, my argument is we know how to do this. We know how to cut taxes. We know how to fix regulations. We know how to develop energy. The problem is not knowledge. The problem you have people in power who don't believe in it. Their policies are so wrong I use the analogy that is it's as though they had a cookbook that said in order to make a hard egg you froze it. Now, it's technically true you can get an egg hard if you put it in the freezer long enough, but it isn't what people think they are ordering in the morning when they ask for a hardboiled egg.

And so Obama really is sort of a classic Saul Alinsky radical whose basic ideas are the opposite of what we need to create jobs, which is why in the fall, if I'm your candidate, one of our major themes will be food stamps versus paychecks, and the fact that Obama is the best food stamp president in history. I would like to be the best paycheck president in history. And I think that contrast lets us draw correctly what the choice is for the American people.

Let me just say very briefly I believe on taxes that we taught have zero capital gains tax so that hundreds of billions of dollars will pour into the country. We ought to have a 12.5 percent corporate tax rate which would actually be lower than Canada. And 12.5 percent is the Irish tax rate. Today at 35 percent taxes we can't get General Electric to pay any. At 12.5 percent they would fire half of their lawyers and actually write a check and pay taxes.

We should also have 100 percent expensing, which means any new equipment you buy whether you're a farmer, a factory, a business, a doctor, you buy new equipment, you write it off in one year. Our purpose is to have American workers have the most modern, most productive equipment in the world so they can be the most competitive, so we can compete with China and India while having high value-added jobs.

As a part of that, if we are going to modernize the equipment, we need to also modernize the workforce. So I have a proposal that in the future in order to get unemployment compensation you have to sign up for a business training program so you're actually learning something while we help you but no longer pay people 99 weeks to do nothing.

(APPLAUSE)

We also have a proposal to abolish the death tax permanently because it's a profoundly wrong tax which punishes people who worked all their life, saved all their life, and then some politician can take half their lifetime work away from them.

And finally we go for personal taxes, we offer an optional 15 percent flat tax. This is based on a model in Hong Kong where you either keep the current system with all the deductions and paperwork, or a single page this is what I earned, these are my dependents, here is what I'm paying. And we think people should have the right to choose.

On regulations, we want to start by repealing Obamacare.

(APPLAUSE)

Then we want to repeal Dodd-Frank which is a Bill that's killing small banks, killing small businesses, and driving down the price of housing. Then we want to repeal Sarbanes-Oxley which is a bill that added a lot of paper work for no new net information. So we think people would be better off if we eliminate those.

I would ask Congress when they come in to session on January 3rd next year, not 2012 since we're almost in it, but the year after next as of today, next year as of tomorrow, I would ask the Congress to stay in session and to repeal all three before the presidential inaugural so the day after the inaugural I could sign them and we would have begun to clear out the clutter as of that moment.

I would also, by the way, on the day of the inaugural, sign a series of executive orders all of which will be posted on October 1st so it will be part of the last move campaign. And the first executive order I'll sign will abolish all of the White House czars as of that moment.

(APPLAUSE)

On longer perm regulatory reform we need to replace the EPA with an environmental solutions agency. The current EPA is a job-killing, dictatorial bureaucracy totally out of touch with reality and very, very destructive of local governments and destructive of both agriculture and industry.

And many of you have followed Senator Grassley's fight over the dust regulations. The EPA has technically has ability to regulate particulate matter as part of the Clean Air Bill, which I don't think any congressman thought it meant dust. But the bureaucracy has now interpreted it to include dust, and so some bureaucrat in Washington came up with the conclusion that if you were to plow on a windy day and some of the dirt from your field was to be carried by the wind into your neighbor's field, that you would be polluting your neighbor's field with your dirt. Now since your neighbor's field is exactly the same geologic dirt as your field, it is implausible you're hurting it, but this is the kind of thinking they get.

I was in Arizona and describing what Senator Grassley was fighting. They said it's worse than that. They had an EPA official come down for a meeting and trying to explain to him because Arizona is a desert you have natural occurring dust storms. And after they talked to him, he said, well, have you considered wetting down the desert.

(LAUGHTER)

And they looked at him and said, you know, the reason we call it a desert --

(LAUGHTER)

-- is we don't have any water.

(LAUGHTER)

So I think we should replace the EPA with a brand new agency with brand new people.

(APPLAUSE)

And the first requirement to be hired by the new agency is you have to have common sense.

(APPLAUSE)

We should also modernize the Food and Drug Administration so it is in the laboratory learning the science and then accelerate new products and new medicine given to the patient rather than stop them. And our goal should be the fastest and finest producer of new health solutions in the world. Health will be the largest single sector of the world economy. As countries get wealthier they like living longer. And if United States was consistently the gold standard in health products we would create hundreds of thousands of new value jobs in the health industry, which would then create huge amount of profit selling everywhere in the world, whether you're China, India, Europe, Japan, you name it.

Less taxes, regulation. Now, let's talk about energy. If you've been watching the news you know that the Iranians have been practicing closing the Strait of Hormuz. One out of every six barrels of oil in the world comes through that strait. And we run a very real risk of disaster if the strait gets messed up.

Callista and I were out at the Reagan library for Ronald Reagan's 100th birthday, and we had lunch with former secretary of state George Shultz, who said how often you have to get hit over the head by a two by four to figure out you need to have a national energy policy. So my vision is that we should have a policy of developing so much American energy that we're not just energy independent, but we actually have a surplus to be reserved for the rest of the world in case the Middle East disintegrates.

(APPLAUSE) Part of that involves oil and gas offshore, part of it's coal and nuclear; a part of it is - is wind and solar. You - Iowa now is the second largest wind electricity producer in the world, after Denmark; and part of it's biofuels.

I - some of you are old enough, you'll remember, in 1984, I voted for something called gasohol, and Ronald Reagan signed it as part of our national security approach. In 1986, it became known as ethanol, and we renewed it. In 1998, when I was Speaker, big oil tried to kill it, and Chuck Grassley said that I was the one person who saved ethanol from big oil.

Now, why do I believe in big - in ethanol? Well, it's pretty simple. If I have to choose between the next billion dollars going to Saudi Arabia or South Dakota, I pick South Dakota. If I have to pick between Iran and Iowa, I pick Iowa. And, the fact is, if we could make sure we retain the renewable fuel standards, go to E15 as a blend, and move towards flex fuel vehicles and flex fuel stations, we would be substantially better off.

The Brazilians have flex fuel vehicles, so all the auto companies that say it's hard to do, every one of them does it in Brazil. And the fact is the Brazilians are essentially independent of the Middle East in their energy supplies.

So, we can do this. We can get it done. And it think it's important that we do so.

Now, let me give you just two quick examples of how totally wrong Barack Obama is on energy. He - as opposed to drilling offshore, he put a moratorium in the Gulf and he goes to Brazil and he tells the Brazilians how proud he is of the fact that they are drilling offshore, and how glad he is that we could guarantee $2 billion in loans to buy equipment from a company that George Soros has invested in.

And then he goes on the say what I think was an astounding thing for an American president. He said, "I want to us be your best customer." Now, that's exactly backwards. We don't send the president of the United States around the world to be foreign purchasing agent. We send him around the world to be a salesman for America.

So, I am deeply committed - if you look at the productivity of Iowa, we have to be in foreign markets to absorb our production. And I'm deeply committed to finding the toughest, most aggressive trial lawyer available and having them become our U.S. trade representative so we can take the right attitude in negotiating with China and India and other countries, to open up markets on our behalf and make sure that we in fact are leaning forward to sell our products overseas.

But the second - the second example of the president's absolute inability to understand the real world is the Keystone Pipeline. You know, it's one thing if the White House can't play chess, it's another thing if they can't play checkers. But it really worries you if they can't play tic-tac-toe. And I think when the president was trying to paying off his environmental extremist friends in San Francisco, it literally did not occur to him that the Canadians have alternatives. So he was going to drag this out and not approve the pipeline, not have the unions mad at him because they want the jobs, not have the environmentalists mad at him because they don't want the pipeline.

And I don't think he realized that the prime minister of - the prime minister of Canada has a pretty easy alternative. All he has to do is turn to the Chinese, get them to fund the pipeline and build it from Central Canada, West to Vancouver. And when Prime Minister Harper said, after the president announced that he didn't want to make a decision, I think he shocked Obama by saying, "That's all right. We're going to talk to the Chinese."

Now, if you build the pipeline through the United States, you have 20,000 construction jobs immediately, and you are bringing oil to the largest refinery center in the world, Houston. So, for the next 20 or 30 years, as Canadian oil comes through Houston, we're making money processing it, we're making money in the port of Houston shipping it. It is a total win-win for the United States.

And the president just can't see it. And if you had said to me three or four years ago we get to a point where the Chinese - where the - where the Canadians would think that the Chinese were a more reliable ally than the Americans, I would have thought it impossible. But that's the kind of stuff this administration is doing. And that's why it's so important that we defeat him.

If - if you help me next Tuesday night, and with your help if I end up becoming the nominee, I will challenge the president to seven three hour debates in the Lincoln-Douglas tradition of a timekeeper but no moderator. I will concede in advance that he can use the teleprompter if he wants to. After all, if you had to defend Obamacare, wouldn't you want a teleprompter?

So, let me - if I might just toss it open for questions for a few minutes. There are a couple of microphones, I think. Right here.

UNIDENTIFIED MALE: Hi. I had a question. Now, Iran has nuclear weapons. If you were president, what would you do to Iran to save America from the nukes?

GINGRICH: Yes. Well, right now they're trying to get nuclear weapons. They don't have them yet. But I think we have - but they're trying to build them right now. That's right.

I think - I think it's in our interest to replace the dictatorship. I don't think it's just about stopping the weapons program. This is a dictatorship which has been actively anti-American and has seen itself as at war with America since 1979.

And I think if you go back and look at President Reagan and Prime Minister Thatcher and Pope John Paul II, they designed a strategy against the Soviet Union which worked brilliantly. And I think - it was not primarily military, but it was economic, it was propaganda, it was political organization. I think we should do the same thing against Iran.

Our goal should be to replace the Iranian government with a moderate government and to do so with nonmilitary means by - by undermining the regime, by organizing the opposition, by developing propaganda, doing all the things we did so well in the 1980s.

But I don't - I don't think - you know, one of the places I really disagree deeply with Ron Paul, I do not believe you can be comfortable with a nuclear armed Iran. I think it is a mortal threat to us, and - and my reasoning is very simple. If you're faced with a religious fanatic, who's willing to put a body bomb on and walk into a grocery store or a mall or a bus and blow themselves up in order to kill you, if you give them a choice of doing that with a conventional weapon or a nuclear weapon, they are going pick a nuclear weapon every time.

And I think the idea that these guys are going to be passive with it is just out of touch with reality. So I think we do have to replace the regime.

Yes, sir?

UNIDENTIFIED MALE: (INAUDIBLE).

GINGRICH: No, I don't think we're safer, but I - I don't think we were safer under Bush, either. I think - I think we are faced with problems much bigger than we understand. We have enemies out there who are much more serious than we realize, and we have not yet developed a strategy that's the size of the problem.

I mean, I think we have - we have two different challenges. One is China, but that's primarily an American challenge. If we fix our schools, if we fix our manufacturing base, if we fix our science and technology, the Chinese won't catch up with us for 100 years. So that's about us.

The other is radical Islamism, and I think neither Bush nor Obama has realized how deep the problem is and how serious a threat it is. So I - I think that we have - we have not gained any great security since 9/11. If anything, our enemies are more numerous today, more sophisticated, and working very hard to get dangerous weapons to kill us. That's my view.

Yes, sir?

UNIDENTIFIED MALE: I've got (ph) a statement before I ask a question.

GINGRICH: Sure.

UNIDENTIFIED MALE: I'm licking my chops for that first debate with Obama. And secondly, I've chosen to be a speaker for you at a caucus and -

GINGRICH: Thank you. Thank you very much.

UNIDENTIFIED MALE: I'm 76 years old, and I've seen a lot of you fellows come and go, but I've only sought to shake - share the hands of two others, and they both went on the win, so I'd like to shake your hand.

GINGRICH: That was a good omen.

UNIDENTIFIED MALE: Now, the question that I have, as I go to that caucus, I know I'm going to get asked, it's not about the economy directly, but I got all the information from you when they told me I was going to be a speaker at the caucus. And they explained everything but one thing that my son wants to know, and I want his support too, you see? He's worried about global warming and - and your stance on that, and I said I'm pretty sure he's going to be with us and it hasn't been proven yet.

So can you -

GINGRICH: First of all, it hasn't been totally proven. Second, even if it were proven, there are a lot of different solutions other than cap and trade and - and turning over the entire economy to the - to the EPA.

You know, the - the Dutch face the problem of oceans. They decided to build dikes instead of lowering the sea. I mean, there are a lot of different ways you can solve things. So - but I think - I think global warming is not proven.

And one thing that one of the ads is the most dishonest that was written about me, I opposed cap and trade. I testified - you can see it on newt.org, I - we have the video. I testified at the U.S. House immediately after Al Gore, and I testified against cap and trade. And so any ad that says anything different is plain a lie, which is one of the problems we have. We haven't frankly figured out yet how to deal with the number of ads that were dishonest without ending up looking stupid ourselves.

So - so you can just say to your son I am opposed to cap and trade. He is safe. And I - I also am an amateur paleontologist, so I've - I spend a lot of time looking at the earth's temperature over a very long time, and I'm - I'm a lot harder to convince than just looking at a computer model.

OK, yes sir?

UNIDENTIFIED MALE: Thank you (INAUDIBLE) coming Southwest Iowa. Right now the ag economy is in the best shape we've ever been, but we hitched our wagon to China. We're sending half our beans, we're sending pork over there, we're starting to export corn.

How do you be tough with China as far as currency and yet still trade with them on a regular basis? Because right now we have the extraordinary price and - and we want to save that, but yet we realize also they've been - their currency has been manipulated. How would you - what would be your attitude be towards China?

GINGRICH: Well, I - my answer will be one of constant patient negotiation. Callista and I were in Beijing - I think it was three years ago? Three years ago. And we went to a place called The Pearl Factory, which is a six story tourist trap. And we were looking for - wherever they went (ph), we were looking for pajamas for those two.

And we had two guys with us who were Americans but they were graduates of the University of Beijing, and one of them loved to negotiate. And he said, OK, go in and ask them what the pajamas cost, and whatever number she gives you, come back with 10 percent. And so she says something like 110 yuan, and I said I'll give you 10. He said she will now say, you're killing me, and so she said you're killing me. I can't do that. I'll come down to 90. He said OK, go up a little bit.

So because of I'm American, I'm impatient, I went up to like 20. He said she will now say you're going put me out of business. I'll go bankrupt. Exactly what she said. We just - you know?

So this goes on for like 20 minutes, and as - and as an American, I'm sort of uncomfortable doing this because, you know, we walk in, we look at the price, we buy it, but it doesn't occur to us to negotiate with the store owner.

So I - we start at 110, I ended up paying 50, and the guy was disgusted. He said you could have gotten it for 30 or 35, and she would have made a big profit and she would have been happy.

But what - here's what I realized a couple of days later. I was thinking about this experience, and I thought we send diplomats who want to get a deal. They send diplomats who want to negotiate till they get the right price, and we're not used to dealing with countries like that.

It's a permanent struggle. It's not a this week, next week. It's not a crisis. It is every week having somebody who's very clever and who figures out how to cause them pain in a way that they decide to change a little bit. And - and I think we have to decide co-existing with China is going to involve permanent negotiations, and we just have to realize it and do it (ph) and just say this is part of the deal.

Let's see. OK -

(END OF CNN COVERAGE OF GINGRICH REMARKS)