GINGRICH: You know, this is a good place to talk about the scale of change we're about to live through. We're at the end of the welfare state era of dependency, debt, distortion, and dishonesty.
The student loan program began when Lyndon Johnson announced it, I think, with a $15 million program. It's an absurdity. What does it do? It expands the ability of students to stay in college longer because they don't see the cost. It actually means they take fewer hours per semester on average. It takes longer for them to get through school. It allows them to tolerate tuitions going up absurdly. By 2014, there will be one administrator for every teacher on college campuses in the United States.
Now, let me give you a contrast that's very startling. The College of the Ozarks is a work-study college. You cannot apply to it unless you need student aid, and they have no student aid.
You have to work 20 hours a week during the year to pay tuition and books. You work 40 hours a week during the summer to pay for room and board. Ninety-two percent of the students graduate owing no debt, the eight percent who owe debt owe $5,000 because they bought a car.
Now, that is a model so different, it will be culture shock for the students of America to learn we actually expect them to go to class, study, get out quickly, charge as little as possible, and emerge debt free by doing the right things for four years.
BARTIROMO: Governor Perry, name the top programs that you would cut in terms of long-term deficit reduction. Include Medicare, Medicaid, Social Security, and defense spending in the order you see fit.
PERRY: Well, every one of those -- and by the way, that was the Department of Energy I was reaching for a while ago.
PERRY: So here what's we have to look at as Americans. And it's the entitlement programs that are eating up this huge amount of money that's out there.
And it's also the spending, Congressman Paul. And when you look at Medicaid, Medicare, Social Security, and those unfunded liabilities, I think are over $115 trillion just in those three programs. Those are the places where you go where you have to make the really hard decisions in this country.
BARTIROMO: So what is your order? And you didn't mention defense spend.
PERRY: Well, obviously, Social Security is one of those where we either can go to a blended type of a program where we blend price and wages, and come up with a program, and can save billions of dollars there. But the people who are on Social Security, they need to understand something today. It's going to be there for them.
Those that are working their way towards Social Security, we've made a pledge to them. Those individuals are going to have those dollars there for them.
But the young people out there, who is going to stand up for the young people in this country, those that are at the workforce today, and stand up and say, we are going to transform this program so it's going to be there for you? I will do that. I will stand up for the young people in this country and put a program into place that will be there for them.
HARWOOD: Speaking of young people, a quick answer. Do you agree with Congressman Paul that we should kill the federal student loan program?
PERRY: I happen to think there are a substantial number of ways. As a matter of fact, I've called for a $10,000 graduate program --
HARWOOD: But would you kill the federal student loan program?
PERRY: I don't think the federal government should be in the business of paying for programs and building up huge debt out there. I think we need to look at, how do you --
HARWOOD: So get rid of it?
PERRY: -- force these universities to be efficient? And one of the ways is that the governors who appoint the trustees, they step in and they basically say, listen, you are going to have graduation rates that are moving upwards, you're going to have tuition that is moving down. You have to have control over those boards of regents, of that's how you do that, or the legislature has to have control.
But the bottom line is, we have to put powerful economic forces into place. And one of those is using our technology --
HARWOOD: Thank you, Governor.
PERRY: -- to be able to let our kids have the opportunity to get an education through long distance learning, for instance.
BARTIROMO: That's time.
HARWOOD: Thank you, Governor.
BARTIROMO: We're going to take one more quick break. When we return, final questions to the candidates.
HARWOOD: Our CNBC's Republican Presidential Debate will be right back.
BARTIROMO: Welcome back to CNBC's "Republican Presidential Debate."
HARWOOD: Mr. Cain, let me ask you a question, under a Republican governor, the state of California hired a company in China to build major portions in the new San Francisco-Oakland Bay Bridge, creating thousands of jobs in China. And California did that because it was cheaper. Is that smart, purchasing by government in a global economy, or is there something wrong with that?
CAIN: There's something wrong that, which is why I have proposed a bold plan, 999...
CAIN: ... and allow me to explain how on the 999 that that company would be more inclined to keep the business here. On the first 9, you take sales minus purchases, net exports, and capital, it levels the playing field between goods produced here in the United States and the rest of the world.
It makes the United States much more competitive and businesses won't be tempted to build overseas and send jobs overseas. The tax code is what sends jobs overseas. The tax code is what caused them to buy the articles from the Chinese. It starts with replacing the tax code.
HARWOOD: Governor Romney, was it a mistake for Governor Schwarzenegger to hire the firm in China to build portions of that bridge?
ROMNEY: Well, that's a -- a long answer to that, because what China is doing is not playing fairly by the rules that exist in our -- in the WTO and the world. China is, on almost every dimension, cheating. And we've got to recognize that. It is good for America...
ROMNEY: It is good for America to have free trade. It is good for us to be able to send our goods and services around the word and vice versa.
HARWOOD: So a good decision to build the bridge over there?
ROMNEY: That is normally a good thing. But China is playing by different rules. One, they are stealing intellectual property. Number two, they're hacking into our computer systems, both government and corporate. And they are stealing, by virtue of that as well, from us.
And finally, they are manipulating their currency, and by doing so, holding down the price of Chinese goods, and making sure their products are artificially low-priced. It's predatory pricing, it's killing jobs in America.
If I'm president of the United States, I'm making it very clear, I love free trade. I want to open markets to free trade. But I will crack down on cheaters like China. They simply cannot continue to steal our jobs.
BARTIROMO: But how do you crack down? How do you crack down, Governor? Are you talking about new tariffs? How are you cracking down?
ROMNEY: I'm sorry, pardon?
BARTIROMO: How would you crack down on China?
ROMNEY: Well, number one, I would do something this president should have done a long time ago, which is to label China a currency manipulator. And then I would bring in action at the WTO level, charging them with being a currency manipulator.
Number three, where they have stolen intellectual property, where they have hacked into computers, and where their artificial pricing is causing their goods to have predatory levels of pricing, I would apply, if necessary, tariffs to make sure that they understand we are willing to play at a level playing field.
We want -- we have to have free trade. That's essential for the functioning of a strong economy. But we cannot allow one nation to continue to flaunt the rules and kill our jobs by allowing them continue as they have.
BARTIROMO: Speaker, in addition to that, so many companies -- multinational companies, want to try to get a foothold in China and sell to the billion-and-a-half people there. They can only do joint ventures. They're not getting a fair shake in terms of selling to that 1.5 billion person population. How would you move the needle?
GINGRICH: Well, there are two things here. And let me say in advance that I would yield in part to Governor Huntsman, because he speaks fluent Chinese, he has worked in China, and he's been the ambassador. And I'd be curious to get his reaction.
But there are two different parts here. The problem with building the bridge is simple. What -- what is it about American regulations, American taxation, American labor cost and attitudes that makes it cheaper to go to China than to go to the United States? Now, we...
... first of all, you've got to decide, how are we going to be more competitive and how are we going to be the lowest cost? And there's a new Boston consultant (ph) that says, by 2015, South Carolina and Alabama will be cheaper than the Chinese coastal provinces to manufacturing.
Second, in terms of dealing with China strategically, I think we're going to have to find ways to dramatically raise the pain level for the Chinese cheating, both in the hacking side, but also on the stealing and intellectual property side. And I don't think anybody today has a particularly good strategy for doing that.
BARTIROMO: Time. Thirty seconds. Jon Huntsman, you were the ambassador to China, 30 seconds to respond.
HUNTSMAN: Thirty seconds? For Heaven's sake. Let me just say that we've had a 40-year relationship with China. It's a -- it's a troublesome and problematic relationship, very, very complicated.
But the bottom line is, I mean, you can give applause lines and you can kind of pander here and there. You start a trade war if you start slapping tariffs randomly on Chinese products based upon currency manipulation. That's not a good idea.
But longer term, we're just going to have to keep doing business the way we've always done, is sit down, you find solutions to the problems, and you move forward. It isn't easy. It isn't glamorous. It's grinding it out the way we've done for 40 years. And for 40 more years, we're going to have to do it the same way.
HARWOOD: Are you saying Governor Romney's pandering?
HUNTSMAN: I'm saying that you can throw out applause lines and you can say that you're going to slap on tariffs. You know, that doesn't work...
HARWOOD: But you're suggesting it. He's standing right here. Would you say that he's pandering on this issue?
HUNTSMAN: Well, I've said it before. I think that -- that that policy is one of simply pandering, just throwing a tariff on for the sake of an artificially valued currency, which is, in fact, the case.
But here's what they do in response. They say, you have an artificially valued currency, too, with those quantitative easing programs. You, too, are manipulating you're -- and we're going to slap something on your products. And before long, you have a trade war.
But let me tell you longer...
HARWOOD: Governor Romney, are you pandering?
ROMNEY: Look, I've been in business all my life, 25 years. I consulted to businesses around the world. I've been in business where we competed around the world. I understand free trade; I like free trade. I know that America can compete with anyone in the world. Newt is right about -- about our capacity to manufacture and compete heads-on versus the Chinese.
But I've also seen predatory pricing. I've seen people price their goods at an artificial level for an extended period of time, such that they can drive other people out of business. And then when the other people are out of business, they can raise their prices. That's what China's doing, by holding down the value of their currency.
Let the currencies float. If the U.S. currency, for instance, is being inflated, let it float. Let us float. Let us have a market mechanism determine the value of our respective currencies, as opposed to the Chinese government continuing to put an advantage to their -- their producers. This -- this is no longer a time for us just to sit back and say we're going to let them steal our jobs.
BARTIROMO: Congresswoman Bachmann, weigh in here. How do you open the markets in China for American companies?
BACHMANN: Well, the Chinese have been bad actors. Recently we found out that they dumped counterfeit computer chips here in the United States. We're using some of those counterfeit computer chips in the Pentagon in some of our weapons systems. This has national security implications.
We also found out that the Chinese just finished building 3,000 miles of underground tunnels where they are housing some nuclear weapons. There's some very real consequences to the United States overspending to such an extent that we're in hock to them over a trillion dollars.
We've sent so much interest money over to the Chinese to pay our debts off that we effectively built their aircraft carrier. And by 2015, we will be sending so much interest money over, we will be paying for the entire People's Liberation Army of China, the number- one employer of the -- of the world.
What we need to do is stop enriching China with our money. And we do that by stop borrowing from them, by stop spending money that we don't have.
CRAMER: Mr. Cain, I want to go to you with this question. This does not lend itself to 9-9-9 or any other number.