Mississippi Governor Haley Barbour came to CPAC this year with all of the attention and expectations of a possible presidential candidate weighing on his shoulders, and delivered a well-received speech on fiscal discipline and economic policy this morning at CPAC. A few minutes after leaving the stage, Barbour sat down with an interview with me to discuss his themes in more detail. Barbour was eager to explore the normally third-rail issue of entitlements. Barbour says he is convinced that the crisis has matured the electorate enough to have a frank and open discussion on reform, and that time is running out for it:

Here are Barbour’s remarks to CPAC, as prepared for delivery:

Thank you David – I appreciate our long friendship all the way back to the ’76 Reagan days. And thank you for the warm welcome.

Speaking of warm, man, this global warming is freezing me to death!!

Over the years this conference has usually focused on what’s wrong with the Left. To deal with that subject now would take a month, not just a weekend.

The policies of the left are why, since the last time I spoke at CPAC, our political fortunes have changed dramatically.

Seven new Republican Senators …

Twenty-nine Republican governors, including nine out of 10 key swing states for 2012 …

More than six hundred new Republican legislators.

And the largest Republican majority in the U.S. House of Representatives in 65 years.

You know what we call that in Mississippi? A pretty good start.

The 2010 election was the greatest repudiation of the policies of a President and a Party in American history.

November 2nd was the crescendo of a stunning rejection of a leftist governing philosophy that is profoundly at odds with America’s founding principles and our history of democratic self-government and entrepreneurial capitalism.

For two years, the Obama Administration and the Democrat Congress pursued an agenda bent on fulfilling the pent-up demands of every frustrated liberal – at the expense of the public good and contrary to the will of the people.

When America needed a growth strategy to revive our recession-wracked economy, the Obama Administration and the Pelosi-Reid Congress gave us a $1 trillion stimulus bill that only stimulated more government.

As unemployment soared to 10 percent, Americans needed and called for policies that would spur job creation. Instead of focusing on jobs, the Obama Administration and its Democrat Congress spent more than a year concocting a government-run health care system – one that stifles job creation as well as drives up the cost of health care.

At a time when we desperately needed incentives to create new jobs, President Obama and his congressional allies tried to impose the biggest tax increase in American history on small business owners by letting the Bush tax cuts expire. Two years of their calling for these massive tax increases caused more uncertainty among employers, making them reluctant to hire new workers or spend any money until they could see how high their tax burden would be.

Along the way, the President and his Democrat Congress pushed government spending to 25 percent of GDP, sucking trillions of dollars out of the productive, private economy.

They forget that every dollar taxed or borrowed by government is a dollar that can’t be invested by an entrepreneur or small business person in a job-creating product or facility … a dollar that can’t be saved by a family hoping to send their children to college. In the liberal ideology, every dollar earned belongs to government. They believe reducing taxes is some kind of government give-away to the taxpayers.

Despite job creation’s being the top priority for our country, this Administration’s policies have been more hostile to job creation than any I’ve ever seen.

Now … after his policies have contributed to unemployment rates stuck at 9-plus percent for almost two years … suddenly, President Obama and Democrats are paying lip service to job creation. Except this time, they’re calling their spending spree “investments” rather than “stimulus.”

Happily, the new conservative majority in the House understands that jobs are created by the private sector, not by government. Indeed, a bigger government means a smaller economy.

Because of last year’s election, we’ve already extended the Bush tax cuts for another two years. And Republicans will cut spending and take the first step toward restoring sanity to the federal budget.

These are important accomplishments … but they are only a start.

We won an important victory in November, but we don’t control the government. Our House majority only gives us control of one-half of one-third of our national government.

Our new majority can stop the worst excesses of exhausted liberalism. We can stop funding for bad policies … we can push for less spending … we can use the House’s oversight authority to expose the damage being done by the blizzard of Obama Administration job-crushing regulations. But, we can’t today do what needs to be done for our country.

So, as we prepare today and for the next twenty-one months, I ask you to remember the words of my fellow Mississippian, Fred Smith, CEO of Fedex, who says: The main thing is to keep the main thing the main thing.
The main thing is electing a Republican President next year.
*We cannot put America on the right track until we elect a Republican President in 2012 and a Republican Senate to join the Republican House in enacting those critical policies. We will not have the policies that lead to economic growth, job creation, smaller government, less spending, lower taxes, rational regulation and a stronger presence in the world in every dimension until we have a Republican President to lead for those right policies; the ones that will achieve the right results.

Make no mistake: the reckless policies of the Obama Administration and the left-wing Congress have brought America to a crossroads.

The Congressional Budget Office informs us this year’s deficit will hit a staggering record of $1.5 trillion. For every $1 it spends, the federal government will have to borrow 40 cents – much of it from the Chinese government, and my generation’s children and grandchildren, that’s many of you, will be handed the bill, a gargantuan debt to pay.

In fact, CBO reports this year the federal government will spend $3.7 trillion but only take in $2.2 trillion. We don’t have a revenue problem, we have a spending problem.

But the federal government can’t spend itself rich, anymore than your family can spend itself rich.

I remember how liberals used to mock my old boss Ronald Reagan’s belief that lower taxes would spur economic growth and improve the nation’s balance sheet. The left laughed and said we couldn’t “grow our way out of the deficit.”

Let me tell you something: It’s a heckuva lot easier to grow your way out of a deficit than to spend your way out.

In my first four years as Governor we got rid of a huge budget shortfall because revenue went up more than 40%, without raising anybody’s taxes. Revenue went up because we had more taxpayers with more taxable income.

But, we have to be honest. This failure to control federal spending took place under Republicans as well as Democrats, though it’s gotten a lot worse during the last two years.

It took about 220 years for our government to accumulate $5 trillion in debt. Under Obama our debt will grow by $5 trillion in less than four years!

I pray and believe the Republicans in Congress, Republican Legislatures and Republican Governors will be faithful to the will of the American people, expressed in November.

And from my experience as Governor I know Congress can reduce spending. I’ve watched Mitch Daniels give Indiana its first balanced budget in eight years, without raising taxes; I saw Virginia Governor Bob McDonnell come into office facing a deficit in excess of $2 billion. He cancelled a big tax increase, controlled spending and has a surplus of more than $400 million. Chris Christie has shown responsible spending cuts can be achieved even in an usually blue state like New Jersey.

A lot of people think while Republican Governors were attacking fiscal issues we were ignoring social issues. That’s not right.

My first year as Governor my pro-life agenda was adopted by our Democrat- majority legislature, and Americans United for Life named Mississippi the safest state in America for an unborn child.

As I mentioned, that year, Mississippi had a $720 million budget shortfall, about 20% of our total general fund. It took us two years, but we eliminated that deficit without raising anybody’s taxes.

More recently, when the recession hit our state, as allowed by law, I cut spending by 9.4%, right at $500 million.

We governors cut spending, including some Democrat governors like Phil Bredesen in Tennessee. Congress can cut spending, too.

And there’s plenty to cut.

When I cut state spending nearly 10% over the course of one fiscal year, I said I didn’t think most people even noticed. Of course, the liberals and the advocates whined and moaned.

Our liberal media elite especially criticized my savings in Medicaid; those savings have been large – hundreds of millions.

One way was to make sure everyone receiving Medicaid was actually eligible. Under my Democrat predecessor, our Medicaid rolls shot up from about 500,000 to about 750,000 in four years. A key reform we made was to require recipients who aren’t in nursing homes or immobile because of their health to re-establish their Medicaid eligibility in person annually. After my reforms, the rolls fell from nearly 750,000 to fewer than 600,000, by more than 20%.

Another change was to emphasize strong management so our Medicaid error rate now is the fourth lowest in the country; less than half of the national average, and about half the federal Medicare error rate. Our state taxpayers save about $50 million a year just because of our lower error rate. That would equal tens of billions in savings for the federal government in Medicaid and Medicare if the national error rate was the same as that of Mississippi’s Medicaid program.

Governors deal with problems, and voters have decided, from here on out, leaders should be judged not by their hopes or intentions; leaders must be judged by the results they achieve.

This fact is why President Obama has tried to sound like Ronald Reagan for the last several weeks. Reagan would recognize this ploy as just another play from the Democrat playbook: Fake up the middle, then run around left end.

Spending becomes investments; non-defense discretionary spending should be capped, but at a level of 27% higher than two years ago; the most job-stifling regulatory regime in history – that of Barack Obama and Carol Browner – will be “reviewed”. The President even told Bill O’Reilly Sunday that taxes hadn’t gone up during his first two years: What he didn’t say was the lack of a huge tax increase was solely because he couldn’t get any Republican Senators to vote for his proposal for the largest tax increase in history. And he told us in his State of the Union address that he would push for that gigantic tax increase in this Congress. The Gipper would have chuckled and shook his head, having seen the Left trot out this old movie many times before.

Americans have told us they want a more responsible government – one that respects the limits on government enshrined in our Constitution. They want policies that enhance individual freedom, not expand government control. They believe in personal responsibility, not government dependency.

If Republicans are not faithful to these principles, we’ll be defeated as quickly as the Democrats – and we’ll deserve to be.

The Obama policies of raising taxes, explosive spending, skyrocketing debt and government-run health care are probably pretty familiar to you.

Let’s talk about another growth killer you don’t hear about as much: The Obama energy policy and I am glad my old friend, Speaker Newt Gingrich, also talked to you about energy.

Just as ObamaCare will increase the cost of health care, the Obama energy policy is driving up the cost of energy … and not by accident. And while health care is about 18% of the economy, energy costs affect 100% of the economy.

You remember the cap and trade tax. Well, in 2008 then-Senator Obama told the San Francisco Chronicle, “Under my plan of a cap- and-trade system, electricity rates would necessarily skyrocket.” And if Senate Republicans hadn’t killed the cap and trade tax, the electric bills for working Americans would have skyrocketed … except even fewer working Americans would be working today!

American manufacturing would be crushed by Obama’s energy proposals, but he hasn’t given up.

His moratorium on Gulf of Mexico drilling has become a Permatorium; more Alaskan oil is being placed off limits; the technology – hydraulic fracturing – that makes possible the huge increase in natural gas production from shale formations is under attack; permits to mine coal are harder to get than a heart transplant.

The Wall Street Journal recently reported U.S. oil production will fall 13% this year, and that’s part of the Obama strategy.

The Obama Administration is trying to achieve by regulation what it can’t pass through Congress.

In a sentence, the Obama Energy policy is this: Increase the price of energy so Americans will use less of it. They are pursuing that policy to reduce pollution and to make extremely expensive, uneconomic alternative fuels cost competitive! This is not an energy policy; it is an environmental policy.

So as gas blows by $3 a gallon on its way to four dollars and more, remember what Energy Secretary Steven Chu said in a 2008 speech; “Somehow we have to figure out how to boost the price of gasoline to the levels in Europe.” Gasoline in Europe is $8 or $9 a gallon.

These energy policies are catastrophic for America’s economy. Such policies would destroy our ability to compete in the global marketplace because of cost.

What we need is more American energy!

The American worker can compete with anybody if we don’t tie a millstone around his neck, and we’re not going to allow the Obama Administration to do that through energy policy.

Fellow conservatives: 2012 will be the Year of Decision. Last November Americans did not give the GOP a mandate to govern – they gave us a chance to earn their trust and support. Let’s make the most of it.

As we prepare to complete our victory by winning the Senate and the White House in 2012, let me remind you of what I said at this conference last year, as Chairman of the Republican Governors Association: I said if the 2010 campaigns were about issues, Republicans would win a huge victory.

That’s because the American people agree with us on the issues. It’s why they massively repudiated Obama’s policies last November.

The Left and their allies in the liberal media elite like to describe conservatives, especially tea party activists, as out of the mainstream … as a bunch of unsophisticated know-nothings.

The leftish media say the tea party is a problem for Republicans. This is a case of the Left whistling past the graveyard.

Americans motivated to participate in the tea party movement were upset about the very same policy issues as Republican volunteers and leaders: Jobs and economic growth; reckless spending, skyrocketing deficits and debt; an energy policy that drives up energy costs and a government-run health care system that drives up health care costs.

Rather than divide us, these are the issues that unite us as conservatives, as Republicans … and as Americans.

The Left refuses to admit, the average American agrees with us on policy and issues. That is why Republican candidates last year won the votes of Independents by some twenty points.

And if the 2012 campaign is about policy, Independents will again join us in getting our country turned around and on the right track, with a larger economy and a smaller government; lower taxes and more Americans working; a falling deficit as we have more taxpayers with more taxable income; more American energy; ObamaCare repealed and replaced by an improved system where you and your doctor control your healthcare choices.

We know prosperity results from an economy based on creating wealth, not redistributing it; and if you truly care about helping the least among us and lifting people out of poverty, history proves you should favor a system of democratic capitalism over a centralized, government managed economy.

If we offer this conservative vision, it will be embraced by Main Street business owners and Walmart mothers – by American workers, corporate executives and Mama Grizzlies – by tea party activists, rank and file Republicans and Independent voters.

Our agenda is America’s agenda and with your help, our team will be America’s team, the winning team, in 2012.

Let me close by remembering today would be the 202nd birthday of Abraham Lincoln, father or our Party, and the first Republican President.

Lincoln saved our country -one nation, indivisible- and he established our Party as the Party of freedom.

So today every American is free to work hard and make the most of his or her God-given talents; to stand equal before the law; to pray to their own God, or no God; and to have a government that is “ of the people, by the people, and for the people” rather than a people controlled by the government. These are the reasons Lincoln said America was “the last, best hope on earth,” and so shall she always be.

Thank you. God Bless.