Carly Fiorina’s ‘Demon Sheep’ Talks to ABC

ABC News' Teddy Davis reports:

Carly Fiorina, the former Hewlett-Packard CEO who wants to be the Republican nominee against Sen. Barbara Boxer, D-Calif., launched a Web video on Wednesday attacking fellow Republican Tom Campbell for backing higher taxes in California to balance the state's budget.

Given the aversion that most Republican primary voters have to raising taxes, the attack was sensible enough.

The only problem was that Fiorina's web video was so strange in its production value, narration, and choice of metaphor that it got mocked in the blogosphere and it is now Campbell's web-savvy campaign that is attempting to use the ad to raise money for his Senate run.

Watch the web video here:

"Carly's ad likens fiscal conservatives to sheep, and Tom to a demon sheep, without mentioning a single federal issue or proposing a single solution to America's economic woes. Seriously," writes the Campbell campaign's e-mail to supporters.

Fiorina is worried about Campbell because ever since he switched last month from the governor's race to the Senate race, he has been leading the GOP primary field.

Campbell, a law professor and former congressman who earned his Ph.D. under Milton Friedman at the University of Chicago, has a strong Libertarian streak: he backs abortion rights and same-sex marriage.

In a recent telephone interview with ABC News, he called for instituting an "essentially revenue neutral" carbon tax which would be offset by cutting payroll taxes. Sharing the viewpoint of many other economists, Campbell believes a carbon tax would be a less intrusive way to combat global warming than the cap-and-trade legislation that Boxer has championed in the Senate.

"I thought that the danger to the United States economy from what she proposed was extreme," said Campbell, referring to Boxer.

While most Republicans and even some Democrats are weary of cap-and-trade legislation, Campbell is taking the unusual step during a campaign of offering an alternative which includes a new "essentially revenue neutral" tax.

"Weaning ourselves off imported oil is essential," Campbell told ABC News. "The best way to do that is to lower the taxes, and I've got a specific one in particular, lower the FICA tax. In a recession, you want to make it cheaper for employers to employ people. So maybe you can forgive the FICA tax for a year. But lower the taxes. It's important that you start with that."

"Then impose a carbon-based tax on the use of carbon-based fuels in two ways — in energy production and in the price of an automobile," he added. "Those are both consumption taxes. What you've done then is essentially revenue neutral — substituted a consumption tax on carbon content by lowering an employment tax. The economics are wonderful. You incentivize hiring people and you incentivize the substitution away from depletable fossil fuels."

"And the supervision is zero," Campbell continued. "It's almost zero because you already have an IRS. You don't need to monitor the smoke stacks." 

Beyond the tax issue, Campbell is also being attacked for his previous stance on illegal drugs.

On Dec. 9, 1999, when Campbell was running for the U.S. Senate against Democrat Dianne Feinstein, the Los Angeles Times reported that Campbell favored letting localities engage in the experimental government distribution of illegal drugs to combat crime.

Citing what he described as a successful heroin distribution program in Belgium, Campbell said that a study there found the effort not only reduced crime but lowered the rate of drug addiction.

The Los Angeles Times reported that Campbell said: "If you take the addicted population, and that is very hard to fake let alone desirable to fake, and offer them the drug to which they are addicted . . . that has the possibility of very beneficial results."

Campbell no longer touts the drug distribution idea and despite his comments to the Los Angeles Times, he bristles at the suggestion, floated by Fiorina recently, that he favors drug legalization.

"I never called for legalization of any drugs. Period," Campbell told ABC News. "My opponents are attempting to put the issue forward. That's not the case. It's simply not true. I was and am supportive of medical use of marijuana in the state of California, and that is, of course, supported by the vast majority of Californians."

Asked if he favored any other policy change in the area of drugs other than medicinal marijuana, Campbell said, "No. Nope."

The third Republican candidate in the Senate race is Assembly member Chuck DeVore, a more conventional, down-the-line conservative who has been backed by the Political Action Committee of Sen. Jim DeMint, R-S.C.

Asked how he expects to win the Republican nomination despite having called for higher taxes at the state level, a new "essentially revenue neutral" carbon-tax at the federal level, and being supportive of same-sex marriage and abortion rights, Campbell pointed to his tough-on-spending record.

"I have been more specific than any candidate on how to solve the budget deficit problem, on how to curb the rate of growth of the federal government which is precisely what the TEA Party movement is focusing on," said Campbell. "Putting yourself in their shoes: 'Do you want to replace one of the biggest spenders in the United States Congress's history . . . with a focus on the fiscal issues? Or do you want to bring back the social issues. I hear nobody saying, 'Yes, let's make this a fight over the social issues.'"

ABC News' Matt Loffman contributed to this report.