(CNN) - Sarah Palin responded to unsubstantiated accusations that Joe Biden called the tea party "terrorists" over their role in the debt ceiling negotiation, saying President Obama should look into his own past with Bill Ayers if he wants to see "domestic terrorists."
"He didn't have a problem palling around with Bill Ayers back in the day when he kicked off his political career in Bill Ayers' apartment," the former Alaska governor said Tuesday night on Fox News. "You know, shaking hands with Chavez and saying he doesn't need any preconditions with dictators … wanting to read U.S. Miranda rights to alleged, suspected foreign terrorists."
If she and Fox host Sean Hannity were "real domestic terrorists," Palin said "heck, shoot, President Obama would be wanting to pal around with us, wouldn't he?"
Multiple Democratic sources said Democratic members of Congress vented to the vice president about tea party lawmakers who "negotiate like terrorists." As they spoke, Biden said "well now we've taken away their weapons of mass destruction," meaning the Republicans could not use the debt ceiling as leverage with Democrats in the future.
Biden's press secretary, Kendra Barkoff said the word "terrorists," "was used by several members of Congress. The Vice President does not believe it's an appropriate term in political discourse."
Obama's association with Ayers, the '60s communist radical, raised brows during the 2008 presidential campaign. Although, the two knew each other in Chicago, Ayers denied a close relationship with the president.
Palin said if the president were serious about improving the rhetoric in the U.S., as he called for in his speech following the Tucson shooting, he would tell the vice president to "tone it down a little bit."
"That is typical of our president, where it's, blah blah blah, you know it's all talk and no real action," Palin said.
The former 2008 vice presidential candidate, who is publicly considering a run for the White House, said she is "getting closer" to a decision. And she criticized 2012 GOP frontrunner Mitt Romney, who she said did not take a stand early enough in the debt ceiling debate.
"I do not have respect for what he has done in this debate," Palin said. "He waited until it was a done deal … and then he came out and made a statement that he didn't like the deal after all."
Romney, the former Massachusetts governor, kept his distance from the debate ahead of the agreement between Congress and the White House. After a deal was reached he issued a statement in which he said the president's leadership "pushed the economy to the brink at the eleventh hour."
"You know, you can't defer an issue and assume that the problem is going to be avoided," Palin said.
When asked if any presidential candidates met her test, Palin cited Rep. Michele Bachmann of Minnesota.
"She spoke out and she cast her vote according to her principles. She stood true," Palin said. "Long time to go still, with debate, with discussion on who the right candidate will be, I'm not prejudging the field at this point."
- CNN Chief White House Correspondent Jessica Yellin contributed to this report.