• This is a partial transcript from Your World with Neil Cavuto, December 15, 2003, that was edited for clarity.

    Watch Your World w/Cavuto weekdays at 4 p.m. and 1 a.m. ET.

    NEIL CAVUTO, HOST: Just because Saddam's locked up, are terrorist threats notched down? Yes, says former Secretary of Defense Caspar Weinberger (search), at least when it comes to terrorist threats.

    Mr. Weinberger joins us on the phone from Maine.

    Secretary, thank you very much for joining us.

    CASPAR WEINBERGER, FMR. SECRETARY OF DEFENSE: Well thank you for asking me.

    CAVUTO: What do you think now, as far as terrorism is concerned? Are you more or less worried than you were, let's say, on Friday?

    WEINBERGER: Oh, somewhat less worried, of course, because I think the — part of the terrorism in Iraq was made up of people who were former Saddam adherents, the Baath Party (search) people who hoped he was coming back and who thought they would continue along their murderous ways in the hope that he'd continue to reward them when he came back. Now they know he's not coming back, that he's completely finished, and he's showing up as the coward and the braggart that he is. And I think that will take a lot of steam out if it and a lot of the inducement.

    It won't end terrorism. There are still a bunch of crazies around who will commit suicide and sell themselves to anybody who wants to rent them out. But I think it will — on the whole, it will reduce it. It will make our task in constructing a democratic Iraq much easier.

    CAVUTO: Secretary, do you buy the notion that we would have had a bigger rally in stocks in this country and maybe across the world had we not had follow-up terrorist incidents in the Middle East today?

    WEINBERGER: No, I don't think so. I think that anybody who knew anything about it knew that once you defeated the military, there were going to be some people who hoped that Saddam Hussein would come back, and who relied on him entirely for their support and their existence, their livelihoods, as well as their lives for many years.

    They kept hoping that he would turn up. They couldn't really believe that his army was defeated, that all of these claims of his were just coward's boasts and that nothing would ever come of them.

    Now they know that was true, and I think they'll consider that they'll either have to go off into the hills somewhere or join somebody else. And I think that it will help us build this democratic Iraq that is run by the consent of the government and rule of the law much more quickly and much more effectively.

    CAVUTO: Do you think, secretary, that this might let us put our guard down a little bit? You led one of the biggest defense buildups in our country's history. We sorely needed to do so at the time, a little over 20 years ago.

    WEINBERGER: Yes.

    CAVUTO: Now some people are saying, as I'm sure you're well aware, that with the capture of Saddam — and they hope the imminent capture of Usama bin Laden — we don't need to pour as much into defense. What do you say?

    WEINBERGER: Well, you know, that's interesting, because that is exactly the same argument these people and their predecessors made when we defeated the communists and when we won the Cold War. They said, “Now let's get back to this health and education and road-building and all the other stuff that is so much more important.”

    The fact of the matter is that if you want to stay free and stay a democracy, you've got to spend money and you have got to have a strong military. And so I don't think that this means we have to do less at all. We have to do perhaps different kinds of spending, we have to do some spending to get more flexible and more mobile. But I don't think it removes the need for military strength, and I think it is military strength that has given us the position that we have now.

    CAVUTO: All right. Secretary, always a pleasure chatting with you. Thank you very much.

    WEINBERGER: Good of you to call. Thank you.

    CAVUTO: Caspar Weinberger, the former defense secretary of these United States in the Reagan years.

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