• The following is a transcript of Neil Cavuto's interview with Vice President Dick Cheney that took place June 25, 2004.

    NEIL CAVUTO, HOST: Mr. Vice President, great to have you at Fox. Welcome.

    RICHARD CHENEY, VICE PRESIDENT OF THE UNITED STATES: Good to be on the show.

    CAVUTO: First, on the economy (search), you were talking it up here today in a speech. We got more good economic news today, existing home sales at a record pace after yesterday, new home sales at a record pace. Does it bother you, though, that in the media it is still not trumpeted that much?

    CHENEY: Well, I think the evidence is overwhelming that the economy is doing very well. We've come through the recession and the aftermath of 9/11. I think it's — it's beginning to sink in with the public as well, too.

    You know, in this business, you don't have any control over what the press says and how they portray things. And that's their prerogative. But I think anybody who looks at it objectively has trouble making the case that somehow this is a bad economy. Our opponents...

    CAVUTO: But, still, the other side is saying that it's the worst since the depression.

    CHENEY: I know, and I just — I think when you say what John Kerry said, that it's — when he makes the claim that it's the worst economy since the great depression, nobody believes that. I mean, it's — it's — one, it's not true, and two, for that statement to be made I think just undermines his credibility with the voters.

    (CROSSTALK)

    CAVUTO: Still — and, again, it depends on the survey. I know there was one out of the University of Michigan today, sir, that showed an uptick in consumer sentiment. But there are a lot of other surveys, and even some polls, where Americans don't feel as gung-ho about the economy as you do. What do you say to them?

    CHENEY: Well, we keep doing events like today, get out and talk to folks, have an opportunity to explain to them what our policies are and why we think they're working. You just have to go out and get a big bullhorn and convey the message just as often and aggressively as you can. And that's what we do.

    CAVUTO: Are you afraid, though, that Alan Greenspan is going to rain on your parade?

    CHENEY: No. I'm a big fan of Alan Greenspan's. I've known him for over 30 years.

    CAVUTO: You were both in the Ford administration. He was Mr. "Whip Inflation Now."

    CHENEY: I've sworn him in twice now as chairman of the Federal Reserve. I think he's done a superb job for the country. And that's what he gets paid to focus on. And I think we have to give him a lot of credit for the policies that the Feds pursued over the last three years that have clearly made room for the expansion we're on now, which is a very low rate of inflation, very low rate of interest. And so I think he's done a great job.

    CAVUTO: All right. Now, the feeling seems to be, sir, that he's going to start raising rates a week from now, and that in order for them to adjust to where we are now, at the very least, they would have to double. Short-term interest rates would have to double. Now, they're very low, but are you comfortable with that?

    CHENEY: Well, the Fed will make Fed policy. That's as it should be. I mean, the administration, White House, president and I have no involvement in that process, nor should we. Do we really want an independent central bank responsible for that?

    And I say, we've got great confidence in Greenspan and his colleagues making sound decisions. It's a good group, and they don't want to choke off the recovery or the expansion. On the other hand, they've got obligations as well with respect to being concerned about inflation. And I don't have any reason to doubt that they'll make good, sound policy.

    CAVUTO: Now, higher interest rates can't control higher energy prices. So that's the conundrum, as you know, the Fed has to deal with. But are you worried that energy prices, gas prices, oil prices have stayed so high for this long?

    CHENEY: Well, it has stayed high, without question. And we've got significant worldwide demand out there. We look specifically at oil prices; there's less excess capacity that can be tapped in a time like this than has been true for many, many a year. And the economic growth in China, for example, has placed enormous additional demand.

    And the fact of the matter is, we've been trying to get an energy passed, energy policy in place through the Congress now for three years. Now, we've gotten it through the House a couple of times. We still haven't been able to get enough votes in the Senate to get it in place.

    But, to some extent, as a nation, we end somewhat ambivalent about energy. On the one hand, we put large chunks of the country off limits to any energy development. And on the other hand, we complain when gas prices go up because the international marketplace dictates higher prices.

    We can't have it both ways. So we're going to have to adjust and produce more here at home if we want to, and then conserve more.

    In terms of its economic consequences, though, a key figure for me, or statistic for me, is that in 1981 energy took about 8.5 percent of our GDP. Today, it only accounts for about 3.5 percent of our GDP. In other words, we do a lot more with less energy than before. We've gotten to be much more efficient consumers.

    We conserve better. We use it more efficiently. And per unit of output of GDP, we use less energy now than we ever have in our history.

    CAVUTO: But, still, I mean, for the average American, sir, who's looking at paying higher gasoline prices, are you afraid that wipes out whatever benefits the typical American has gotten from those tax cuts?

    CHENEY: Well, I don't think that's happened, because I think the economic results are there for all to see, that the tax cuts have been significant, worked out to a little over $1,500 per family across the family. And anybody who's paid income taxes has seen their taxes go down.

    And a lot of it was targeted, too, at various parts. The small business treatment, and so forth, it was designed to encourage savings and investment and new hires. So I think the tax package has worked without question.

    Now, there's no doubt but when gasoline prices go — go up, that's an additional added expense for the consumer. But if we look at those prices in real terms, adjusted for inflation, they're not has high now as they have been in periods in the past.

    CAVUTO: Do you think they'll come down?

    CHENEY: I think so, as we get through the summer driving season, we get into the fall. I think we'll be able to do that. But, you know, we complicate our lives enormously in the energy field.

    We've got — I talked to a — a CEO of a major oil company the other day. He has to produce something like 51 different grades of gasoline for the U.S. market because of our Clean Air Act requirements and the fact that, you know, what you produce and sell in Detroit probably doesn't satisfy the requirements in Chicago, doesn't satisfy the requirements in Peoria.

    You've got to have a different blend of gasoline for each and every one of those jurisdictions to meet the air quality standards. That complicates it. You can't import as much refined product from Europe as you used to be able to do because they don't produce any other product...

    CAVUTO: Right. And Iraq complicates it, right?

    CHENEY: Iraq complicates it in an international situation where you've got maybe only a million or two barrels of excess capacity out. And...

    CAVUTO: But what if they shut down? What if the terrorists succeed, sir, in shutting down all Iraqi oil production for, let's say, even a few weeks? What would be the fallout here?

    CHENEY: Well, first of all, I don't think that will happen. I think it will be disrupted from time to time. The Iraqis are getting better and better at managing that whole process. And as they rebuild the infrastructure and if they get more security — if they get more security forces deployed out there, I think the production will be more dependable and reliable. But there are other — other factors at work, too.

    I think the markets, to some extent, have discounted that risk. It's already built in. We've also got our Strategic Petroleum Reserve. And the basic reason it's there is, if there were a major interruption in supply, then you'd tap the reserve.

    CAVUTO: So if Iraq were shut down, Mr. Vice President, would you be inclined, would the administration be inclined to tap the reserve?

    CHENEY: That's a decision the president would have to make. He'd make it at the time.