This is a rush transcript from "Your World with Neil Cavuto," August 8, 2007. This copy may not be in its final form and may be updated.
NEIL CAVUTO, HOST: This is a FOX News Alert. Did something the president of the United States told us today move the markets today? They were up big much of the day, and then ending up even bigger. Another wild day for Wall Street, but a very big day here in Washington as we sat down with the president of the United States for an exclusive one-on-one on these big market swings, on the housing market, and mortgage problems, on calls for a bail-out, even on Barry Bonds' record home run last night.
We sat down for a rare chat inside the United States Treasury where the president was talking up the economy. Topic number one today though, those trapped miners in Utah.
CAVUTO: Mr. President, always great to have you.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Thank you, sir.
CAVUTO: I notice in the heat, you just don't sweat.
CAVUTO: Let me ask you, I know you have been in contact, sir, with Governor Huntsman out in Utah and the miners. And you have offered whatever federal support and help he needs to rescue them. But it comes at a time when environmentalists say you should go a step further and maybe abandon coal. That it is too risky, too dangerous, too dirty. What do you say?
BUSH: I say that, first of all, it doesn't make any sense to abandon an energy resource of which we have got a bountiful supply if part of our strategy is to become less dependent on foreign sources of energy.
Secondly, I'm a believer in technology, and I believe we will be able to continue to develop technologies that will enable us to use coal in even more environmentally friendly ways.
CAVUTO: So at a time when we are looking the bridge collapse in Minneapolis, and infrastructure costs, and this push that maybe we need to reprioritize our federal spending, what do you say?
BUSH: Look, I'm all for prioritization, but if what one is suggesting is, is that we don't need to be fully engaged in an enemy that wants to attack us again, and therefore cut back spending and supporting our troops, I strongly disagree.
The biggest threat to our economy — short-term threat, the biggest threat to the lives of our citizens is another terrorist attack. And after September 11th, Neil, I vowed I would use all resources necessary to protect this country.
Now I believe we've got ample revenues to do a lot of important projects. I mean, if rebuilding bridges is that big a priority, then we ought to prioritize that in the highway monies that we have already budgeted, as opposed to helping individual congressman or senators realize pet projects in their districts. In other words, prioritization means real prioritization.
CAVUTO: Does it bother you, Mr. President, when every time we have a crisis, unfortunately, that if it wasn't for Iraq, we would have money for this, if it wasn't for Iraq we would have money for this?
BUSH: No, it doesn't bother me, because I firmly believe that what we are doing is the right thing. And I know it is an unpopular war with some. But I will tell you it would be even more unpopular, is if we abandoned the mission there and al Qaeda and other extremists became more emboldened and attacked us again.
And then people would look back and say, what happened to them in 2007? How come they could see the impending threat? Well, I see the threat. And I will look forward to working with Congress, with members of both parties to continue to focus on the threat.
And I have been told you can't fight a war and balance the budget. Well, we are fighting a war, we cut taxes, and our deficit is shrinking, as a matter of fact, it is — as a percentage of GDP, it is below the 40-year average.
We are told we can't do a lot of things. And I believe we can do a lot of things, starting with protecting our country and in the meantime, diversify our energy supply or fix infrastructure. But it does require prioritization, something that Washington is not very good at doing.
CAVUTO: Speaking of prioritization, sir, a lot of the Democratic presidential candidates have said since the mortgage troubles that we would have to rescue or bail out. They are very particular not using the word "bail-out," but what they do say is a reserve set aside for sick lenders.
Hillary Clinton, I think, is proposing something in the vicinity of a billion dollars to do that. Are you for such measures that would shore up the mortgage industry?
BUSH: I'm for letting the market work. My biggest concern when it comes to the mortgage industry is the lendee, not the lender. It is the person to whom people have lent money. In other words, I'm worried about people having their homes foreclosed. I'm worried about people buying into a deal that they are not certain as to what they are buying into.
And I think the focus ought to be on the individual homeowner. And to that end, I do believe there needs to be more transparency. And we are asking for more money for truth in lending. I think we ought to crack down predatory lending. I don't think we need new law, we ought to enforce the law on the books.
And then I think we ought to let the market work. People are reassessing risk. And there is — the good news is we have got ample liquidity in our society to be able to, you know, deal with this current issue. And.
CAVUTO: But I think what Senator Clinton is saying, Mr. President.
BUSH: Well, let me put it more bluntly. No, I'm not for a federal bail-out.
CAVUTO: OK. Because that is what she is essentially looking at.
CAVUTO: And what she is saying is that because there were some duplicitous lenders out there that you can't just let that go. And people who were hoodwinked into these mortgages now have to be rescued.
BUSH: Oh, I thought you said the lenders as opposed to the lendees. First of all, I believe that, you know, there is enough liquidity to encourage refinancing. No question we ought to be cracking down on predatory lenders. And we will.
CAVUTO: So to be clear, sir. If someone was a victim of a predatory lender, who gave them sort of a song and dance on a mortgage, and they took that song and dance and they took that mortgage, and now they risk losing their homes, would you say it is not the government's job to rescue that person?
BUSH: Well, actually there is a place for people to refinance, and that is at the FHA. And therefore it is important to reform the FHA to make sure it has got a more extended reach. There are refinancing mechanisms at the federal level available for homeowners.
CAVUTO: Do you think the mortgage crisis, as it is being called, is overblown?
BUSH: I think anytime anybody's homes are threatened is something we ought to be concerned about. I do believe that we are adjusting from a plethora of capital that came rushing — or liquidity that came rushing into our system. And we are watching it very carefully and you know, paying attention to, you know, the — whether or not there is enough ample revenues in our society, ample cash in our society to help — for there to be a natural adjustment through the marketplace.
CAVUTO: I heard someone describe it, sir, as President Clinton presided over the Internet bubble, President Bush presided over the real estate bubble.
BUSH: Well, I think the verdict is still out on the real estate bubble. There is no question that there has been a correction. I think the good news so far is the correction has been what one would call a soft landing as opposed to precipitous decline.
I would point out that the economic growth in the second quarter was 3.4 percent. And I would remind people that this economy is pretty darn strong given the fact that the job picture remains strong. And so there was a correction.
And you know, markets tend to correct. And the fundamental question is, will they correct is such a way as to not derail the good, strong economic growth that we are seeing?
CAVUTO: So when Barney Frank, in the House Financial Services Committee, is looking at going after essentially the brokerage houses for packaging or providing support for these kind of loans, now his counterpart in the Senate, Chris Dodd, is against that, but what do you think of that?