• This is a rush transcript from "Your World with Neil Cavuto," October 31, 2007. This copy may not be in its final form and may be updated.

    NEIL CAVUTO, HOST: Well, you know, in the meantime, this guy has been called the dark horse in the GOP race. And, certainly, he stands to benefit from a strong economy.

    With us now, presidential hopeful — I'm not sure they call him a dark horse anymore. He may be close to a front-runner. I'm talking to former Arkansas Governor Mike Huckabee.

    Governor, good to have you.

    MIKE HUCKABEE, PRESIDENTIAL CANDIDATE: Thank you, Neil.

    It's better to be called a dark horse than a dead horse, isn't it, any day?

    CAVUTO: Yes, a thin dark horse. You still look great, by the way.

    (LAUGHTER)

    CAVUTO: Lost all that weight and kept it off.

    Let me ask you about this notion that this staves off a recession or a slowdown, good for Republicans.

    HUCKABEE: I think it is good for Republicans when the economy's doing well, especially when you have a Republican in the White House.

    But Republicans are still going to have to address the microeconomy, which is something I don't think we're doing very well. We are addressing the macroeconomy, how its overall impact on the marketplace and the Dow.

    But, when you start talking about how it's drilling down into individual families, and are they getting ahead, the reality is, there are many families that really are working as hard or harder than they have ever worked in their lives, and they are not seeing that pay off in terms of their capacity to do better and to do more. And...

    CAVUTO: So, cutting interest rates does not change that?

    HUCKABEE: It may help them, particularly if they are in the middle of that housing crunch. And I think it also may help them in consumer items.

    Where it really may help is a sense of consumer confidence. But what still has to happen is a major change in the overall tax policy. Energy prices have to come down, because the guy that is working for an hourly wage, he has still got to put gas in his car to get to and from work. And, when prices go up, he feels it really, really hard right in the back pocket.

    CAVUTO: All right.

    Now, you come from a party the predominant candidates of course have been saying it is not up to the government to solve these problems; it's up to individuals and companies incentivized to fix them.

    We have seen that illustrated in the home mortgage situation, with the president kind of pushing these guys to do something. Do you subscribe to that?

    HUCKABEE: Well, again, generally, government is not there to fix all these problems, but what the government does is mess it up by getting in the way with incredibly complicated tax policy that makes it very difficult for a free market to survive.

    I mean, in the purest of worlds, there would be a real free market, where you could go out and earn whatever you wanted to earn, and the government would not confiscate you for your productivity. Now, what we have is a graduated income tax system that says, the harder you work, the more you are going to pay. You save it, we tax it. You invest it, we tax it. You inherit it, we tax it.

    And, so, it is counterproductive to what ought to be happening in the economy. And that is turn it loose and let it roll. That is what would really give people at the bottom a chance to reach the next rung on the ladder.

    CAVUTO: Now, as long as I have been covering you, Governor, you have been saying kind of the same thing, which is good. I mean, your message is consistent.

    HUCKABEE: Yes.

    CAVUTO: But now it seems to be registering in these latest polls that have you up. I think, in Iowa, you and Rudy Giuliani are essentially tied. Nationally, in some of them, you place above Mitt Romney.

    What is going on?

    HUCKABEE: The message is getting through.

    People are looking for a candidate who is just straightforward, and I think is giving them a sense that the message is authentic. I am not saying anything different. I think you hit it on the head without even realizing it. I am saying the same thing that I said before.

    CAVUTO: I never realize what I'm asking, so...

    (CROSSTALK)

    (LAUGHTER)

    HUCKABEE: But I think that is a lot of it, is that people say, this guy is saying what he said before. He's not just changing his message to run for president.

    And, if there is anything that people are looking for, it's somebody who has true convictions and hopefully will communicate them, and then explain why that will work for the economy.

    CAVUTO: But, you know, why I think you are registering now, Governor, for good or ill, is they are picking on you more. And one of the things you hear a lot is, you know, when he was running things back in Arkansas, he was a taxer. He was a liberal on that stuff. So, he's not what he appears to be.

    HUCKABEE: Well, I was anything but a liberal in Arkansas. That would really surprise a lot of the Democrat legislators who beat me over the head about being too far to the right.

    But here's what I did do. I did govern. I balanced the budget every year I was in office, and cut taxes 94 times. The other thing we did, we rebuilt out roads. We improved our schools. That is what government is supposed to do. It is supposed to just do it well.

    CAVUTO: All right, can you hang around, Governor?

    HUCKABEE: I will. Sure.

    CAVUTO: We continue with a bit more here.

    I want you to remember this from my exclusive chat yesterday Rudy Giuliani.