• This is a rush transcript from "Your World with Neil Cavuto," January 22, 2008. This copy may not be in its final form and may be updated.

    NEIL CAVUTO, HOST: To the campaign trail now and exclusive reaction from GOP presidential hopeful Rudy Giuliani.

    (BEGIN VIDEOTAPE)

    RUDY GIULIANI, (R) PRESIDENTIAL CANDIDATE: I think the Federal Reserve has to have the independence to assess these things and generally they`ve been correct and I have no reason to criticize it. I think they`re looking at what we`re all looking at, and I mean monetary policy is important to this.

    I would put more of the focus on fiscal policy, though. I think the government is going to have to do something pretty strong here. I think a very strong stimulus package is necessary. And to me a strong stimulus package is heavy on the permanent part. And that`s why I put out last week — when we had talked about it — the largest tax reduction in American history.

    The idea of that was to say to the markets, you`re going to be looking at an America that`s a good investment. You`re going to be looking at an America that has growth. You`re going to be looking at an America that`s going to allow you a little bit more range of profit and a little bit more range of seeing expansion.

    So, I would — I would put heavy emphasis on cutting the corporate tax, cutting the capital gains tax, keeping the tax on the dividends low, the things that are very competitive between countries where money moves one place or another.

    CAVUTO: Yeah, but none of these stimulus packages, including the president`s, Mayor, have much of a long term nature. A lot of them have these rebates and quick checks to folks. But if that`s all they can produce — and it looks like as this time that is all they can come up with — what do you think?

    GIULIANI: I would think that would not be — that wouldn`t help very much. It would be like a Band-Aid.

    Just think of this situation. Companies that are considering investing long term and they have got three or four possibilities of where to invest the money, and one of them is America, and they are looking at an America in which the Bush tax cuts are going to expire, which means a 20 to 30 percent increase in taxes. They are looking at an America in which all kinds of tax increase programs are being suggested by people like Charlie Rangel. They`re looking at an American where, if a Democrat gets elected, there will be a vast expansion in the central government`s regulation of business.

    And they`re looking at an America that has one of the most out-of- control legal systems as far as getting sued in the world. Well, when you look at an America like that, you may select Ireland or you may select Bermuda, or you may select Eastern Europe, or you may select China or India.

    So, the American president has to understand that we have to be competitive.

    CAVUTO: Hillary Clinton delivered a statement on the Fed`s rate cut and referred to it as a global economic crisis. Are we in a global economic crisis?

    GIULIANI: I don`t think politicians should use words like "global economic crisis," because, sometimes, you make what it is into a crisis when you call it that.

    I consider this a very serious and very significant problem that has time-honored, sound policies that can ameliorate it. And those time-honored, sound policies of fiscal prudence are lower taxes, moderate regulations, get control over government spending, and reform your legal system, so that it isn`t so out of kilter with the legal systems of the rest of the world, so that, when companies invest here, they believe they get a fair shake.

    Now, maybe I am so convinced of this, Neil, because I am the only one running for president who ever had to do something like this. I had to turn around an economy, a government economy. I took over a government economy in 1993 that was in very bad shape, considered to be in crisis. And we followed principles of fiscal prudence. We lowered taxes. We reduced spending. We moderated regulation.

    And we went from a city where we had 10.5 percent unemployment to a city of 5 percent unemployment. A city in which we lost 300,000 jobs, we added 450,000 jobs, a city that had deficits to a city that had surpluses, and we reduced taxes more than the city had ever reduced in its entire history.

    CAVUTO: Mayor, I do want to address with you the compelling case you make for tax cuts.

    I mean, Club for Growth loves you. They do not flip over the present front-runner, John McCain, says that he has been wishy-washy on tax cuts and for them and against them, but he wouldn`t rescind his vote, but he wants to make them permanent. So, they`re not too hunky-dory with him.

    What do you make of that, his mixed messages on tax cuts?

    GIULIANI: Well, I think John, who is an honest man and has his own views. I think John voted against the Bush tax cuts twice because John doesn`t embrace supply-side economics the way I do.

    His worry was, how can you cut taxes at a time of war?

    Well, if you`re a supply-sider, you realize, if you cut the right taxes, you`re going to make more money by cutting the income tax, like I did, by 24 percent. I actually got more money from the cut. It may come from the fact that John`s experience has been in the legislature. John has not been in charge of a budget. John has not been in charge of a city or a state or a business. So, maybe these things are not part of his experience.

    The reason I am so aggressive about tax-cutting is because I have been an executive, and it`s worked for me. It`s worked for me when I was being criticized for doing it. And, then, a year or two later, I could put out the chart and say, see, I was right. You were wrong. We made more money from it.

    (CROSSTALK)

    CAVUTO: Does it bother you, Mayor, that he`s leading in the polls, that he`s leading ever so slightly in Florida...

    (LAUGHTER)

    GIULIANI: No.

    CAVUTO: ... even leading in your home state of New York? What do you make of that?

    GIULIANI: What I make of it is, it`s a really close race. John McCain is a strong candidate, just like the other Republicans are strong candidates. I admire every single one of them, and I believe they are so much better than the Democratic candidate. I happen to believe that I would be the best by far for lowering taxes.

    And there`s no doubt that I am the strongest fiscal conservative in this race. George Will said as much in a column that he wrote a number of months ago. I am the one who has reduced taxes the most and reduced taxes strategically. Those tax reductions led to more jobs, more employment, more income for the government, and more growth for our economy. That`s what we`ve got to do right now.

    CAVUTO: Well...

    GIULIANI: Critically important.

    CAVUTO: ... that might be the case, sir. But, as, again, to get back to these annoying polls, is Florida a must win for you? You have to win?

    GIULIANI: Neil, it`s a real important win. I don`t think any candidate ever puts himself in a corner and say, must win, have to win, must win. But it`s a really important win.

    You know, it`s like when you`re in a World Series and you`re down two games to nothing. Is the third game a must win? Well, it sure is, because, otherwise, you`re going to be three-oh.

    And — but, until you get to the actual last one, you never know. Florida is very important...

    (CROSSTALK)

    CAVUTO: OK.

    Was there any concern...