• This is a rush transcript from "Your World With Neil Cavuto," September 23, 2008. This copy may not be in its final form and may be updated.

    NEIL CAVUTO, HOST: I love when this guy is on. Ed Rendell is here. He's the Democratic governor of Pennsylvania, speaks his mind, answers questions, an oddity in either party.

    But, Governor, you probably heard...

    GOV. ED RENDELL, D-PA.: Sure, Senator McCain.

    CAVUTO: Not Ahmadinejad, but — who, by the way, still hates us — but Senator McCain saying, I'm for this, but let's not go crazy with this, about the $700 billion rescue.

    I think I interpreted that correctly.

    RENDELL: Yes.

    CAVUTO: What do you make of that?

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    RENDELL: Well, I liked some of the things that Senator McCain said. Certainly, taxpayers getting to recoup some of this money has to be a part of it. Limitations on CEO pay, absolutely, he couldn't be more right about that.

    But he left out two pretty important components. Number one, we have to put in place, as a part of this bill, a regulatory scheme that will make sure that what caused this to happen is prevented in the future. That's got to go hand in glove with this.

    And, secondly, we have got to do something, Neil, for the 100,000 people who are facing mortgage foreclosure now. It's OK to help the big financial institutions, but, at the same time, if we're going to spend this type of money, let's help those people.

    Let's put together a plan to allow their mortgage rates to be adjusted. They still have to pay significant, but — but something they can live with. Let's make that part of the process.

    CAVUTO: Do you worry, though, Governor, that that's not just a little ancillary expense. I mean, to help them all, I mean, potentially could — could be tens of billions of dollars.

    RENDELL: Well...

    CAVUTO: So, where would you — and you're pretty good at running a fiscal house. Pennsylvania is one of the best-run states in the nation now. Where would you draw the line?

    RENDELL: In terms of how do we get — recoup this money?

    CAVUTO: Right.

    RENDELL: Well, you're not going to like this answer, Neil, but I would do what I think President Bush should have done after 9/11, look in the camera and say: "Mr. and Mrs. America, we're facing a crisis of incredible proportions. And we have got to suspend the tax cut."

    The tax cut on the wealthiest people in this country could easily absorb...

    CAVUTO: But would you do that in a slowing economy? Your party has been saying it's all but a depression, right, so...

    RENDELL: Well, you...

    CAVUTO: So, you would have a slowing economy. You would be hiking taxes into it.

    RENDELL: But I...

    CAVUTO: When Bill Clinton raised taxes, you know, Governor, we know in retrospect, the economy was moving up. So, it's better to do it the wind at your back than the wind at your face, right?

    RENDELL: Well, you know, I think you can make a case that, when Bill Clinton raised taxes and used that revenue to balance the federal deficit, that was the key component in — in having the economy surge the way it did.

    I always kid some of my Republican supporters. I said, "Sure, Bill Clinton raised your taxes $40,000 a year, increased your net worth by about 20 million bucks"

    CAVUTO: Well, he also had this little thing called an Internet boom.

    But, you're right. We can argue the semantics and...

    RENDELL: But, certainly, Republicans were saying for years, balance the budget.

    CAVUTO: Right.

    RENDELL: Eliminate the deficit. The economy will zoom. That's what Bill Clinton did.

    CAVUTO: Well, you raise some good points. We could quibble over the details how he got there.


    RENDELL: Right.

    CAVUTO: But let me ask you, Governor, about what McCain is saying. He is open — seems to be open — for doing something to help individuals and those behind in their mortgage.

    RENDELL: Well, that wasn't a part of his five principles.

    CAVUTO: But — well, but he's open to pass this legislation, I'm saying.

    So, what I'm asking you is, where do or should we draw the line? Because, pragmatically, Senator Obama today was saying, whatever things we want to do, either to help those behind in their mortgages, right, let that be in separate legislation. Let's get this thing through now.

    What do you — whose approach is right?