• This is a rush transcript from "Your World With Neil Cavuto," January 28, 2009. This copy may not be in its final form and may be updated.

    NEIL CAVUTO, HOST: Well, Mitt Romney urging Republicans on the Hill to vote against this stimulus bill tonight — the former Republican presidential candidate telling me that he hopes they stand their ground.

    (BEGIN VIDEOTAPE)

    MITT ROMNEY, FORMER MASSACHUSETTS GOVERNOR: Well, it's a — a bill that has a lot to do with stimulus, but a lot to do with other things as well.

    And, frankly, I think the American people recognize that we're walking on an economic tightrope right now, and that this is not the time for excessive borrowing. It's also not the time for spending money on a wish list of congressional favors that people have been asking for.

    This is a time to be very serious about helping build our economy. And spending hundreds of millions of dollars on contraceptives or hundreds of millions of dollars even on nice things like helping teenagers understand the risks of sexually-transmitted diseases, this has nothing to do with economic stimulus.

    And it's the wrong course for the Democratic House to have taken. I think you're going to see the Senate do something very different. I hope so. And Barack Obama should be given credit for saying he's going to talk to Republicans, but he needs to listen and — and incorporate some of the — the clear objectives that I think the nation has.

    CAVUTO: You know, Governor, the president already did get Henry Waxman, Nancy Pelosi to remove the contraceptive stimulus in the stimulus, I guess. So, he's trying to work with his party, but it has not been easy.

    Are — you had said that that would be his most difficult battle. Is this a preview of coming attractions?

    ROMNEY: Yes, I think — I think what you're seeing is that congressional Democratic leaders want to pay back the people who helped get them elected. They have some pet projects they want to see carried out.

    The sexually-transmitted disease initiative, several hundred million dollars, is a new one that has been put in.

    There are other spending programs that — that the Democrats have put in. And I think Barack Obama may or may not like them. But, you know, he needs to put his foot down and say, we really are planning on bringing change to Washington, and — and bills that are filled with a parade of pork are not going to be accepted by the presidency.

    And, frankly, at a time like this, when too much spending and profligate borrowing could cause us to potentially fall into stagflation or a collapse of our currency, we're — we're in a bit of a tightrope here.

    We've got to be very, very careful that we're not spending too much, we're not borrowing too much. You know, when I was running for office...

    CAVUTO: Well, they argue, though, Governor — but they're arguing that if...

    ROMNEY: Yes.

    CAVUTO: Those are future fires you're referring to that might be very real. But the real fire now, they argue — this is from the White House and from Democrats — this is the fire now. We've got to get going, and that, even if you're against all of their spending — even economists against this have said, Governor — something should stick here and should stimulate here, whether you like it or not.

    What do you make of that?

    ROMNEY: Well, that's absolutely right.

    And I — and I wrote an op-ed several weeks ago saying we should have a stimulus plan. We need a stimulus bill. But we have to make sure that we spend the right amount of money, not too much, to cause a crisis in our currency.

    And, at the same time, if we're going to be spending some additional money, we want to spend those dollars on things that are absolutely essential and on things that we would have spent money on anyway, regardless of the circumstances.

    We would just pull those dollars forward. And that would be, for instance, rebuilding the helicopters that have been shot down and — and damaged in — in the conflicts over the last several years. It would include some infrastructure projects, but only those that are essential. Grass for the Mall is probably not one of them.

    And, so, you have to measure it as — as what's the right size and what kind of spending will actually encourage the economy to grow. You know, the — the Democrats talk about a big-spending — or — excuse me — a big tax cut, but there's not a big tax cut in this bill. It's a check to everybody.

    And we have already seen in the last stimulus bill that sending people checks doesn't grow the economy. That — those dollars are just not spent.

    CAVUTO: So, you would be favoring more like tax rate relief, something people could plan on for the foreseeable future, because we know, with even the rate relief, that can change, too, but something of more enduring value?

    ROMNEY: Yes.

    You — you recognize, of course, and everybody in America understands, that we're not going to have everybody working for government, that — that, if you want to see more jobs and expansion of our economy, you're going to have to get the private sector to decide to invest and to hire people.

    And they're not going to do that if — if consumers come into their store loaded with a $500 check, because they're going to recognize this is a one-time blip. It's a short-term thing. It's not something you invest to sustain in the future.

    But, instead, if you give people a permanent tax cut, and you bring down the burden on middle-income families, you're going to see businesses recognize that this is an opportunity for — for expansion.

    And, frankly, Christina Romer, who is the — the president's designate as the chairman of the Council of Economic Advisers, her analysis said a tax cut has three times the multiplier effect. And compared to something like — like infrastructure spending, with only 1.4 times multiplier effect, this is better.

    CAVUTO: Yes, but she said that before she — she said that before she joined this administration.

    Let me ask you...

    (LAUGHTER)

    CAVUTO: Let me ask you, though, about Democratic criticism of the very points you raise, Governor. And that is, I think it was Bill Clinton who said something like, you know, Republicans, every time there's a problem, cut taxes, cut taxes. It's the — it's their same old argument. That dog don't hunt.

    In other words, referring to what's happening in the economy, it was because Americans gave Republicans a shot with these tax cuts, and they didn't seem to do anything.

    What do you say?

    ROMNEY: Well, actually, every time there have been tax cuts, going back to John F. Kennedy and Ronald Reagan, tax cuts have in fact spurred the economy. And what has happened in our most recent turndown has virtually nothing to do with tax policy. It has everything to do with the excessive lending by banks and excessive borrowing by homeowners to buy homes, in many cases, where they couldn't afford to pay back those mortgages.

    And that has caused a — a worldwide economic crisis. It has nothing to do with tax — tax rates in the U.S. On the other hand, if you want to get the economy going again — and this has been proven time and time again — you have to give people a — a sense of permanence in a reduction in a tax rate.

    And that's why Christina Romer — you're right — she said this multiplier — three times multiplier was — was much bigger than an infrastructure spending.

    CAVUTO: Right.