This is a rush transcript from "Your World With Neil Cavuto," March 23, 2009. This copy may not be in its final form and may be updated.
NEIL CAVUTO, HOST: Now, Wall Street may be celebrating this $1 trillion plan today, but Fred Thompson says taxpayers shouldn't.
With us now in an exclusive chat, the former Republican presidential candidate, host of the new "Fred Thompson Show" on radio. I was delighted to be part of that.
Senator, good to have you. What do you make of this?
FRED THOMPSON, FORMER REPUBLICAN PRESIDENTIAL CANDIDATE: Thank you, Neil.
Well, you know, I certainly don't know. And I doubt if anybody really knows whether or not the plan is going to work or not. As you say, I don't say that you can tell from a temporary gain in the stock market. That happens every once in a while when the government spends money.
But I think the underlying issue is one of credibility and credence that the people in Washington know what they are doing. And I think the jury is still out on that, once people settle down and take look at the details.
It just seems to me like the — the toxic assets, or the legacy assets, as they now like to call them, are still there. And you are going to have to find a willing buyer and a willing seller. And, you know, nobody knows what price it's going to bring and — and whether or not the private sector is going to willingly come and participate in this plan or not, so an awful lot of details.
But I think people were just hoping and praying that some kind of plan would come out of Washington on this. So, even though they apparently pretty much went back to the original Paulson plan that they discarded...
CAVUTO: That's right.
THOMPSON: ... they have now come back to it, even though all that, they still like — liked, temporarily anyway, what they saw today.
• Video: Watch Part 1 of Neil's interview | Part 2
CAVUTO: All right.
You were referring to Hank Paulson, the former Treasury secretary, whose — whose original idea with the original TARP money, if you recall, was to put sort of the toxic or the bad debts, if you will, of banks that had accumulated these bad loans that had essentially gone defunct into a box, a lockbox, if you will.
THOMPSON: Yes, create a bad bank.
CAVUTO: Right. And then — and that would eventually be resold, presumably in an improved economy, at higher prices, and everyone comes out the better.
Now, it was greeted dismally then.
THOMPSON: See, I think — see, that's the problem.
CAVUTO: Greeted dismally then. Greeted more favorably now.
THOMPSON: Well, because we are more desperate for any kind of hope, as far as the financial sector is concerned, I think.
But I think it — it really goes to the underlying problem. When you see people in Washington thinking adamantly — in his case, for example, come before Congress, saying, you don't have time to read this, I don't have time to explain it, I have got a few pages, here, sign off on it, I need $700 billion, and they give it to him, and the first tranche is like $300 billion, and it seems to have — have gone to places that no one can really identify, and they changed the plan, and now they come back to that original plan, it — it doesn't give you any sense of confidence that anybody has got a handle on this situation.
Now, you know, they — but they have got to do something. And this looks like, you know, it's — it is a shot. But there's an awful lot of uncertainty out there. We're — we are spending money like we have never spent before. We're getting lectured by the French and the Germans on fiscal policy.
The Chinese are nervous. Now the CBO says that it is even worse than we thought. And now the Treasury, and now the Fed is printing another trillion-plus dollars. So, it's — it is a tough deal.
I wonder what the average guy out there that doesn't follow this, you know, every couple of hours, the way that we do, is thinking about all that. It certainly doesn't — doesn't urge you, I don't think, to take your money from out from under the mattress...
CAVUTO: All right.
THOMPSON: ... unless you are going to buy gold, I guess.
CAVUTO: If you have got it under the mattress.
The CBO to which you're referring to, the Congressional Budget Office, which said that the president's numbers don't add up, effectively saying that we could be looking at $2 trillion more in red ink in the next 10 years.
Having said that, though, do you — do you think that part of the success — or the successful response to this banking plan, what little we know of it, Senator, is that there is going to be private participation, albeit a small part, I think $100 billion of the roughly $1 trillion we're talking about here — with the government backing up private rich investors, hedge funds and the like, supporting this, buying some of this toxic stuff?
The reason why I'm a little leery of that, as I was discussing with you earlier, is that this is the same group that has been vilified and equated as all AIG bonus babies, when — and now they are seeing their taxes hike. They are all greedy villains, et cetera. And now they just, willy-nilly, sign on to this? That — that is what gave me pause.
What say you?
And I — I fear that it will give them pause, too, to join in partnership to a government that is — that is apt to change the rules on you. That is the whole point, I think, behind this AIG bonus thing. I mean, it is — it's absurd and a slap in the face of the taxpayers, and all that, but we are talking about a handful of people and a fraction of the bailout money that these companies received.
But Congress comes and, contrary to the Constitution, I believe, changes the rules of the game and retroactively penalizes the people they have identified as bad guys. In that case, they are not just identifying the people in the unit of AIG that caused the problem, or even AIG. They are — they're identifying anyone who has taken money from the government.
And the Senate bill goes even further. So, if you are looking at that, regardless of the details of that particular situation, you are saying, here is an outfit that changes the rules of the game in the middle of the game. That is contrary to the most fundamental tenet of our system. And that is the rule of law.
So, you wonder about, what if you get in, and you do well, and you make a lot of money doing this? What is Congress going to think about that, when you have done that? I don't know.
CAVUTO: Well, that is actually a very good point.
Also, let me ask you this. What if, playing the other side of that coin, the market is telling us something of substance here, and that this does represent more than just that presumed — presumed bear market rally, that this is the start of something big?
Then, wouldn't the Obama administration, wouldn't Democrats who have been pushing this bigger government, and some within your own party, I might add, now come back and say, well, aha, that is the trick; you — you greedy capitalists have been saying, you know, government hands-off, and, yet, when push comes to shove, we are improving because government is very much hands-on?