• With: Gov. Mitch Daniels, R-Ind.

    NEIL CAVUTO, HOST OF, “YOUR WORLD”: Meanwhile, stocks selling off, with new jobless claims picking up, back above 400,000 this week. Now new reports that part of the president’s post-Labor Day job plans will be to require billions of dollars to fix run-down schools. Is that going to fix this job market?

    The Republican governor of Indiana, Mitch Daniels. Governor, welcome to you. What do you think? Would that do the trick?

    GOV. MITCH DANIELS, R-IND.: No, of course not.

    And no one should think for a moment that it would. I mean, first of all, this is to shoot a BB at a rhinoceros. It’s not even near the mark in terms of the real problems that we’re facing. And it’s just more histrionics. If we hadn’t already learned our lesson about government stimulus of this kind, I would’ve -- I would’ve thought the last round of it by this administration would have taught us all.

    CAVUTO: Joe Biden, who is in China now, has gone on record saying stimulus was never given a chance to work because we didn’t spend enough on it. I’m paraphrasing, Governor. But that does seem to be the administration’s thinking in this post-Labor Day plan here and strategy, more stimulus.

    DANIELS: Yes.

    CAVUTO: What do you think?

    DANIELS: Neil, when I was 21 years old, and in my misspent youth, you know, if you had way too much and binged one night, somebody the next morning, one of your buddies, would tell you, hey, have a little more, you will feel better, you know?

    This is hair-of-the-dog economics. And it didn’t work then. It wouldn’t work now.

    CAVUTO: OK. So, you’re saying we have got to just change our strategy now, be brave now, one of the reasons why you like Paul Ryan, the rising Republican congressman, House budget star, came up with this Medicare plan that has been vilified, I guess.

    And a lot of Republicans, fellow Republicans, have kind of left him hanging on the vine. He’s toying with a presidential run. It’s a crowded field. Why do you think he should?

    DANIELS: Well, to clarify, I haven’t said that he should. It’s not for me to tell him whether this is right for -- for Paul and his family.

    But when an outstanding young journalist called me yesterday and asked me about Paul Ryan, you can bet I said some very laudatory things. I think he’s a terrific talent. He is forthright and knowledgeable and -- and courageous. And he’s got the general direction for this country right.

    And the single best thing that a president -- it won’t be this one, obviously, but that a president can do right now for growth and jobs and to reclaim American leadership in the world is to announce that we are going to change the safety net programs prospectively, not for the recipients of today or even the next few years, but so that there’s something there for the younger people of this country and that we’re not going to crush them under the debt which we have now laid out to dominate their future.

    Paul Ryan has been the clearest voice. If he did decide to get in, he would enrich this debate and lift it up. He understands intuitively, I think, what’s at risk right now, the American dream of upward mobility, the American necessity of a stable, hopeful middle class. And he knows how to restore it.

    CAVUTO: You look at the markets. And when you were with President Bush, I mean, I ‘m sure you followed the markets and all this now and then. You didn’t get too fixated on them. But the markets seem to be telegraphing trouble, whether it’s abroad, a new banking crisis that moves ashore here or something worse. I have no idea, Governor. What do you think?

    DANIELS: The only thing that surprises me is that anybody is surprised.

    You know, I -- born-and-bred optimist, but for the last year-and-a- half, consistently, I’ve said I didn’t like the looks of this economy, and in particular, I was very worried about the burdens, the regulations, the obstacles, the -- just the out-and-out hostility of this national administration to the private sector, the only place where -- the growth of the private sector is the only place where salvation, both of our economy and, by the way, the federal government’s fiscal mess, lies.

    And, yet, at a time when the growth of the private sector should be the overriding goal, every public decision should be tested against the question will this make private sector growth more or less likely, this administration consistently gives it last place in its priorities.

    CAVUTO: All right. We’ll watch closely.

    Governor, good seeing you again. Thank you.

    DANIELS: Thanks, Neil.

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