This is a partial transcript from Your World with Neil Cavuto, May 7, 2003, that was edited for clarity. Click here for complete access to all of Neil Cavuto's CEO interviews.

Watch Your World w/Cavuto weekdays at 4 p.m. and 1 a.m. ET.

NEIL CAVUTO, HOST: Well, it might not be the $700 billion-plus package that he originally wanted, but it looks like President Bush is going to get more of what he wanted in there than Democrats wanted to take out of there. And that does not suit my next guest very well at all. With us now, former New York Governor Mario Cuomo (search).

Governor, always good to see you, thanks for coming.

MARIO CUOMO, FMR. NEW YORK GOVERNOR: Thanks for having me.

CAVUTO: You don’t like this tax cut.

CUOMO: No. Not at all. Anybody who had lived through Reagan tax cuts would know why. Look. You are an expert at this. Is the problem with our economy that you don’t have enough friends with money who want to invest in it? I have all kinds of clients with investment money. The problem is the economy is 70 percent consumption. The 150 million workers we have can’t consume. They can’t buy goods and services. The average wage in the country is what, $43,000. They are falling backward.

CAVUTO: But isn’t the government consuming a lot too?

CUOMO: Well, you have to get them money to buy. Our problem is the businesses aren’t doing business. It’s as clear as that. And for the businesses to do business, you have to put money in the hands of the people who will spend it.

CAVUTO: Then why are you saying that the Reagan tax cut didn’t work?

CUOMO: Oh, it was disaster.

CAVUTO: Governor, wait a minute, we had the biggest economic boom and market boom right after that.

CUOMO: Excuse me, well, I’m going to answer you. He gave us the biggest tax cut in history and the biggest tax increase in history. He raised taxes after the tax cut six times. The reason he did that is the deficit got so…

CAVUTO: But marginal rates never approached that marginal turnaround.

CUOMO: Fair and balanced.

CAVUTO: Go right ahead.

CUOMO: Finish my answer. And at the same time, he forced all the states and local governments to raise taxes. It got so bad, Dick Stockman told the truth in his book, and Richard Darman told the truth in his book.  And they said it was a disaster. He had to raise taxes six times. And then Bush had to raise taxes, and it cost him his presidency. And then Clinton…

CAVUTO: But wait a minute, you know, Governor, there were many other people since who said that the tax cuts were fine.  It ignited a great economic boom.

CUOMO: What economic…?

CAVUTO: Wait a minute. We had a 20-year bull market. Now who do you credit for that? We had a 20-year economic boom.

CUOMO: I will answer that.  The boom came after George Bush had to surrender his presidency to pay for the Reagan deficit. Incidentally George Bush predicted it would happen. He called it "economic voodoo." And he raised taxes, as you remember, nearly $100 billion. Then Clinton raised them nearly a $100 billion and then you had a boom. And so you should be arguing, well, the tax increase by Bush and Clinton created a boom.

CAVUTO: Well, no, no, no, no, no. Governor, here is what you are doing. And this is a typical argument Democrats raise against tax cuts -- and it might be well and good. But you worry about the deficits. Here is what I think is missed in the argument, Governor. We pay more attention to what the government should keep than what people should keep. There is something intrinsically wrong with that, don’t you think?

CUOMO: No, no, no. The deficits, you people, you fair and balanced people, used to argue for balanced budgets. You are the conservatives, remember who you are.

CAVUTO: Didn’t we have deficits during Jimmy Carter? Didn’t we have it?

CUOMO: I know its embarrassing, let me finish, I know it’s embarrassing, but now what you want are deficits. You took the Clinton surplus, the biggest in history, and in two years you gave us the biggest deficit and debt in history.

CAVUTO: You are a smart man in the economy, right, you don’t think that the slowdown that we have seen in the economy wasn’t happening still in the last year of Bill Clinton? Are you trying to peg all of this on George Bush?

CUOMO: No, you didn’t hear me blame George Bush. I said he left you with the biggest surplus. You now have the biggest deficit.  You know how you judge these things.

CAVUTO: Why are deficits bad? Why are deficits bad?

CUOMO: George Bush the second gets credit for winning the war. He didn’t build the Army and the Air Force that won it, but he was the president. So he gets credit. Now he has the biggest deficit in history, the biggest debt in history.

CAVUTO: But why is that bad? Tell me why that is bad?

CUOMO: The biggest deficit and biggest debt, why it’s bad?

CAVUTO: Everyone was worried about higher interest rates, but we haven’t seen them.

CUOMO: I’ll tell you why. I’ll tell you why, because one of the things that happens is that you force the state and local governments, which now also have a $100 billion in deficits, like New York, to raise their taxes, which you did in the ‘80s for the Reagan tax cuts. These are the worst of all taxes because they are not the progressive taxes where I will pay more because I have more than you, I should be so lucky, but these are taxes like sales taxes, and real property taxes where the…

CAVUTO: But you don’t think people already pay, whether at the national, state or local level, enough in taxes? Don’t you think people need to step back in this, Governor, and say, this is all screwed up.

CUOMO: Excuse me, I’m with you. So let’s take the $500 billion that is now going out mostly to the top 1 percent in taxpayers, that is me and my people, top 1 percent.

CAVUTO: Who pay the most in taxes.

CUOMO: Exactly right. But let’s take that $490 billion over the next five years, and give it to 150 million workers, instead of less than 2 million taxpayers at the top. Now what would happen.

CAVUTO: Even though the rich will pay ultimately after this, Governor, more in taxes as an aggregate group than before?

CUOMO: No, no, no. You see, now we’re making a different argument.  I don’t blame you. Now you are making a fairness argument. I was rich, I gave you more, give it back. We want to stimulate the economy. What would stimulate it more? just a minute, 150 million or 120 million people who will spend the money? or me and my clients who will put it in the bank and wait until businesses get better?

CAVUTO: How do you know?

CUOMO: You’d prefer the 2 million people at the top to the 100 million...

CAVUTO: You know what? I don’t distinguish, Governor. I think everybody should get something, everybody. You are distinguishing and trying to make a class argument, right?

CUOMO: Oh, Neil, we’re talking about fairness. No, sir. I thought we were talking about stimulating the economy.

CAVUTO: You don’t think getting people back their money will?

CUOMO: Neil, you are in a position now where you have to say this, I hope you don’t change your mind tomorrow, that you would rather have a million people or two who are not going spend the money than 150 million who not only need it but.

CAVUTO: I want everybody. Governor, we’ve run out of seconds, here.  I want everybody. But I want you back.

CUOMO: One hundred million over two.

CAVUTO: All right. Governor Mario Cuomo.

Content and Programming Copyright 2003 Fox News Network, Inc. ALL RIGHTS RESERVED. Transcription Copyright 2003 eMediaMillWorks, Inc. (f/k/a Federal Document Clearing House, Inc.), which takes sole responsibility for the accuracy of the transcription. ALL RIGHTS RESERVED. No license is granted to the user of this material except for the user's personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon Fox News Network, Inc.'s and eMediaMillWorks, Inc.'s copyrights or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.