This is a partial transcript from "Your World with Neil Cavuto", March 25, 2004, that was edited for clarity.

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NEIL CAVUTO, HOST: Fox on top of a division, maybe, in the Democratic ranks? Continuing my chat now with House Minority Leader Nancy Pelosi (search), who draws some distinctions with her Party’s presidential standard-bearer on who is rich and who should give up a tax cut.

(BEGIN VIDEOTAPE)

REP. NANCY PELOSI, D-CALIF., MINORITY LEADER: This is where the American people interact with the economy. Economic security for them.

This is a situation where we have to have an economic policy that grows the economy, to create jobs and give the economic security that our people deserve from an economic policy.

So I don’t think that you can say there’s some good indicators except for jobs, because...

CAVUTO: But you will acknowledge that we’ve had 360,000 jobs added over the last six months. Now you’re right. That is small compared to what...

PELOSI: Is needed.

CAVUTO: ... the economy should be doing but you know as well, do you not, that with an improving economy there is a significant lag with jobs?

PELOSI: It’s three years. I think this: We have to think in a very much more grand and dramatic way about job creation.

CAVUTO: What would you do to create jobs?

PELOSI: What would I do? Thank you for asking. In our economic package that we induced one year ago, in January of last year. It would have created, not by our estimates, but by the CBO estimates, one million new jobs at a minimum last year.

And that was to have a couple of different things. We certainly want to give tax cuts to business, R&D tax credits and the rest, to encourage investment in research and development, to have innovation in our economy.

We had a major investment in infrastructure, to rebuild America, mend America, to move commerce, to move people to work, to protect our environment, to protect our homeland, the high-paying jobs immediately.

We made a major investment to help the states so that...

CAVUTO: Where would the money have come from?

PELOSI: It was paid for. It was paid for and that’s really what the beauty of it was, too.

CAVUTO: So you would argue that the president’s tax cuts and, particularly as your presumptive nominee has been saying, the tax cuts for the well-to-do could have gone toward more productive uses?

PELOSI: Exactly.

CAVUTO: So are you on board with his plan that anyone over $200,000 has to give up their tax cuts?

PELOSI: We’re in the process of putting our budget together now. The tax cuts over people making $1 million a year is an area...

CAVUTO: He’s saying 200,000.

PELOSI: Well, in our tax bill we have 150, in our bill from last year we had 150 but we’re going higher than that, because you know what? You get a lot of money after you turn the tax cuts around at the high end.

CAVUTO: All right, here’s where I’m confused, Congresswoman, so if you’ll indulge me, what is the high end to you? What is a rich person to you?

PELOSI: Well, certainly a person making over a million dollars a year.

CAVUTO: But is a person earning over $200,000 a year, as Senator Kerry has said, is that a rich person?

PELOSI: I think that the tax cuts for people over $200,000 a year can be used better to invest in education in our country. Nothing does more to grow our economy than investing in education.

CAVUTO: There are a lot of your constituents who earn over $200,000 a year.

PELOSI: They do.

CAVUTO: How would they feel if you were to say to them, look, you’re rich, give it back?

PELOSI: It’s not a question of saying they’re rich. What we’re saying is that people in the middle-income level should not be paying for bigger tax cuts for people at the high end.

The middle class working families are the families that are paying for this. Now, we haven’t finished our budget, we will be finished as soon as we see the Republican budget, then we will finish our budget. And we may just go to the million-dollar and above level.

CAVUTO: So do you think it’s a mistake, if you’ll indulge me, Congresswoman, a mistake for Senator Kerry, then, to be targeting what seems to be a different number, the $200,000, and over crowd, versus what you’re saying, maybe the million and over crowd.

PELOSI: No, I don’t think it’s a mistake.

CAVUTO: You’re on the same page.

PELOSI: Last year we had $150,000 and above. But you can’t just look at that. You have to say what is it you get for this? Again, we all like tax cuts. I’d rather invest more in R&D tax cuts...

CAVUTO: But rescind the tax cut for those folks, the upper-income folks.

PELOSI: Very upper income folks, yes. And we’d do better to invest in tax credits and cuts for people in the middle income and lower because we put money where it is needed, injecting more demand into the economy, to create jobs.

For example, here we have all of this unemployment in our country. We have serious deficiency in job growth. Not one manufacturing job created yet this year. It’s all in the public sector.

Instead of extending unemployment insurance benefits to those people, we are just saying, "Well, forget it. We don’t care."

Now, what would it do if we extended it. First of all, it’s the right thing to do. Second of all, those people would spend that money on necessities, thereby injecting demand immediately into the economy, to grow the economy, to create jobs.

CAVUTO: Final question. Personally, what do you think of President Bush?

PELOSI: He’s a nice man. He’s a nice man. But that isn’t the point. It’s not about personal. It’s about being the president of the United States; it’s about leadership. And I think that President Bush does not deserve to be reelected.

I think that our economy has suffered under his leadership. I think he has been divisive. He said he was going to be a unifier, not a divider.

I’m very enthusiastic about Senator Kerry, because I think he will mend America. I think he will reconcile our differences. This isn’t about whether somebody is a nice person or not. This is about what that person can use his or her leadership to do, to bring America together and not just drive wedges into our society.

CAVUTO: But if the vitriol is such on both sides, to be fair, Congresswoman...

PELOSI: I don’t think it should be.

CAVUTO: Well, you’re right. On the Medicare issue, where you said the president has sort of blown our money, on Social Security, you said he’s blown our money.

PELOSI: That’s right.

CAVUTO: On the war you said he essentially blew it. These are almost impeachable offenses.

PELOSI: I don’t go to that point. But I do think that what the president has done in his term of office in being insensitive to working families in America, and their aspirations, by having reckless economic policies that are bankrupting our country, with our children paying the bill into the future, and by the way, short-changing them in their education in the meantime, shortchanging our veterans while we honor them, their valor, their courage, their patriotism, the sacrifice they’re willing to make, and then we shortchange them and leave them behind when they come home.

With our seniors and saying its more important for us to give a tax cut to people making over a million dollars a year, than to have you have the benefits Social Security...

CAVUTO: Your views are well delineated, Congresswoman. I’m just saying if he got re-elected has the well been so poisoned that your relations with him are going to be just awful?

PELOSI: Well, I’m just working very hard to make sure that he’s not re-elected. And that’s nothing personal. That’s about his policies, which I think have not -- in furtherance of growing a better future for our children, that is our responsibility here.

My favorite line in one of the songs we all sing, "Oh, beautiful for patriot’s dream that sees beyond the years." I don’t think that this administration is looking beyond the years. I think it’s very shortsighted, very special interest and moneyed interest-oriented, rather than building a better future for our children, which is our responsibility.

And part of that responsibility is to act with civility and not driving wedge issues to divide our country, but to find our common ground, as much as we possibly can.

(END VIDEOTAPE)

CAVUTO: All right, Nancy Pelosi.

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