This is a partial transcript from "Your World with Neil Cavuto," December 15, 2005, that was edited for clarity.

NEIL CAVUTO, HOST: Will smooth elections in Iraq Thursday mean smoother sailing for the GOP in midterm elections? My next guest certainly hopes so. He is the chairman of the Republican Governors Association. And he made a big news splash yesterday, announcing that he would not seek another term as governor of Massachusetts.

From Boston right now, the Republican governor of that state, Mitt Romney.

GOV. MITT ROMNEY, R-MASS.: Thanks, Neil. Good to be with you.

CAVUTO: How does Iraq and today's successful election — what seems to be successful, I should stress, Governor — play into what you have got to do to help Republican governors next year?

ROMNEY: Well, I wish Iraq and the successes that I am expecting you are going to see over the coming year or two, I wish those things really did play heavily in the gubernatorial races.

But I think, the truth, is, most governor races are run on local issues. They are not national issues. We have got a lot of Republican governors running for reelection who I think will do very, very well, based on their record.

But we have a lot of open seats we are giving up, eight seats we are giving up. Only one on the Democratic side becomes open. And, as a result, the math is against us. We will probably end up some three to six down. But we are going to do our very best to raise as much money as we can to support those governors, particularly those incumbents who have got great records and hope they will get reelected.

CAVUTO: I would hate to quibble with you, Governor, but, in my home state of New Jersey, President Bush is not a popular fellow.

And I honestly think that that seriously hurt the Republican candidate try to take out Jon Corzine. How much of an effect will the president's popularity, or lack of it, affect Republican gubernatorial candidates next year?

ROMNEY: You know, I really don't think that national politics and the national ballot test, if you will, of Democrat vs. Republican, and concern about foreign affairs, weighs very significantly on governor's races.

People look at governors as people who are going to balance their budget, improve their schools, fight for better criminal justice. And that is why they elect Republican governors time and again, even from liberal and Democratic states like mine.

CAVUTO: But to be fair, sir, as you know, they didn't in New Jersey this past November, and they didn't in Virginia, a largely Republican bastion. What happened?

ROMNEY: Well, Democratic governors there were replaced by Democratic governors.

I sure thought we had a better chance of picking up Virginia than we did. But again, I don't think Virginia was about Iraq. I think people who have looked at the race said they looked at the candidates, they looked at the local issues, and they voted for the Democrat there.

There is no question, however, that a strong and surging Republican Party nationally does provide some benefit to our governor's races. But, what, 90, 95 percent of the governor's race is up to their job in their state, their vision for their state. And that is why people choose governors.

CAVUTO: You know, Governor, Bill Clinton held your position and went on to become president. Is this a jumping board for you?

ROMNEY: Well, that is a lifetime away, really.

You know, in the world of politics, people are not going to start looking at what happens in '08 for, I would guess — even those that are planning on getting in, they are not going to really get in for at least a year. A lot of folks are going to keep their options open.

But that is really a ways off. The president is only in one year into his second term. Enormous things are happening, as you know, happening around the world, happening here at home. And this is a time for this president. And, you know, we will see what happens down the road.

I know you were just talking to Newt Gingrich. And you are going to talk to a lot of folks, who may consider a run down the road. But it's a long way off.

CAVUTO: Are you?

ROMNEY: From my standpoint, I remember a favorite phrase of a friend of mine. He would say, "I will burn that bridge when I come to it."

(LAUGHTER)

ROMNEY: So, I am not thinking about it now.

You know, we will let the future take care of itself.

CAVUTO: Sir, I will rudely go on with one more question in that regard.

Because you're a Mormon, many Americans don't know that religion well, don't know it extremely well, particularly the Christian core of the Republican Party. Could that be a hardship for you, if you ever entertained running?

ROMNEY: Well, you know, it seems to me, it is only the Democrats that apply a litmus test on religion.

They don't want evangelical Christians to serve on the court. Republicans don't apply a litmus test on religion, particularly toward great faiths like my own and Baptists and evangelicals, who vote heavily Republican.

So, I don't think religion has a role to play in politics or in public service. I certainly haven't found it playing a role here in Massachusetts. And I hope people in my party and the Democratic Party choose individuals based on their capabilities and their values.

And I think people of faith, basically of all faiths in this country, line up with very consistent values.

CAVUTO: Governor, let me ask about your party in the greater scheme.

There has been some disenchantment by core conservatives in your party that the Republicans lost an opportunity to, at least this term, extend the president's tax cuts beyond 2008, '09 and '10, when some of them from capital gains begin to roll out. Do you fear that that is going to come back to bite Republicans?

ROMNEY: Well, again, I don't think that what happens in Washington affects gubernatorial races in a major way.

CAVUTO: No, I am talking generally for the party, sir.

ROMNEY: But generally, I think what I hear is much more concern about spending and a concern that the Republican Congress was not able to rein in spending. And there is a lot of discussion about the excesses in the transportation bill and excesses in other areas as well, and a concern that that led to high deficits and an inability on the part of some to vote for tax reductions.

Tax cuts and low tax rates stimulate our economy and cause it to grow. And that is what has helped create the kind of recovery we have got now.

CAVUTO: Then, do you say, Governor, that because Republicans, who control, as you indicated, the White House, the House and the Senate, have not been able to rein in spending — and they are running the whole enchilada — does a party like that deserve to be reelected?

ROMNEY: Well, it better be reelected, because we are facing extraordinary, critical times, with regards to the attack coming from Iraq and the jihadists, in terms of the attack that is coming internationally, an economic attack, if you will.

That is an overstatement to a certain degree, but Asia is coming into its own. It is great for Asia, but it is a new challenge, unlike anything we have faced before. And we need the strength of Republicans, who will fight the jihadists and who will also make sure our economy is strong to take on a new challenge there.

So, yes, we need Republicans. And if Republicans have made some mistakes, we better clean them up fast.

CAVUTO: All right, Governor Mitt Romney, a real pleasure.

Thank you, sir. Appreciate it.

ROMNEY: Thanks, Neil.

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