This is a rush transcript from "Your World with Neil Cavuto," October 11, 2007. This copy may not be in its final form and may be updated.

NEIL CAVUTO, HOST: The White House is not happy, steamed today over a decision that has illegals very happy — a judge yesterday blocking a government crackdown on employers who hire illegals, and, today, a very steamed Homeland Security Secretary Michael Chertoff on just how dangerous that decision was and is.

Secretary, always good to have you. Thank you for coming.

MICHAEL CHERTOFF, HOMELAND SECURITY SECRETARY: Good to be on, Neil.

CAVUTO: You don't like this one bit, do you?

CHERTOFF: Well, I'm frustrated because it's kind of ironic to have a judge say that we — it's against the law to enforce the law.

I think, in this case, we're going to be able to address the concerns he raised. I think, actually, most of his decision went our way. But I think it's a symbol of the fact that a lot of interest groups are coming together now to go to court to try to block our efforts to enforce the law against illegal migrants.

CAVUTO: But I think the gist of his decision was empathy for employers, not necessarily illegals, but employers who would have the responsibility of making sure whether they're hiring illegals or not. What do you make of that?

CHERTOFF: Well, I think employers do have a responsibility to make sure that the people they are hiring are legal, in the same way that employers have the responsibility to pay payroll taxes.

Obviously, it's a burden on the employer. I think most employers, though, are willing to comply with the law if they get clear guidance about how to do it.

And that's really what this regulation was about. It's giving clear guidance about how to comply with the law and make sure your employees are legal.

CAVUTO: All right. Do you think, though, that if this judge's decision stands and you do not get a chance to get this case heard again — which is unlikely, I must stress — I understand it's something that will be addressed — that we have lost an important sort of edge in getting this issue under control?

CHERTOFF: Well, first, I do agree, Neil, I think we're going to wind up winning in the end. This is one tool. We obviously have a whole number of tools. But I would certainly hate to lose this regulation, because it's another way we can help employers do what they need to do to make sure they comply with the law.

And it's really a matter of common sense. The basic principle is this. When you get a heads-up that there's something funny or something missing or amiss with respect to your employees, you have got to look at the question and you have got to resolve it. You can't just stick your head in the sand and pretend it's going to go away. That's all this amounts to.

CAVUTO: OK. In the meantime, then, we still have this issue of employers, either knowingly or unknowingly, hiring illegals, and apparently in greater numbers than we thought. What happens?

CHERTOFF: Well, let me be clear. This is not a holiday from law enforcement. We are still going to hold employers accountable who — if they knowingly and systematically violate the law. We're going to continue to bring criminal and civil cases. This is not a license for people to knowingly employ illegals in the workplace.

And I think we're beginning to see some effects, because we are getting complaints, frankly, from the business community about the vigor of our enforcement.

CAVUTO: You know, I have had you here before — and if you don't mind me switching gears a little, Secretary — on this issue of our safety here at home. And I think you kind of paraphrased something fairly interesting last time, where you said, the more time that passes from when we were hit, in this case 9/11, the — the sort of less concern Americans have about being hit.

You worried about that, that, even though we have had hits in Europe and certainly Latin America and Asia, and what have you, certainly in the Middle East, that we have gotten complacent?

CHERTOFF: I am worried that there is complacency, at least in some quarters. There is a lot of noise you hear sometimes about 9/11 is overblown or we need to move beyond 9/11.

And, while I understand life has to continue — and I'm the first person to say, we can't surrender our freedom or our way of life to terrorists — we would be very foolish if we didn't take note of what was going on around the world, if we didn't take note of what Bin Laden has been saying publicly, if we didn't take note of attempted attacks in Britain and Germany, and recognize we still have to be on our toes to stay ahead of the enemy.

CAVUTO: In New York, as you know, secretary, Governor Eliot Spitzer wants to give licenses to illegals. It's caused a bit of a ruckus, even among many within his own party. How do you feel about that?

CHERTOFF: Well, first of all, let me be clear that, under the law, as far as the federal government is concerned, the only license or identification we're going to be accepting as valid to get onto an airplane or get into a federal building is a license that makes it clear that someone is here legally and has a lawful right to be present.

I think that, you know, obviously, New York's got to think long and hard about whether they are going to be enabling people to function in the state in a way that might be harmful to the citizens of the state.

CAVUTO: All right.

Secretary, always a pleasure. Thanks for taking the time to join me.

CHERTOFF: Good to be on.

CAVUTO: Michael Chertoff, homeland security secretary, in Washington.

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