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Fred Thompson on U.S. Economy, Presidential Race, Conservative Credentials

This is a rush transcript from "Your World with Neil Cavuto," October 15, 2007. This copy may not be in its final form and may be updated.

NEIL CAVUTO, HOST: Suffice it to say, we have concerns about the economy again.

So, for the next president of the United States, that is certainly going to be a topical issue. And wouldn't you know we have a man many consider to be a possibility in that category.

I'm talking about Fred Thompson, the former senator of Tennessee. Some of you might have seen him on TV now and then, movies. I don't know if it rings a bell.

But, anyway, Senator Fred Thompson, very good to see you.

FRED THOMPSON, REPUBLICAN PRESIDENTIAL CANDIDATE: Thank you.

CAVUTO: Thank you very much for coming.

THOMPSON: Good to see you again, Neil.

CAVUTO: Thank you.

THOMPSON: Appreciate you having me. Congratulations on your new show.

CAVUTO: Thank you very much.

Let me talk a little bit about the environment for the network. Wall Street less than hospitable to the network's launch. I will leave that to Wall Street later.

But are you concerned about a recession?

THOMPSON: No. No.

You have got to understand that recessions happen, and that we have been in an extraordinarily long period without one. But it's, what, 22 successive quarters now of economic growth...

CAVUTO: Right.

THOMPSON: ... ever since the tax cuts kicked in.

But inflation rates, unemployment rates, all those are good indicators. I think we're part of a healthy global economy. And I think, as long as we stick to the principles we believe in, in this country — and that is market economies, and competition, free Americans with each other, engage in world trade, innovation — we are going to be OK. Clearly, the Fed looked down the road and saw a little something there, and with their drop in rates recently. But they're always trying to stay ahead of the hounds a little bit. And, hopefully, they did.

(CROSSTALK)

CAVUTO: Are they enough ahead?

THOMPSON: Sure. I think so, for right now.

(CROSSTALK)

CAVUTO: For right now, being — let's say they're going to meet again on Halloween, I believe.

THOMPSON: Yes, appropriately enough, huh?

(CROSSTALK)

CAVUTO: Yes. Should they do anything more?

THOMPSON: Oh, I don't know. I think that we will have to wait and see between now and then.

You know, a couple days ago, the market was up.

CAVUTO: Yes.

THOMPSON: You know how that goes.

CAVUTO: Oh, absolutely. But this view, the doom-and-gloomers who say, hey, get ready for more doom, more gloom, you don't buy that?

THOMPSON: No. No.

I don't see — you always have to be mindful in terms of our fiscal policies and what we are doing with the economy, which direction do the people that it's going to go in. I think, if Wall Street decides that we're going to go into a period where we tax-and-spend ourselves into oblivion, then we're all going to be in trouble.

That's what this next election probably is going to largely hinge on. But I think, for right now, if we stick to the basics, and do what made us a great nation, that there is no reason why we can't continue the prosperous times that we have now.

CAVUTO: All right.

You talk about what made a great nation. But also what made the Republican Party a great, dominant party for many years, certainly dating back to Ronald Reagan, is practicing that religion...

THOMPSON: Yes.

CAVUTO: ... you know, being fiscally prudent, not going crazy. And now there is some doubt as to whether you guys still have that mojo.

(CROSSTALK)

THOMPSON: Yes. It is not just the Republican Party. You go back to the '20s. Any administration that has lowered taxes, lowered tax rates, Kennedy administration, Reagan administration, and now here, has proven that it grows the economy, and that, you know, after a percentage and a half or thereabouts, the economists say that the revenue to the government starts coming in greater than the economic growth.

So, it benefits activity that in turn is taxed by the government. And, yes, we have to stick to that. And we have to make sure that the tax cuts that were placed in 2001, 2003 stay in effect. It's not only...

CAVUTO: For all groups, including the upper-income group, for whom it seems the Democrats, to a man and woman, have said rescind?

(CROSSTALK)

THOMPSON: Yes. Well, that is of course class politics. They want to take from those who they feel like they can't get to vote for them and give to those who they feel like who can. It is just that simple. And, you know, about 40 percent of the people pay about 99 percent of the taxes now. And they would like for that to be 35 or 30 or something like that.

And the only problem with that, and especially when you get to increasing the taxes on investment and capital gains and dividends and things of that nature, which, of course, is all involved here, too, you are stifling investment. And the government doesn't get as much money as it otherwise would.

It just does not work economically. It is all about who is going to control the levers of power in the country.

CAVUTO: Well, is your fear, Senator, if a Democrat got elected president and widened — I know you don't want to see that happen, but and widened the Democratic position in the House and/or Senate, that it's spending run amok in a filibuster-proof majority?

THOMPSON: No question about it. Nobody is saying very much about it, but once you get past just a few years out — most people talk in terms of 10 years, thereabouts — you are looking at a train wreck anyway under the best of circumstances, because of the demographic situation that we have got. We're in a graying society, fewer and fewer workers proportionately paying into the entitlement program. And, if we stay on the same course, which all the economists say is unsustainable, then we are going to have an avalanche of spending and deficits and debt. We're working through the Social Security surplus now. And...

CAVUTO: Well, you know, the first baby boomer received her Social Security check today.

THOMPSON: Yes.

CAVUTO: And I guess there are 80 million behind her, including me at the tail end.

THOMPSON: It doesn't get any better.

CAVUTO: All right.

So, the question is asked, do you do what Barack Obama has said, just lift the ceiling cap, presently at $97,300, and make it limitless, or do that in concert or something like that, with scaling back benefits, means testing, any of that?

THOMPSON: Generally speaking, increases in taxes slows the economy. It does not grow the economy.

(CROSSTALK)

CAVUTO: So, increasing the income threshold to you, Senator, is increasing taxes?

THOMPSON: Oh, no question about it.

CAVUTO: Yes.

THOMPSON: It would be a tax increase, and it would especially hit small business hard, at a time when, lest we forget, not only are the tax cuts expiring at the end of 2010, but the alternative minimum tax is kicking in.

CAVUTO: That's right.

THOMPSON: And it was designed to hit about 155 people, I think. And now it's going to be in excess of 20 million families that are — that are going to be hit with that now.

So, all that is coming together. We should not even be talking about the tax increase side of the ledger. We should talk about the reduction of spending side of the ledger.

CAVUTO: But they always talk about that, right, Senator, that reducing spending? It's kind of like me and the diet pledges. They go nowhere.

THOMPSON: Well, it — it — yes. Yes. That is exactly right.

They always talk about it.

CAVUTO: My diet pledges or the government's pledges?

(LAUGHTER)

(CROSSTALK)

THOMPSON: No one wants to do anything about it. But it's really irresponsible. We are going to be pitting one generation against another.

On our current path, we are going to either see a drastic increase in taxes or a drastic decrease in benefits if we don't do something now. We could get together, do some reasonable things, not have to really hurt anybody, and start taking some right steps in the right direction.

But that's the — of course, the entitlement, mandatory spending side of things. But, even on the discretionary side, in past conflicts that this nation has engaged in, we have drastically reduced non-military spending. In the Korean war, I think it was reduced 45 percent in one year and all other conflicts.

Of course, we have not done that this time. We want to have our cake and eat it, too. It's guns and butter. And that's sustainable in the short run. But, because of the fact that we are blessed with longer lives, we're turning into a curse for future generations. That's irresponsible.

CAVUTO: Well, if you are — if you are serious, then, Senator, about being very fiscally diligent, and on top of excessive spending, why not sign this tax-cut pledge that you will not raise taxes?

Governor Mitt Romney has. I believe he's the only one. Why not you?

THOMPSON: Well, I'm shocked that he would do such a thing. I have a record of eight years. I am the consistent conservative who, over a period of eight years in the United States Senate, fought for lower taxes, less government, welfare reform, and conservative judges. That is my record. That is what I was yesterday. That's what I am today. That's what I will be tomorrow.

So, my record is — is absolutely clear on that. But when people start sticking pieces of paper in your face that they have worded to suit themselves, asking you to make commitments of any kind as far as the future of this country is concerned, I don't see how anybody running for president can do that.

CAVUTO: So, you interpret signing a no-tax-hike pledge as hamstringing you? There could be circumstances where you could see taxes having to go up?

THOMPSON: I see no circumstances where I would support tax increases, no.

CAVUTO: So, sign a pledge.

THOMPSON: I see none.

Well, you know...

(CROSSTALK)

CAVUTO: ... love you dearly, Senator, say, just sign the pledge.

THOMPSON: Well, as they say, that may be the easy way out, but I am not going to do that. I haven't committed to sign any pledges. I don't intend to sign any pledges, other than making a pledge to the American people as to what I believe.

My record is clear. It is solid. There's no question. I believe, to the tips of my toe, that increased taxes on the American people stifle growth, stifle innovation, stifle all those things that we say that we want in this country. And it hurts the economy.

And, if we don't have a growing economy, we are not going to be able to address any of these problems I just mentioned, especially our entitlement issues. We can't grow our way totally out of the situation that we're in, but we can't solve the situation at all unless we have strong economic growth. Higher taxes...

CAVUTO: And you can solve that by raising taxes, period?

THOMPSON: No.

CAVUTO: Under any scenario?

THOMPSON: No, not any scenario that I can foresee sitting here today.

CAVUTO: OK.

Senator, we're going to take a quick break here. The scenario is, we want to pay some of our bills. We're going to come back...

THOMPSON: Good idea.

CAVUTO: ... to Senator Fred Thompson, who might tonight be naming a target. Which one of those two other fellows is the target of a speech a lot of folks are going to be watching closely tonight? We already know. And he is already going to share — after this.

(COMMERCIAL BREAK)

CAVUTO: All right, this is a FOX News Alert.

Just hours from now, former Senator Fred Thompson is going to address the conservative party of New York. And guess who the target of his speech will be? Not Democrats, but, in his words, Republicans acting like Democrats.

Is that a jab at maybe Rudy Giuliani, presently the front-runner in national polls?

Let's ask Fred Thompson. The Republican presidential candidate continues this exclusive chat with me.

And it is really the moment of his week and month and year.

All right, Senator, what about that? Is Rudy Giuliani...

THOMPSON: I finally made — I finally made a FOX News bulletin.

CAVUTO: Yes. Yes.

THOMPSON: All right. All right.

CAVUTO: There will be many more, I'm sure.

THOMPSON: Let's hope.

CAVUTO: Is he — is he the guy you are targeting when you say, "I believe that conservatives beat liberals only when we challenge their outdated positions, not embrace them; this is not a time for philosophical flexibility; it's a time to stand up for what we believe in"?

THOMPSON: Yes.

Well, that is the point that I have been making for some time now. Some think that the best way to beat the Democrats is to be more like them, in many respects.

(CROSSTALK)

CAVUTO: But what has he done or said that makes him more like a Democrat?

THOMPSON: I don't think — I don't think that the mayor has ever claimed to be a conservative. He sought and received the Liberal Party nomination. The Liberal Party put out a press release at the time, says, he thinks the way we do, listed a whole host of issues.

He supported a liberal Democratic gubernatorial nominee.

CAVUTO: Mario Cuomo.

THOMPSON: And then, when Pataki was elected, opposed Pataki's tax cuts, his income tax cuts. So, I don't know that he has ever claimed to be anything else. I think it's just a philosophical difference as to how best to win next November.

Some people think that it — moving more toward them in some respects is the way to do that and take that middle ground. I think that another pattern will be more successful. And that is being strong for conservative principles. And, as I said, I'm the consistent conservative who has been out there for eight years on the national level supporting tax increases, supporting a balanced budget, welfare...

CAVUTO: Tax cuts.

THOMPSON: I'm sorry. Did I say increases?

CAVUTO: Yes. I don't know. Something is going here that I don't know about.

(CROSSTALK)

THOMPSON: Yes. You're right. Opposing tax increases...

CAVUTO: Right. Thank you.

THOMPSON: ... and supporting welfare reform and conservative judges, all of which we were able to get done, except not enough conservative judges. And...

CAVUTO: So, you don't think, as mayor of New York, Rudy Giuliani was a conservative fellow?

THOMPSON: No. I think he did some things that were laudable. I don't think there is any question about it.

I think that the crime situation was a laudable approach that he took. I think the aftermath of 9/11, you know, we applaud him for that. No question about that.

But we're talking about the future security and future prosperity of our country, what is going to bring about prosperity. And what about the unity of the American people? How are we going to come together?

You know, back in the '80s, we had an approach that you take strong conservative, solid principles, and they served as a magnet for an awful lot of people. Some people were called Reagan Democrats, for example, that...

CAVUTO: The Boll Weevils, right.

THOMPSON: Everybody said at the time, you know, that it would never work. They discounted him when he first started out.

But I think he established not only his personality and charisma and so forth, but I think he established a principle that that is the way to get elected and be successful. So, I think that there is just a disagreement as to how best to succeed in November.

And it's important that we succeed in November, because what I see from Hillary is basically a siren's song that we now have the keys to our own treasury. We don't have to worry about future generations. Five percent of the taxpayers are paying over half the income taxes. Maybe they ought to pay 60 percent, 70 percent, you know, the class warfare deal.

If we only bring our troops home, all the bad guys will go away and everything will be safe. And we can kind of settle in to a certain complacent, comfortable mediocrity. And the United States, in my opinion, would go down the path of...

(CROSSTALK)

CAVUTO: Well, she is saying that the government is the means by which you can kind of level the playing field. You are saying quite the opposite.

THOMPSON: You know, we live in a country, the country I grew up in — and I think we still live in — where a people can work hard, play by the rules, can expect to have a fair chance at living the American dream.

Make sure he's treated fairly under the rule of law and treated equally, takes responsibility. If he needs help, he gets help. But if he can take care of his own responsibilities, he's expected to do so. That is the kind of country we live in. And that helps everybody when we do that.

You know, companies hire people, you know. It is not just individuals out there. We have to look at the economy across the board and all segments and all aspects of it. We have the highest corporate tax rate, second highest in the industrialized world. That hurts the working man and woman.

It makes us less competitive across the board. So, all those things have to be addressed. Those are fundamental issues that we're going to be addressing in the election next November. And the real question is, where do you think the American people are? I think — I ran in...

CAVUTO: You think they're closer to you than to Hillary?

THOMPSON: I ran in '94 talking about those things, those principles, those first principles I think that made us successful of lower taxes, less regulation, free and fair competition among people, trade with other nations. The American people accepted that in 1994.

We took the Congress.

CAVUTO: OK. THOMPSON: I don't think the American people have changed their mind.

CAVUTO: All right. We will see. You have been gracious enough to stay for one more segment. When we get back, we're going to talk to a colleague of yours who was jumping ugly with you, all right?

We will have more after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

CAVUTO: There are no sort of marital issues with you. Why not use that in the campaign?

MITT ROMNEY, PRESIDENTIAL CANDIDATE: Well, I don't know. People will get to know us, as they do. They will see us on the trail. And there is no question in my mind but that — that the values associated with families and strengthening families is really critical to our party and to our nation.

(END VIDEO CLIP)

CAVUTO: All right. By the way, you can catch my entire chat with presidential candidate Mitt Romney on Fox Business Network, of course debuting this day. And my show will be coming on at 6:00 p.m. Eastern time.

Romney not making much of marital status in this campaign. What does his rival Fred Thompson make of that, everyone sort of going after personal issues?

THOMPSON: Boy, you're really trying to pick fights today, aren't you?

CAVUTO: No. No.

THOMPSON: I'm surprised.

CAVUTO: I don't know how — why you would say that.

(LAUGHTER)

CAVUTO: With your wife here, I'm not going to dare try it.

(LAUGHTER)

CAVUTO: She's within throwing distance.

THOMPSON: Good idea.

CAVUTO: Is it going to get nasty on personal levels?

THOMPSON: I don't think so. I certainly hope not.

I think people are ready for a serious discussion by serious people about serious issues. And we have got to do that. If you do anything other than that, I think you are taking a terrible risk. I would like to think we're all kind of where I am on this part, anyway. And that is, life is too short and this is too important to get down to that level, and not deal with the things we have to deal with.

CAVUTO: But you know what the position with you...

(CROSSTALK)

THOMPSON: This is not — I know.

CAVUTO: You know, that you don't have the energy for this or the enthusiasm for the grueling nature of a campaign, and, you know, you are a very good actor, OK former senator, your heart's not in it, all that.

THOMPSON: What do you think?

CAVUTO: Well, I don't know. You're very close to me and you can hit me.

(LAUGHTER)

CAVUTO: So, I'm just relaying what they said.

THOMPSON: Well, you know, I have thought about that. I have heard that.

Once somebody writes something, you know, then others pick it up and use it. I started out — I was a father. I was a teenage father. I started working. I was working in a factory, borrowed and worked my way through school. Got a chance to be a federal prosecutor at the age of 28. I was a Watergate attorney at the age of 30.

I came back, took on a scandalous state administration, did a few movies, served in the United States Senate, won two elections in a state that Bill Clinton carried twice. I won by 20-point margins. I came back and was working two jobs, one in television and one in radio, when I decided to run for president. And I'm the proud father of five children, two of which are under the age of 5.

Now, if a fellow can do that, you know, and he's...

(CROSSTALK)

(LAUGHTER)

CAVUTO: He's got a little bit of energy.

THOMPSON: You know, I commend it everybody. So, I...

CAVUTO: Well, that brings up the health issue. Now, you were kind of enough when this — when you first were considering running chatting with me about your own health issues. You are doing fine. But when cancer was mentioned, everyone said, hey, that's scary.

THOMPSON: Sure.

CAVUTO: That's scary.

You seemed to have put that to rest. But do you feel it will or could become an issue?

THOMPSON: I don't think that is ever totally at rest. And I think it's a fair thing to talk about.

I, fortunately, have a rare form — rare in the good sense — of an indolent lymphoma.

CAVUTO: Right.

THOMPSON: I had another checkup about a month ago, I guess, and did the full works. And I'm still...

CAVUTO: Everything is OK?

THOMPSON: Everything — I'm still...

CAVUTO: But you know how it goes.

THOMPSON: ... still free and clear.

CAVUTO: This is something I'm personally familiar with.

THOMPSON: Yes.

CAVUTO: When people see you tired or fatigued or just the normal runaround of just a campaign, they are going to say, aha!

How do you stop the ahas?

THOMPSON: Well, you know, in all fairness, I'm not the only person even in the so-called top tier of candidates who have had this kind of problem.

CAVUTO: Very true.

THOMPSON: And it's been a few years ago. And I don't...

CAVUTO: That's right. Rudy Giuliani has dealt with prostate cancer.

THOMPSON: Well, I, you know...

CAVUTO: John McCain.

THOMPSON: I don't even...

CAVUTO: Skin cancer.

THOMPSON: I hate to even bring them up, but I think, in all fairness...

CAVUTO: So, you think the cancer stigma thing has kind of eased?

THOMPSON: Well, certainly from what it used to be. There are so many Americans now who have successfully dealt with it and led full and useful lives.

My doctor is the first guy I called when I started thinking about this. I assure you that that is important to me than any election, even president of the United States. Now, like I said, I have got young children. And I value my time with my wife and children tremendously. And, so, I would not be doing this if I thought there was a problem. I have never been sick a day in my life from that.

And, like I say, I and others who are part of this campaign have shown that you don't have to cower in a corner. You don't have to put things on the shelf. You can do anything you want to, as long as you are fair and honest about it.

The first thing I did was lay it out there and say, OK, American people. You know, in the polls and whatnot, they were saying that they were going to give me a fair shot if I wanted to run. They were going to listen to me. And now we have been in about six weeks. We have got over 80,000 contributors. So, there — a lot of people are still with me there, politically and financially. So, I don't think it is an issue in the campaign.

But there are several of us that, at any time, can have that come up. And it's — like I say, it is a legitimate question that people have. That's why I do regular checkups and try to keep everybody up to date, as well as myself.

CAVUTO: See, you should do what I do, Senator. When I just want to take a day off, it might be that you should just use it to your advantage.

THOMPSON: Yes. Yes.

CAVUTO: But that's me. All right. So...

THOMPSON: Well, you know, people can — you're not going to stop people from talking. And...

CAVUTO: They will. That's true. See, that, they do. They do.

(CROSSTALK)

THOMPSON: Of course they do.

CAVUTO: Right.

THOMPSON: And people have different standards. And people have expectations and standards of some of us that are different than others.

CAVUTO: Right.

THOMPSON: And that is just the name of the game. If you were going to be deterred by that, then you ought to stay out of it. But I like to feel I have got pretty big shoulders and it will work out the way it's supposed to.

CAVUTO: I wonder — and I know you have addressed this, Senator, this idea of being deterred by what were these incredible expectations of you entering the race, almost impossible to live up to, so that, if you just have a respectable performance in the debate, if you have sort of a respectable campaign stump speech, it isn't good enough, because Fred Thompson was supposed to walk on water.

THOMPSON: Yes.

Well, I think that's — some in the media are like that. I don't think that people are like that, I mean, in terms of the poll numbers. And I don't know how much you can tell about it from now. In terms of the flow of the money that is coming, I have not had to put any money of my own in the campaign yet, and won't be.

So, it looks like the American people have an understanding. I have been around for a while, starting when I was 30 years old in Watergate, and in and out of public service. So, they have an understanding.

But some in the media like to write about style more than substance. And, you know, some — some have discovered that I am not Ronald Reagan, which is a great shock, apparently, to some of them. I wish they had asked me earlier. I could have set that aside, you know, very quickly. And that is a standard nobody, of course, can live up to.

But, like I say, I knew that. I understood that. I knew what was happening.

CAVUTO: Yes.

THOMPSON: I get some benefit from that. I get some detriment from that. But...

CAVUTO: But you think it's kind of evening out?

THOMPSON: I found a cure for that, is quit reading the press as much.

CAVUTO: Yes. Well, there could be something to that.

Let me ask you this. Could you support any of your colleagues running for president as the nominee?

THOMPSON: Yes.

CAVUTO: So, if Rudy Giuliani gets the nomination, you would actively work on his behalf?

THOMPSON: Well, I don't like to think in terms of losing. I don't want it to sound the wrong way, but I'm the — about the only guy, I guess, in the so-called top tier that has never lost an election.

And, so, I...

CAVUTO: But that's not what I asked.

THOMPSON: ... I don't like to think...

(CROSSTALK)

CAVUTO: You could definitely support, if it came to that?

THOMPSON: Yes.

CAVUTO: All right. Mitt Romney, if it came to that?

THOMPSON: Yes. Any of them.

CAVUTO: Could you be a running mate for either of them?

THOMPSON: No.

CAVUTO: Really?

THOMPSON: No.

CAVUTO: Not at all interested?

THOMPSON: I am just not — I am not interested in that position. It's no reflection on them.

Any Republican who is running will be better than the Democrats who are running, because of a philosophy. I mean, they have a philosophy of higher taxes, more government, more caretakerism, less responsibility, and more regulation.

And this will drive our economy into a second-rate economy and make our nation...

CAVUTO: OK.

THOMPSON: ... a less safe nation. And I could not ever support that.

CAVUTO: All right.

THOMPSON: The Republicans would be better than that.

CAVUTO: Fred Thompson, great seeing you.

THOMPSON: Thank you. Thank you.

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