This is a rush transcript from "On the Record ," March 17, 2008. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, HOST: We headed south this weekend to New Orleans to meet with a special guest, former President Bill Clinton. Our 42nd president teamed up with movie star Brad Pitt to do some good work.

President Clinton's Global Initiative University is teaming up with Pitt's Make It Right Project. We spoke with former President Bill Clinton in New Orleans, lower ninth ward.

Video Part 1: Clinton's Global Initiative

Part 2: Clinton on FL, MI delegate mess

Part 3: Clinton on politics of race

(BEGIN VIDEOTAPE)

VAN SUSTEREN: Mr. President, nice to see you, sir.

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES OF AMERICA: Thank you, Greta.

VAN SUSTEREN: We're back in New Orleans. We have been here before doing interviews.

CLINTON: This is a happy day. We have a lot of kids, a lot of energy, a lot of good things happening.

VAN SUSTEREN: Let me explain to the viewers, the Clinton Global Initiative started in 2005. What you're down here for is something different — the Clinton Global Initiative University, right? What's the difference?

CLINTON: We learned as the Clinton Global Initiative unfolded that more and more of our good ideas seemed to be coming from young people. They may not have had a lot of money, but they understood the power of technology to do interesting things.

Like this wonderful Web site Kiva.org, where two young people decided to make it possible for individuals of modest means all across America to be micro-credit bankers to the world. For as little as $25, you can actually go on this Web site, pick a, let's say, guy running a garage in Afghanistan, and contribute money, and you see the effect of your money.

Then they pay your money back, and when you get paid back, you can either turn around and loan it to someone else, or take it back.

VAN SUSTEREN: I've done that, actually, and it's fun.

CLINTON: It is fun, isn't it?

VAN SUSTEREN: It is fun, yes.

CLINTON: So what we thought is that there is so much energy and there are so many things going on on college campuses, we need to try to get every college and university in America involved in this kind of work more, and to try to make it almost like a normal part of the college experience to be doing this kind of work and to create that mindset and take advantage of all of these good ideas.

So we decided that we should have one of these just for college students, not charge them an admission fee, just underwrite it. And we thought it would be good to do in New Orleans because all of the colleges here are involved in rebuilding the city, and because there is still a lot to be done here.

VAN SUSTEREN: I have seen you walk through the hundreds of students down here who are participating. You have Brad Pitt with you. What is his contribution?

CLINTON: Brad Pitt has moved down here, he and Angelina Jolie and their kids have moved down here, and he is supporting something called Make It Right, which is an effort to rebuild houses here in the lower ninth ward in a way that are both more hurricane-resistant and flood-resistant, and are greener, so that they are more efficient, they emit fewer greenhouse gases.

But from the point of view of people coming back in, it means their utility bill will be a lot lower. So the cost living here in these new houses will be lower than the cost of living in the old houses that were here before the water took them away when they broke through the wall.

VAN SUSTEREN: So if you participate in the Clinton Global Initiative University, you came down a couple days ago, and you participated in session, and then you came out here to where we are and actually cleaned up.

CLINTON: What we did with the regular meeting, which is at Tulane University, was what we did with the regular Global Initiative. We discussed what can be done to deal with poverty at home and around the world to deal with climate change challenge — global warming — to deal with health challenges and health at home, and to deal with the human rights problems around the world.

It's really interesting. Everybody has to make a commitment, so all nearly 700 of these students made a commitment to do something.

It was all perfectly divided. There was 699 students, and there were 350 commitments that were domestic and 349 that were international — a lot of commitments in the human rights area and a lot of commitments in the antipoverty area, about 30 percent each and then about 20 percent each in the climate change and the health area. It was fascinating how evenly divided it was.

Then at the end we wanted to have a service project so these young people could both see what the future of this work and could participate.

What they are doing is they are preparing these lots where — there were houses on all of these vacant pieces of land we see around here, and this is the area where Brad Pitt and his partner Bill McDonagh(ph) internationally recognized the architect who has designed these new houses plan to rebuild these homes.

So they're helping to prepare the sites, and I hope by next year we'll have several homes up here that will be occupied, that will give people the sense that we can safely and responsibly rebuild the lower ninth ward.

VAN SUSTEREN: The Clinton Global Initiative started in 2005. Any idea how much money has been committed to these projects around the world?

CLINTON: I would say over a 10-year period, because a lot of these commitments are multi-year, I would say in the neighborhood of $30 billion, maybe more.

And the more important number is we have over 1,000 projects affecting 100 countries that will positively impact the lives of 180 million people.

Because — like, for example, some of this money can be misleading. Richard Branson has committed, for example, $10 billion over a period of years — maybe it's not quite that much, but several billion dollars. All of the profits of his Virgin airways and rail service to develop biofuels for all forms of transportation.

He is trying to develop a substitute for jet fuel which is the only kind of fuel we know today for which there is no non-oil alternative.

One of the big multibillion dollar commitments we had this year was to finance a massive change by utilities, the more to finance energy efficiency in homes and buildings and build clean energy.

So will these people eventually make money off of this? They will. but is it helping the future of the planet and is it creating jobs in America right now? Yes.

So if it's in the energy area, a lot of these private sector commitments may ultimately make money, but that's fine. They're changing the future of America in ways that are important.

And we have billions of dollars of just outright investments in health and education and antipoverty programs that aren't designed to make money. But over the long run, you want it to be profitable to remove people from poverty into the middle class all over the world. You want it to be sustainable to have health care programs that really work. So we have a lot of outright gifts and other people investing their money in radically different ways to give our children a better future.

(END VIDEOTAPE)

VAN SUSTEREN: Coming up, more from former President Bill Clinton — does he think the Florida and Michigan primary disaster can be fixed? And, yes, we asked him the hot topic of the day, Senator Obama's pastor problems. What does President Clinton think?

And don't forget, log on to gretawire.com and vote in our poll. We'll give you the results at the end of the show, so stick around.

(COMMERCIAL BREAK)

(NEWSBREAK)

VAN SUSTEREN: Here is more from our interview with former President Bill Clinton.

(BEGIN VIDEOTAPE)

VAN SUSTEREN: Can we switch gears to a rather thorny problem — Florida and Michigan. Now, I suspect I know what you would like to see happen, but what do you think realistically is the solution to the problem with seating the delegates?

CLINTON: I don't know. The circumstances are different between the two states, and they're trying to work it out.

Florida presents a difficult problem for the Democrats because even though Florida moved out of line, the Democrats are totally blameless. The Republicans got rid of the Republican legislature and moved the Florida date up. Then Democrats went and pled to vote at their earliest permissible date, February 5, and they were denied.

So everybody was on the ballot, and there was a big turnout, considering there was no campaign. And no one advertised, as that was required, except Senator Obama had a week or 10 days of national cable bytes going into Florida.

VAN SUSTEREN: Intentionally, or do you think it was accidentally that he advertised in Florida?

CLINTON: You will have to ask him. I think — it's very unusual for a campaign to buy national cable bites, it's the least efficient way to do it. So the only discernible impact was to put it on the television in Florida.

But the point is we had a big turnout. Hillary won the election by 17 points, and the delegates have been allocated appropriately.

Now, there are several options. They could have another election, but the Republicans say they don't want to. Under the Party rules, they could seat the super delegates and then seat the others and only count them as half of a delegates, which would cost her 19 delegates through no fault of her own and their own.

The Democrats are totally blameless here, so that's why she has hung in there, and she thinks (INAUDIBLE)

In Michigan, she won, and there was a very determined local effort to get people to vote against her and for "uncommitted." But the other candidates voluntarily took their name off the ballot, I think, trying to help themselves in Iowa, and because they knew she was going to win Michigan.

So the Michigan people are apparently trying to figure out how to do a revote.

So I don't know what is going to happen. It's sort of above my pay grade. I'm not involved in negotiations between the campaigns, and I just think that if you look at Michigan, we Democrats, it's hard we could win a general election without Michigan, and it's hard we could lose a general election if we carried Florida.

Therefore, some way needs to be found for the voters in these states to have their wishes either presently expressed or to be expressed in the future reflected at the Democratic Convention. It would be silly for us to say our rules are so important, we're willing to lose a general election over them.

And so they'll have to find some ways to honor these voters' feelings, either by letting them revote or by finding some way to seat them and doing something.

I don't know, but I'm not involved in it, and I shouldn't be, and I'm going to support whatever is acceptable to Hillary.

VAN SUSTEREN: The Party almost seems held hostage with the idea of Iowa and New Hampshire go first, a little bit. The people in Florida who are Democrats, even someone who might have lived in Iowa and moved to Florida, suddenly finds their vote might not count.

CLINTON: Well, I think that the Republicans were smarter about it, they did it, and then they immediately said they were going to count at least half of the Florida delegates, because they knew they had no intention of playing games with Florida and dividing it off in the beginning.

So they violated the rules. The Democrats asked not to, and then imposed far less harsh penalties. They even encouraged their candidates to go their and campaign and all that kind of stuff.

We got a little carried away, our party did, I think, on that. But it still can be fixed, it can all be fixed.

I think that the underlying dynamics in this election should favor the Democrats. Everybody knows we need to change our economic policy, everybody knows we need to change our foreign policy and our specific policy in Iraq.

So we just need to not do something dumb here that looks like we're ignoring one of the most difficult states in the union, Michigan. It's hard to find a state in America that's suffered more than Michigan in this decade economically. And we certainly can't blow away one of the states that is most emblematic of the future we're trying to build for all Americans in Florida.

(END VIDEOTAPE)

VAN SUSTEREN: Coming up, what does former President Bill Clinton have to say about Senator Obama's pastor problem? Is race an issue in this campaign? The former President opens up. Stick around.

(COMMERCIAL BREAK)

VAN SUSTEREN: In the middle of the pastor scandal, President Clinton opens up about the role that race is playing in this campaign. Here is the last part of our interview with former President Bill Clinton.

(BEGIN VIDEOTAPE)

VAN SUSTEREN: Race: this is a sensitive issue no one wants to talk about, and we're all very careful about it. But now we have the issue of Senator Obama's minister, who has now rejected what he has had to say. But is race an issue?

CLINTON: Well, I don't think race has been an issue in terms of either candidate's commitment to civil rights, equal rights, human rights, empowering all Americans.

I think that people — in every election, identity is a powerful tool. People tend to vote for people they identify with. That's why you have — I mean I had two women lawyers stop me when I was home briefly and I took my dog out for a walk.

One came up with me with her 14-year-old son — I would say she was in her mid to late 40's. The other was in her mid 30's, I would say, and both of them said you tell Hillary to hang in there, we're for her. They identify with her.

And I think for African-Americans who have been voting for decades for white candidates, they think they have an African-American candidate with a legitimate chance to be nominated and elected. There is a pull there to identify with him. It's not racially tinged to observe that fact or those facts.

And what I think is important is that Senator Obama should say to women voters, here is why I think you should vote for me anyway. And Hillary should say to African-American voters here is why I think you should vote for me anyway.

You have to report this election as a contest with conflict, and it is. But as American campaigns go, it has not been particularly conflict- filled. And the truth is that most real voters in this process like both of these candidates.

They've never seen anything like either one of the campaigns. They are amazed that an election season would produce even one of these campaigns, much less two. And I think the most important thing is to just let itself play out.

Now, under our rules — if we had the Republican rules, Hillary would have a prohibitive lead because she won so many big states, and they have a lot of winner take all states. If the Republicans had the Democratic rules, John McCain would not yet be the nominee of the Republican Party.

So we had these rules. We had to jam this thing in and keep it close, we might as well just play this string out and let everyone vote. I think it's great — even Puerto Rico gets to vote. Let all the states vote, and let it matter, and then see where we are at the end.

VAN SUSTEREN: To many viewers it seems a little nutty, though. It's gotten so chaotic in the sense that people are excluded, and we couldn't count ballots in 2000. The whole process seems to have gotten a little bit —

CLINTON: What happened is — the main breakdowns here have been in the caucus states, because all of these caucuses were set up by and large by people who thought their primaries either wouldn't matter or the Parties say we don't care what the primary says.

In Washington they have a primary and then disregard it by having a caucus which comes out differently than the primary. And they're going to send the delegates00

VAN SUSTEREN: But that is bizarre to us.

CLINTON: Of course it is. It is bizarre, but you have to realize — it's only once in a blue moon that two candidates are so closely matched that they take this thing through the whole process.

Then you look back and you say, my goodness, we had these caucuses that were designed to have a handful of people to show up so the Party regulars could send their friends to the Democratic Convention and then, boom, there is a zillion people there and they can't even count everybody. And we still don't even have a good count, for example, on what the popular vote was in the Nevada primary, because so many people showed up, they ran out of paper ballots. They ran out of everything. I think that the Party is going to have to revisit its position on caucuses because of this.

But the elections have been pretty normal, and, as far as I know, there have been no allegations of irregularities in the elections as opposed to the caucuses.

So we just have to lay itself play itself out. These caucuses like blew up. Nobody thought there would be this many people showing up, and they're totally not designed and not fair for an election where you have a lot of general interest.

VAN SUSTEREN: One last quick question — is it harder to watch a spouse get criticized running for office than it is to yourself getting criticized?

CLINTON: Yes, 100 times harder. Hillary laughs at me all the time and says don't worry about this or that. In 1992, I had a lot of rough things for me. I remember Bob Kerry said I would get opened up like a warm peanut in Georgia.

And I didn't even think a thing about it. We were friends before, and we're still friends. I love the guy. He endorsed Hillary for president, and I'm very grateful for it.

When you're in it you take all the stuff with a grain of salt and just blow it off. But when somebody you love is in it, you're sitting there thinking every little thing you know. It's like a death by 1,000 cuts. It's much harder when you're watching.

But I'm extremely proud of her, and I'm extremely respectful and admiring of the campaign that Senator Obama put on and the campaign that she has put on. We have never seen anything like this.

And I still think she would be the best president. I think she is most likely to win against Senator McCain in the fall. I still think she has a good chance to win this thing.

But I don't know what is going to happen, and I think neither does anybody else. And we should just let it flow. Let the people have their say. They'll figure out what to do.

It almost always works out. There will be something that turns this thing one way or the other, and they'll figure it out. We just have to trust them and let it go.

VAN SUSTEREN: Thank you, Mr. President.

CLINTON: Thank you.

VAN SUSTEREN: It's nice to talk to you.

(END VIDEOTAPE)

VAN SUSTEREN: We have repeated extended an invitation to the Obama campaign for an interview with his wife Michelle Obama, and we have offered yet again when we got the interview with President Clinton. But the Senator Obama campaign has declined. Michelle Obama is always welcome on our show.

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