This is a rush transcript from "America's Election HQ," September 17, 2008. This copy may not be in its final form and may be updated.

HEATHER NAUERT, HOST: Neither candidate is offering up a whole lot of specifics to fix the financial crisis, and there is certainly a lot of blaming going on. Obama says that Republicans are responsible. McCain says we need more regulation.

So, who is right and what should Washington's role be in repairing the mess?

Here now is economist and senior fellow at the Cato Institute: Dan Mitchell.

Hi there, Dan. I'm hoping you can be sort of the fair player for us here, because Barack Obama blames McCain and the Republican administration — their economic philosophy, he says. Is that fair or not?

DAN MITCHELL, ECONOMIST: Well, what we're seeing here is classic Washington insider dealing where both parties have their fingerprints all over the problems that created this mess. What happened is government had an easy money policy from the Fed which both Republicans and Democrats wanted. Republicans and Democrats conspired to subsidize and prop up Fannie Mae and Freddie Mac, and they're — of course, that's the whole ball that got this thing rolling in the wrong direction in terms of financial markets.

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And now, we see McCain bashing Wall Street and Obama saying he wants higher tax rates. Neither one of those are a solution. Government caused the problem. More regulation is like pouring gasoline on a fire.

NAUERT: OK. McCain is blaming or basically saying a lack of regulation has caused this. I take it, you don't necessarily think that that's fair, either? Everybody is responsible.

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MITCHELL: Well, let's identify a single regulation that caused this problem. We can identify government policy mistakes that helped create the problem, and yes, did people in the private sector make mistakes? Of course they did. And that's precisely why we shouldn't have bailouts. And yet the administration bailed out Bear Stearns, bailed out Fannie and Freddie. Now, w they're bailing out AIG.

This is a major problem if we don't want to create, in the future, incentives for companies to make these bad choices again. And that's what I'm concerned about.

NAUERT: OK. In terms of the solutions, Barack Obama says, you know, cut taxes to 95 percent of the population, increase corporate taxes. In your opinion, what happens then?

MITCHELL: If we make America's economy more like France, which is in effect, Obama's agenda, we are going to have slower economic growth and lower living standards. And so this notion of using the tax code to engage in income redistribution, which is the heart of Obama's plan, I think, just makes us more like a slow-growth European welfare state.

NAUERT: And, Dan, just about 10 seconds, what about more Washington regulation?

MITCHELL: Again, Washington regulation, things like Fannie and Freddie, got us into the problem in the first place. We should be deregulating, getting the politicians out of private markets. That will reduce corruption and help markets operate more efficiently.

NAUERT: All right. Dan Mitchell, thanks a lot.

MITCHELL: Thank you.

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