This is a rush transcript from "Your World With Neil Cavuto," January 20, 2009. This copy may not be in its final form and may be updated.

NEIL CAVUTO, HOST: Rudy Giuliani wanted to be here this day. The former presidential candidate joins me right now to take it all in.

And, Mayor, what do you think of Barack Obama's message? Obviously, popularly received, he is very popular. What do you think?

RUDOLPH GIULIANI, FORMER NEW YORK MAYOR: I thought it was a very careful message, probably given the economic difficulties that we're facing and the challenges in foreign policy. I thought it was a very careful message. It's very hard to say what direction he's going to move in. I think he kept all his options open.

It wasn't the kind of soaring rhetoric that we were used to during the campaign. It was a much more sober message that we're going to have difficult times ahead and that we're all going to have to pull together, which is quite appropriate.

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CAVUTO: Now, when you say "pull together," Mayor, this is a president who's going to urge us to pull together on something that a lot of Americans have been trying to pull together on, a financial crisis, and that they're going to have to make sacrifices. Many of them will tell you, "Hey, Mr. President, we already have."

GIULIANI: Well, I think — I mean, the — the real problems lie ahead, right? I mean, executing is going to be a challenge for anyone that would be in the office at this point, and I think he's going to have to, first of all, figure out how to stabilize the banks.

I tend to think, Neil, that you might want to go back to Plan A, the original plan that Paulson had about taking the toxic assets off the books by bidding for them, and also seeing if he can get private money in to bid with you. If the government bid is at a certain level, then maybe some private interests would come in and bid a little bit higher than that. But we've got to have an end to this unknown problem for the banks.

CAVUTO: Let me ask you, Mayor. You know full well what it's like to be a very popular mayor, and you know what it was like when you were very unpopular.

GIULIANI: Right.

CAVUTO: Obviously, you have a lot — you have a lot more leverage when you're popular. And this president is very popular with the American people right now, as he comes out to look at the crowd and to take in the scene. These people, some of them around me, Mayor, have been here for the better part of nine hours, so they're finally getting their first glimpse at the new president of the United States.

And he'll be moving to the reviewing stand to take in what is going to be a 15,000-member parade. But how does he capitalize on that goodwill?

GIULIANI: I think he's got to move forward right away. Actually, there's no better time to govern than in difficult times, because there aren't an awful lot of options and people have to cooperate with you.

If he puts his hand out as he has to Republicans and says, "This is what I need because the country is in trouble," it's very hard to say no at a time like this.

So I think the next couple of months will really tell the tale. And the reality is, I mean, he's coming — as he's coming in, we're having this crisis go on with the banks, and it's going to be the first thing he's going to have to solve.

CAVUTO: All right, now, this is the first time we've seen a presidential party walking, I think, since Jimmy Carter in 1977.

GIULIANI: I remember Jimmy Carter. I remember Jimmy Carter doing that. He did it right in front of the Justice Department. And I was — I was a hangover from the Ford administration, there for a few more days. I remember the excitement of Jimmy Carter getting out, but nothing matches quite the excitement that I'm hearing right now. I mean, unbelievable.

CAVUTO: All right, now you've got a president and a wife, a family that connects very well with the American people — as they're turning on to our side of Pennsylvania Avenue, now it's getting to be a huge deal. This crowd around me is clearly reacting to the fact it's a huge deal.

What do you think after the parade, Mayor, after the balls tonight, indications are that the president could be pushing it until 3: 00 in the morning. Word is that he's going to be in the Oval Office at 7: 00 tomorrow morning. What is he — what is he going to do?

GIULIANI: Well, I mean, you know, he's going — he's got to do everything, right?

He's got to figure out how to — he told us that he's going to continue the programs that work and cut out the programs that don't. I would really recommend taking a very good look at government spending and doing an across-the-board decrease in government spending where you can save money. But he's going to have to spend a lot of money elsewhere, obviously.

I think the next thing he's going to have to do is — almost simultaneously is figure out how to get control over this bank slide. And as I said, I think that original Paulson plan may really — may really be the thing that is needed.

You've got to get — you have got an end to the valuation of these toxic assets, and you've got to get them off the books of these banks in order for them to create the liquidity that we need for the market to really come back.

CAVUTO: All right.

Mayor Giuliani, thank you very, very much.

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