This is a rush transcript from "Your World With Neil Cavuto," March 23, 2009. This copy may not be in its final form and may be updated.
NEIL CAVUTO, HOST: Now, Wall Street may be celebrating this $1 trillion plan today, but Fred Thompson says taxpayers shouldn't.
With us now in an exclusive chat, the former Republican presidential candidate, host of the new "Fred Thompson Show" on radio. I was delighted to be part of that.
Senator, good to have you. What do you make of this?
FRED THOMPSON, FORMER REPUBLICAN PRESIDENTIAL CANDIDATE: Thank you, Neil.
Well, you know, I certainly don't know. And I doubt if anybody really knows whether or not the plan is going to work or not. As you say, I don't say that you can tell from a temporary gain in the stock market. That happens every once in a while when the government spends money.
But I think the underlying issue is one of credibility and credence that the people in Washington know what they are doing. And I think the jury is still out on that, once people settle down and take look at the details.
It just seems to me like the — the toxic assets, or the legacy assets, as they now like to call them, are still there. And you are going to have to find a willing buyer and a willing seller. And, you know, nobody knows what price it's going to bring and — and whether or not the private sector is going to willingly come and participate in this plan or not, so an awful lot of details.
But I think people were just hoping and praying that some kind of plan would come out of Washington on this. So, even though they apparently pretty much went back to the original Paulson plan that they discarded...
CAVUTO: That's right.
THOMPSON: ... they have now come back to it, even though all that, they still like — liked, temporarily anyway, what they saw today.
CAVUTO: All right.
You were referring to Hank Paulson, the former Treasury secretary, whose — whose original idea with the original TARP money, if you recall, was to put sort of the toxic or the bad debts, if you will, of banks that had accumulated these bad loans that had essentially gone defunct into a box, a lockbox, if you will.
THOMPSON: Yes, create a bad bank.
CAVUTO: Right. And then — and that would eventually be resold, presumably in an improved economy, at higher prices, and everyone comes out the better.
Now, it was greeted dismally then.
THOMPSON: See, I think — see, that's the problem.
CAVUTO: Greeted dismally then. Greeted more favorably now.
THOMPSON: Well, because we are more desperate for any kind of hope, as far as the financial sector is concerned, I think.
But I think it — it really goes to the underlying problem. When you see people in Washington thinking adamantly — in his case, for example, come before Congress, saying, you don't have time to read this, I don't have time to explain it, I have got a few pages, here, sign off on it, I need $700 billion, and they give it to him, and the first tranche is like $300 billion, and it seems to have — have gone to places that no one can really identify, and they changed the plan, and now they come back to that original plan, it — it doesn't give you any sense of confidence that anybody has got a handle on this situation.
Now, you know, they — but they have got to do something. And this looks like, you know, it's — it is a shot. But there's an awful lot of uncertainty out there. We're — we are spending money like we have never spent before. We're getting lectured by the French and the Germans on fiscal policy.
The Chinese are nervous. Now the CBO says that it is even worse than we thought. And now the Treasury, and now the Fed is printing another trillion-plus dollars. So, it's — it is a tough deal.
I wonder what the average guy out there that doesn't follow this, you know, every couple of hours, the way that we do, is thinking about all that. It certainly doesn't — doesn't urge you, I don't think, to take your money from out from under the mattress...
CAVUTO: All right.
THOMPSON: ... unless you are going to buy gold, I guess.
CAVUTO: If you have got it under the mattress.
The CBO to which you're referring to, the Congressional Budget Office, which said that the president's numbers don't add up, effectively saying that we could be looking at $2 trillion more in red ink in the next 10 years.
Having said that, though, do you — do you think that part of the success — or the successful response to this banking plan, what little we know of it, Senator, is that there is going to be private participation, albeit a small part, I think $100 billion of the roughly $1 trillion we're talking about here — with the government backing up private rich investors, hedge funds and the like, supporting this, buying some of this toxic stuff?
The reason why I'm a little leery of that, as I was discussing with you earlier, is that this is the same group that has been vilified and equated as all AIG bonus babies, when — and now they are seeing their taxes hike. They are all greedy villains, et cetera. And now they just, willy-nilly, sign on to this? That — that is what gave me pause.
What say you?
And I — I fear that it will give them pause, too, to join in partnership to a government that is — that is apt to change the rules on you. That is the whole point, I think, behind this AIG bonus thing. I mean, it is — it's absurd and a slap in the face of the taxpayers, and all that, but we are talking about a handful of people and a fraction of the bailout money that these companies received.
But Congress comes and, contrary to the Constitution, I believe, changes the rules of the game and retroactively penalizes the people they have identified as bad guys. In that case, they are not just identifying the people in the unit of AIG that caused the problem, or even AIG. They are — they're identifying anyone who has taken money from the government.
And the Senate bill goes even further. So, if you are looking at that, regardless of the details of that particular situation, you are saying, here is an outfit that changes the rules of the game in the middle of the game. That is contrary to the most fundamental tenet of our system. And that is the rule of law.
So, you wonder about, what if you get in, and you do well, and you make a lot of money doing this? What is Congress going to think about that, when you have done that? I don't know.
CAVUTO: Well, that is actually a very good point.
Also, let me ask you this. What if, playing the other side of that coin, the market is telling us something of substance here, and that this does represent more than just that presumed — presumed bear market rally, that this is the start of something big?
Then, wouldn't the Obama administration, wouldn't Democrats who have been pushing this bigger government, and some within your own party, I might add, now come back and say, well, aha, that is the trick; you — you greedy capitalists have been saying, you know, government hands-off, and, yet, when push comes to shove, we are improving because government is very much hands-on?
THOMPSON: Well, doing something as far as the financial sector is concerned to free up the flow of money for the benefit of the overall economy is — is a much different thing than fiscal policy that is going to double our national debt in five years and triple it in 10 years.
At least those are the old numbers. I don't know what the CBO is saying about it now, but they're saying that it's worse than that.
THOMPSON: And you have people like Judd Gregg, who is the ranking member on the Finance Committee, say that, you know, let's — let's quit beating around the bush. It is going to bankrupt the country if we go down that road.
And it is far different from a Federal Reserve that now is taking on obligations and responsibilities that I didn't know the Fed ever had, out of the political system, doesn't require a vote from anyone, and they decide when they want to print a trillion dollars and put it into the economy.
And we know, the more money you have out there chasing fewer goods, what that is going to lead to. And — and we think — apparently, you put those things together, you can only come to the conclusion that the government thinks that they can print money and run deficits in the trillion-dollar range for decades, and people are going to still willingly lend us money, as the dollars become worth less and less and less.
It's not going to happen. And reasonable people see that.
CAVUTO: So, let's say that doesn't — devil's advocate here, not to disparage them way, but what if that doesn't happen? In other words, what if we have this economic surge, sort of the reverse predicate of what we had with Ronald Reagan, a surge that happened because of very big tax cuts, but this surge happens because of very big spending. And it's going to embolden the big spenders, the Keynesians, if you will, who believe more spending begets more economic activity.
And they're going to feel justified. And they're going to look at this and say, well, say Fred Thompson is wrong, and the proof is — is in that market pudding. It's in the economic pudding. It's in all that stuff.
THOMPSON: Well, Neil, all you have got to fall back on is common sense and history.
Common sense doesn't lead you to the conclusion that you can spend your way to prosperity. And neither does history. And I will refer again to the much referred-to Great Depression.
When FDR and his administration tried to spend their way out of it, it didn't work. When the Japanese tried to do that, it didn't work. And it is — it's not going to work this time. You can do an awful lot short term, but never before in the history of mankind have these kinds of policies ever represented long-term growth and prosperity.
The CBO, the Congressional Budget Office — they refer to as it the nonpartisan Congressional Budget Office when the good is — news is good, but now it's just the plain old CBO.
THOMPSON: Even before this latest analysis...
THOMPSON: ... they said that the — the administration's policies would not lead to long-term growth, would not be to the long-term benefit of the country.
THOMPSON: That is what I'm concerned about it.
You and I are going to be all right. But our kids and grandkids are going to be inheriting a terrible legacy under — on this glide path.
CAVUTO: All right.
Senator, if you could stick around there — more with Fred Thompson.
Should Tim still be in? This bank plan failing to quiet calls for his resignation. So, should he stay or go? Fred Thompson back in two on that.
And this economic crisis no laughing matter, so why is the president continue to get rapped for laughing, for smiling?
CAVUTO: Well, it is not every day you see a close to 500-point single-day advance in the Dow Jones industrials. In fact, you would have to go back to last fall to see such an advance. It is the fifth highest point advance in Wall Street history. In percentage terms, it doesn't crack the — the top 10, but it does get close, and all of this on indications we might have a plan for all those sick banks.
It is a plan that Tim Geithner desperately needed. He was being universally panned as a guy in way over his head. And then he delivers this. And then we get some added news on housing, that home sales are doing better than expected, which has some saying Tim can breathe a sigh of relief. Can he?
As calls now for the treasury secretary to resign over this AIG mess, President Obama, though, has been saying the guy is not going anywhere.
(BEGIN VIDEO CLIP, "60 MINUTES")
STEVE KROFT, CBS CORRESPONDENT: Has he volunteered to, or come to you and said to you, "Do you think I should step down?"
PRESIDENT BARACK OBAMA: No. And — and he shouldn't. And, if he were to come to me, I would say: "Sorry, buddy. You've still got the job."
(END VIDEO CLIP)
CAVUTO: That can cut both ways, though, right, when the big guy stands behind you? It's like, I'm with you 1000 percent, and then, ta-ta.
CAVUTO: ... should Geithner go?
We are back with former Republican presidential candidate Fred Thompson. He and his wife, Jeri, have a great new radio show.
Senator, what do you make of that, everyone standing by Geithner? And I know a little bit about that history behind you there. That can sometimes be the kiss of death.
THOMPSON: Well, uh-huh, yes. I — I liken it to the owner of the football team that stands behind his coach 1000 percent. That is usually about 48 hours, isn't it?
THOMPSON: But, you know, I have been critical of — of Secretary Geithner, goodness knows.
But there comes a point, when everybody else is beating up on somebody, I kind of want to lighten up a little bit. And I must say, a lot of my problems that I have with him are really problems also the administration, the fact that they are not focusing on the problems that are on the plate of the Treasury Department, they're not staffing up the way that they should, they are not putting all — a lot of this other foolishness aside or long-term plans aside.
There's time to debate and talk about that. It's going to take a long time to deal with some of these very, very complex issues, such as health care. I would — my latest bone to pick with the secretary is the fact that I don't think he was straightforward about what he knew about the bonus plan.
I could live with the fact, if he could come forward and say, look, here is the plan and this is why we signed off on it, and this is why that — that we feel like we have got to do this. And we could agree or disagree.
But they all — again, the administration, they all covered it up, tried to pretend like, now that we know his people were all involved in it, but he didn't have anything to do with it. The Fed was involved with all of it, and supervision and so forth, for a year, but they didn't talk to Treasury and things like — that is ridiculous. Then, of course, Senator Dodd...
CAVUTO: But, even assuming all that is true, and he did know a lot earlier — I know, but is it enough to tell a guy, goodbye?
THOMPSON: Well, I think that — I think that — I don't think that he has committed any personal indiscretion or anything that is a firing offense.
THOMPSON: And the policies he is carrying out are the administration's policies.
I will say this, though. I think the most important factor, probably, is that we can't leave that shop totally unattended right now. I think he has a pretty good record, where he has been. He has made mistakes.
THOMPSON: He may not be at all suited for this job. They kept him under wraps today, you know? Well, the fact that he is not good on television, you know, a lot of people can say that, including you and me. But...
CAVUTO: But let me ask you, though — let me ask you.
THOMPSON: I'm just speaking for myself.
CAVUTO: I know you are. and I will let that go.
THOMPSON: I don't know who we would — I don't know who we would replace him with.
CAVUTO: Yes, but — that's right. I know that.
But, you know, Republicans haven't looked that much rosier in this whole process. And the criticism has been, you know, that they have been the party of no and opposition: We don't like this, and we don't like that.
Do your fellow Republicans look like they will end up being obstructionists, and — and, whatever the justification for that obstruction...
THOMPSON: I hope so.
CAVUTO: ... the American people are going to say, they are the party of no?
THOMPSON: Well, just — just — get — let's get away from the cliches and the pat words and so forth.
I hope they obstruct some of what we have been talking about. But, of course, you know, they don't have much credibility either in...
THOMPSON: ... in many occasions.
I mean, we know what the history is. We know the spending. We know that half of them voted for this phony...
CAVUTO: That's right.
THOMPSON: ... bill that they had on fast track — they got two-thirds of their vote — that said that that was the most important business of the country the other day on this bonus issue.
THOMPSON: We know — we know all that.
What they should do is fight for the long-term best interests of their country.
THOMPSON: They have done that sometimes in the past. Sometimes, they have not. And they need to shape up and learn from this...
THOMPSON: ... that, in the long run, politically, as well as substantively, it is beneficial to do the right thing.
CAVUTO: All right.
THOMPSON: And now they know what the right thing is, hopefully.
CAVUTO: OK, because you are yelling me and you scared me, we have to go.
CAVUTO: Senator Fred Thompson, best of luck, you and Jeri on the radio show.
THOMPSON: Thank you, Neil.
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