This is a rush transcript from "Your World With Neil Cavuto," June 12, 2009. This copy may not be in its final form and may be updated.

NEIL CAVUTO, HOST: In the meantime, from no-go to watch them go from Gitmo.

Welcome, everybody. I'm Neil Cavuto.

Well, seven down, 232 to go — the president making good on his pledge to start shutting down Guantanamo Bay, transferring detainees to New York, Iraq, and Chad, even Bermuda, and this despite a report also today that some military intelligence officers here are advising against the transfer of up to 60 detainees, including five deemed highly dangerous.

And while the island of Palau is more than willing to take these guests, my next guest was not and is not.

Canadian Prime Minister Stephen Harper joins me right now in this exclusive chat.

Mr. Prime Minister, very good to have you. Thank you for joining us.

STEPHEN HARPER, CANADIAN PRIME MINISTER: Yes. Well, thanks for having me, Neil.

Video: Watch Cavuto's interview

CAVUTO: Let me ask you, sir. There's a lot of countries now coming forward and saying, we will take these guys.

With more willing to take them, are you?

HARPER: Well, we certainly — we certainly have left it to the government of the United States to deal with this particular issue.

There is a Canadian in Guantanamo who is charged. We're obviously waiting to see what President Obama's administration does in that particular case. But this government has a very strong record in opposing terrorism. And we're not offering Canada as a safe haven for anyone that the United States considers to be a terrorist.

CAVUTO: What do think, Mr. Prime Minister, of his wanting to eventually shut Gitmo down? I know, as you say, it is a U.S. concern, but it is a Canadian concern, as well, I guess.

HARPER: Well, it's — you know, this, ultimately, really is a decision in the United States.

As you know, there has been, although our — our government has been, I think, more understanding than some, there's been a lot of international concern about the process there. And, ultimately, the administration is going to have to find a balance between addressing some of those concerns, but maintaining strong defenses that we all share against the potential activity of terrorist.

It's is very a difficult problem. And I think I will leave it for President Obama to try and resolve, rather than, obviously, try and resolve it ourselves. But we work very closely with his administration, as we did with the previous administration, on identifying any terrorist suspects and — and trying to thwart their activities.

CAVUTO: Speaking of which, Mr. Prime Minister, as you know, we have been up 700 agents to our Canadian-American border to deal with this kind of issue and about the types of folks who might try to make their way into the United States from Canada.

It's caused some concern among many Canadians, who have — who seem to think that we are targeting Canadians. What did you make of that?

HARPER: Look, I think the concern on the Canadian side, we, as Canadians, have no concern at all about the fact the United States is obviously concerned about the movement of terrorists.

As I have been very clear, our government shares all of these concerns. I have been very clear with President Obama and with the American people that we view any threat to the United States as a threat to Canada. And we cooperate absolutely, fully, with the United States in — in this international effort.

The concern, I think, that Canadians have, particularly Canadian business, is the effects this could have on the relatively free movement of trade between our countries. We have very integrated economies. And we want to make ensure that the systems we put in place and processes we put in place to deal with the security threats do not become barriers to — to trade or to social interaction that are so deep between our own two countries.

We have work with two administrations on that. I think we're making some progress. But this remains a challenge.

CAVUTO: What about the challenge that came post the parliamentary elections last week, where a lot of moderate to conservative candidate seem to win out over established liberal governments in France, in Germany, in Italy, in Britain, in Hungary? I could go on and on.

But — but we are seeing more of that. And is it, in your view, a repudiation of what we have been seeing globally, the big spending by big governments globally, and voters are telling leaders to slow down? Or how would you interpret it?

HARPER: I would generally interpret what has been going on in the world politically, the United States actually being an exception, I — I would interpret, generally, that the population has been supporting incumbent governments that are seen to be focusing on the economy, and that, quite frankly, populations have not been willing to experiment with parties that are unproven in government or have economic agendas that are very unclear at this time.

Obviously, in the United States, the vote was massively for change, you know, for different reasons. I think part of the reason was many of the economic problems were seen to emanate from the United States. But our government in Canada, our conservative government, as you know, was actually reelected with a stronger position during the — during the — you know, the crash of the stock market and the significant economic decline we had last fall.

But I think that — our experience in Canada is actually more typical than what happened in the United States.

CAVUTO: I don't know if it is more typical, though, with all due respect, Mr. Prime Minister. I'm thinking that you have tried stimulus, and obviously are — have been doing a lot to try to get the Canadian economy going, but limited government-type intervention, so almost the reverse of what President Obama is trying to do.

And now the liberal parties, or the more liberal parties, the three opposition parties, who, if they all joined hands together, could — could topple you, are — are seeming to use a vote next Friday on some of these economic initiatives you're planning as a test case to bring you down.

What is going on?

HARPER: Well, we don't know that yet. I think we will all watch and see this.

The Canadian people are very clear that they don't want to see the opposition form another coalition. And they certainly — nobody wants to see an election right now just as we're beginning to see some of the effects of the recession ease. And we still have a lot of work to do on our economic action plan.

There are actually — you know, to be fair, Neil, I think there are a lot of similarities between what we're in doing in Canada with stimulus, what President Obama is doing, and what many other governments are doing.

The big difference in Canada is that we start from a completely different position. Our government had a surplus budget going into this recession. We were lowering taxes, permanently lowering taxes in a way that was affordable.

And, so, now we have a — even though we have the smallest deficit-GDP ratio, the smallest debt-GDP ratio, and the smallest deficit in relative terms in the G-7, we're actually able to have the biggest stimulus package, and we're actually in the best position to return to surplus when the recession is over.

So, the difference is not so much our actions. There are some differences there. I think ours are a little more focused on long-term investments and in the longer term.

But the big difference is, our debt and deficit positions here, our overall fiscal position, is fundamentally sound. We all know that there is a deep structural deficit that exists in the United States, that existed even before the recession took hold.

CAVUTO: True enough, sir. But our fiscal condition is not sound right now. In fact, depending on who you talk to...

HARPER: No.

CAVUTO: ... whether or liberal or conservative in this country, it is out of control in this country.

And the argument seems to that we are, in blackjack terms, sir, doubling down, taking a deficit and doubling it, in the hope that maybe all that spending is going to, you know, reignite things.

Do you think it will?

HARPER: Look, I — I sympathize with the — with the perspective of the administration.

I was asked in an interview a little while back in the United States was I worried that all this deficit spending in the United States could cause awfully big problems later. You called it doubling down. My answer was, as an economist, yes, I would be concerned about that.

But the problem is, when the house is on fire, the first thing you have to do is, you have to bring out the hoses and — and spray water all over it. You can't worry about whether you are flooding the basement. You first have to deal with the problem before you...

CAVUTO: Yes, but have we sprayed too much — have we sprayed too much water? That's the argument.

HARPER: Yes.

Well, you know, as they say, you don't normally worry about that in the middle of a raging inferno.

CAVUTO: Yes.

HARPER: You normally just get as much water on it as you can.

The reality is this. And I think the — the fiscal situation in the United States is very worrisome. That said, President Obama came into office with the United States in a deep structural deficit position, at a time when fiscal stimulus, when deficit spending is actually required economically.

As I say, we in Canada, we're in a very different...

CAVUTO: Right.

HARPER: ... different position, in that we're able to borrow and stimulate the economy now, when we need to, but we didn't have this condition before the recession. So, that's — that's not a problem we have to manage.

CAVUTO: I know, but it sounds like you're very — I know. You are a very polite and diplomatic leader.

But the fact of the matter is, I could not envision you — maybe you have more conservative roots — spending your way out of a morass. But, you know, I know, like you say, when times are tough, everyone does different things.

HARPER: Well...

CAVUTO: But would you have done the degree of spending that this president and this Congress have done?

HARPER: Well, the — the deficit in Canada is one-quarter the size, in relative terms, of the deficit in the United States.

But, as I say, Neil, to be fair once again to the president and to the Congress — and we have some — you know, obviously, some big differences...

CAVUTO: Right.

HARPER: ... especially where we see some — some of these buy- American and the protectionist policies that we are concerned about.

But, that said, the fact of the matter is, we need stimulative spending now. And I say that as a conservative. The IMF says every that.

CAVUTO: OK.

HARPER: Every country in the world is doing that.

The difficulty for President Obama's administration is, the budget was in deficit and structural deficit prior to the recession.

CAVUTO: Gotcha.

HARPER: That is not his fault. And it is certainly not our situation, but it is a reality.

CAVUTO: Another reality, Mr. Prime Minister, is that you're in the car business, like our president.

HARPER: Yes.

CAVUTO: You own a big chunk of the remade General Motors, I think a 12 percent stake, between the Canadian government and the government of Ontario.

What do you expect for that chunk?

HARPER: Well, look, the reason we're in this is, the United States government decided — and, once again, it was under the previous administration, decided that they would politically restructure the auto sector.

And we have 20 percent of the North American auto sector in Canada. So, in relative terms, it is even bigger part of our economy than it is of your economy.

Once the United States decided to do that, we concluded that we had no alternative but to participate in that process. And we worked very closely with both governments.

You know, what we hope to do — obviously, this — this sector is being downsized dramatically. It is our strong belief what will emerge will be a smaller, but viable auto sector. This — you know, our anticipation, to be quite frank, is that we will sell our stake as soon as we can in the not-too-distant future, and — and not make a great deal of money on this.

CAVUTO: But would you use as leverage...

HARPER: But we think this is better...

(CROSSTALK)

CAVUTO: But I guess what...

(CROSSTALK)

HARPER: Well, if I can just finish.

CAVUTO: Go ahead.

HARPER: This is better for us — this is better for us than simply allowing the sector to move to the United States, which would have been the risk.

CAVUTO: All right. I'm sorry, sir.

HARPER: Sorry, Neil.

CAVUTO: Would you use that stake, that 12 percent stake, as leverage?

Because I know many of your countrymen are concerned that this buy- America mantra is going to come to Canadians' detriment, and that it could adversely effect your economy as we buy anything and everything American, again, at your expense. And — and would you use that 12 percent stake to force that issue, that, "Don't even think of doing that, America"?

HARPER: No, I would not. Let me be very clear about this, because I think the great risk in getting into the car business, as, unfortunately, governments have, is that we start using car business for political means, instead of for economic means. And I would not want to do that.

I think the — you know, the obviously the risk we have with the protectionist measures, the buy America, is we see now state and municipal governments in the United States beginning to engage in very protectionist behavior.

We have a significant threat in Canada now that our provinces and our municipalities will do the same thing. And, quite frankly, the biggest risk we have to global economic recovery is an increase in protectionism. And the worst possible signal that we could send to the world right now would be an increase in protectionism, and particularly a procurement trade war between Canada and the United States.

I can't think of a worse signal to send to the world economy right now. So, I hope we will find some ways of — of not going in that direction. It — look, all we do for our taxpayers is, we force governments, force them to make choices in this — these spending programs that will be more expensive in order to do local procurement. And that is not useful.

CAVUTO: Prime Minister, I, like, many, many other Americans, go to Canada a great deal. It's a beautiful country, beautiful — I have been all over your fine country.

And now I guess I'm required to bring a passport with me. And, for a lot of Americans, frankly, sir, that is a pain in the butt. And I know we're doing it on this side of the border...

HARPER: Yes.

CAVUTO: ... to keep things safe. But are you worried about what that means, and, longer term, what it could mean for our relations?

HARPER: I am.

I — first of all, I would absolutely agree, most Canadians would agree with you in your response to this and how you see it. What we have done over the last few years to prepare for this is, we have — we have made sure that as many Canadians as possible have passport or equivalent documents.

We have now something like 80 percent of adult Canadians possess passport or equivalent documents. I would love to see, obviously, the — you know, as much free interaction and free crossage of our border as we can, while, at the same time, as I say, working to make sure we identify anybody who is — who is genuinely dangerous.

I expressed — during the period of President Bush, I expressed in particular my concern that we just have countless social interactions of — of baseball teams, of social organizations, of families...

CAVUTO: Right.

HARPER: ... who cross the border every single day, and make our countries, quite frankly, the two best friends in — in history. And I would hate to see anything to endanger that.

The Bush administration made a very positive change when they exempted, you know, large groups of youth from passport requirements...

CAVUTO: Right. Right.

HARPER: ... for things like baseball tournaments.

But I would really hope that we would focus — I think the important thing to do is to risk-manage these security threats. Rather than, you know, basically try and load down every single citizen with paperwork...

CAVUTO: Gotcha.

HARPER: ... what we need to do is be more effective at identifying the people who are risky and moving on those people early, rather than burdening the entire population and the economy.

CAVUTO: Prime Minister, I know you have to get going. I very much appreciate your time, but a final question on what has been a trend in our country, establishing czars and task forces accountable only to the president in this case, and not to our Congress and to no one else.

So, we have a lot of czars. We have 16 of them, czars, task force managers, whatever you want to call them, sir. Do you have anything like that in Canada? And — and, if — if you did, would you call them czars?

HARPER: I have had a — I have appointed a couple of task forces in the past.

My major files in Canada, in our government — we have a different system of government. In our government, my cabinet ministers come from parliament. They come from the elected branch of government. Unlike, in the United States where Cabinet secretaries are — you know, are appointed outside the elected system, ours are almost exclusively elected people. And, generally speaking, it is my cabinet ministers who carry major files.

But as I say, this is — these are the differences between our — our two governments. And I — and I wouldn't want to comment too much on what practices the American government may take.

(LAUGHTER)

CAVUTO: Mr. Prime Minister, a pleasure. Thank you very, very much. Good having you.

HARPER: Yes. Thanks for having me.

CAVUTO: All right, the prime minister of Canada, Stephen Harper.

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