This is a rush transcript from "Your World with Neil Cavuto," October 30, 2007. This copy may not be in its final form and may be updated.

NEIL CAVUTO, HOST: All anyone is talking about on the campaign trail, Rudy Giuliani hitting New Hampshire hard with a new radio ad on health care today. It is a state he now believes he can win, and it is an issue he now believes he owns, because he had cancer once, and he is using his battle against it to push his health care message. It is a risky, if not unprecedented move, but, in an exclusive interview with me today, one he says he needed to make.


CAVUTO: Mayor Giuliani, great to have you.



CAVUTO: You have an interesting health care plan, but you're putting yourself out there, and you're kind of reliving your own battle with prostate cancer. Was that a touch-and-go kind of a decision for you?

GIULIANI: No. No. I have written about it. I have talked about it so much. I have given so many lectures on prostate cancer, on cancer. I probably talk to three, four men a month on the telephone about prostate cancer. Sort of people think of me as connected to that.

Just did yesterday with someone, two days ago, two other people. So, it is something that I am associated with anyway. So, I don't think I am surprised anybody about it.

CAVUTO: Now...

GIULIANI: I have been cured. And I'm very, very lucky. I got wonderful treatment.

But the reality is that my chance of success here in America is just much better than anyplace else in the world. And I am very — I'm very appreciative of that. And I don't want to see us ruin our health care system, the way I believe Hillary Clinton and Barack Obama and John Edwards want to do with socialized medicine. And make no mistake about it. They want to do socialized medicine.

The chance of a man surviving prostate cancer in the United States is somewhere, when I was doing it, 82 percent, 84 percent. It's probably over 90 percent now. In socialized medicine countries, it's — some of them can be less than 50 percent, and none of them like the United States.

CAVUTO: And why is that? Because there's a delay in care?

GIULIANI: And the same thing is true, by the way — my wife will explain this to you better — in more detail than I can, because she knows all these statistics — the same thing is true of women with breast cancer.

The chances of surviving in the United States for a woman much greater than in France, or in England, or in Canada, or in Cuba, where Michael Moore would like us all to go for health care.


CAVUTO: Always a risk, you know, when you bring up your health. And kudos to you for doing that. But a lot more people are going to look at your health now again, right? People said, oh, yes, he had the prostate cancer.

GIULIANI: Well, I have been cured of it. I have had a PSA that is, I think, described as negligible now for six years, seven year. I can't remember how long it is, but it has been a long time.

So, I am — and I'm very healthy, thank goodness. I have got tremendous energy. But I also understand that all of that is more possible, my success, in essence, which is mirrored by 80 percent, 90 percent of the other men in America, has to do a lot with the American health care system that we have.

And we cannot destroy it in the effort to reform it, which is what the Democrats — the American people have to understand this. They want to destroy our health care system in order to reform it. A government- controlled health care system is a health care system that will dramatically deteriorate.

And, as one person said a while back, when they make health care free, you are going to find out how expensive it really is. And there is — they are basically pandering. It's, you know, we are going to have universal health care. It is not going to cost us anything.

Do you know what it is going to cost us? Deteriorated health care. It's going to cost us long waiting lines, like they have in Canada and in England. It's going to cost us lives, because they don't have the results that we have, and not just with cancer, with heart disease and complex heart operations.

What we want to do is create a more private health care system. We want to encourage — I want to encourage Americans to go buy their own health insurance, give them a big tax deduction to do it, give them a health savings account, let them create equity in it.

That is the way you cover the people who are not covered. You drive down the price.


CAVUTO: They say, as you know, Mayor, that poorer folks, who don't have the access, the cachet that a Rudy Giuliani does, would not be able to get the treatment you did under this system and would die.

GIULIANI: Well, actually, that is not correct. The poorest people in America are covered. They have Medicaid, Medicare.

The reality is that the people who don't have health insurance in this country are not the poorest. They are people who are consumers. But we are not making health care affordable enough for them. These are people who buy other things.

They may buy televisions. They may buy cars. They may buy cell phones. They are consumers. But the health insurance is either too expensive, or they don't see the value of it. So, how do you solve a problem like that?

Do you solve the problem like that with a socialist model, a centralized government, or do you solve it with a big consumer market? Of course you solve it in America with a big consumer market.

So, what we need are more people in that market buying their own health insurance. It will drive down the price. And, in the same way that you make retail goods and high-tech goods available to poor people by driving down the price, that is the way you're going to make health care available. And, in that way, you preserve the essential private nature of it.

If 50 million Americans were buying their own health insurance, instead of just 17 million Americans, I guarantee you, the price would go down by 50 percent, 60 percent, 70 percent, and, believe it or not, the quality would go up, because that is what happens as you have a bigger and bigger consumer market.

CAVUTO: But you have put yourself on the line here, Mayor. And I am just reminded of Paul Tsongas, who put himself on the line, and said, I'm in great health. The cancer is beaten.

We know, a few years later, of course, he died of that disease.

Believe me, we don't wish that on anyone, especially you.


CAVUTO: But do you worry that, when you open up the health books and — and — and people start demanding medical records and they want to see, all right, is he as healthy as he says he is, you know how it goes.

It's a floodgate.

GIULIANI: The reality is that what I can demonstrate is that prostate cancer is a disease now that we largely cure in America. John Kerry had prostate cancer.

CAVUTO: Right.

GIULIANI: Two other candidates that are running have had cancer, two of the other Republican candidates.

CAVUTO: John McCain and Fred Thompson, right.

GIULIANI: Have had cancer, and they have been cured of it.

I think this is something we are going to learn more and more about. You know, it takes some of the fear out of the word cancer, too. It takes some of that terrible death sentence that used to be part of cancer. The reality is, many forms of cancer now, we can arrest much more effectively and we can cure.

And it is due really to this whole medical system, this health care system we have in America that I don't want to see ruined.

CAVUTO: All right. Maybe cancer is just afraid of you.


CAVUTO: That could be it, Mayor, that it doesn't want to mess with you.


CAVUTO: Let me ask you, stepping back from this, this has been a crazy week for both parties. And, as you know, earlier, we had Charlie Rangel putting numbers to what many...


CAVUTO: ... feared would be tax hikes, but pretty dramatic tax hikes, a 4.4 percent surcharge, likely lifting the top rate, when all is said and, to close to 45 percent. What do you think of that?


CAVUTO: He says that the vast majority do well, but the $150,000-and- over crowd might not do well.

GIULIANI: I respect Charlie Rangel for doing it. I think he set forth Barack Obama, Hillary Clinton, and John Edwards' dreams.


GIULIANI: I mean, this is what they want to do. He had...

CAVUTO: But he had the guts to say it?

GIULIANI: Right. Well, he has — he put the price tag on their promises.

CAVUTO: Well, none of them rejected it.

GIULIANI: Well, none of them rejected it because they are going to do it. And they're going to do it more than they're saying.

It's a...

CAVUTO: More than a top rate of close to 45 percent?

GIULIANI: When a Democrat promises tax increases, that is a promise they have always redeemed. And they have always redeemed it by making it higher and more extensive than they promised in the first place. And...

CAVUTO: So, you could see it going lower than that $150,000 threshold; it could go higher — lower still?

GIULIANI: Always does, right? It always does, I mean, because you can't — first of all, you can't raise enough money by just taxing the rich.

Secondly, you know what happens when you tax the rich? You make less money sometimes. Let's take capital gains. Then you have to do other taxes. Let's take capital gains for a second. They all want to raise capital gains. The big debate is, do you raise it from 15 to 20 or 15 to 28?

Charlie wants to raise it from 15 to 28. I think Edwards does. Not sure where Clinton and Obama are. They want to raise it.

Any increase in capital gains right now will cost the government money, and they are not telling you this. The last time we raised the capital gains tax, from 20 percent to 28 percent, the government lost $45 billion.

So, think of how irresponsible this is. They want more money for their socialized medicine program, so they say, we're going to raise the capital gains tax. They are going to get less money, by probably a lot more than $45 billion or $50 billion, like happened last time.

So, what are they going to have to do? They are going to have to go raise another tax. It is a cycle I know intimately, because it was the cycle that almost ruined New York, the cycle of raise taxes, raise taxes. Then you have to raise another one. You are making less money. The economy contracts. Now you have got to raise another tax.

And the reality is, if you know how to deal with taxes, you know how to manage them, you can actually both grow the economy and have sufficient revenues for the government.

I'm the only candidate for president who has a record of doing that. I reduced taxes in New York City 23 times, over $9 billion, and I was collecting $3 billion more from the lower taxes than the higher taxes.

CAVUTO: Well, you know, we had Mitt Romney here, who quibbles with the notion you're the only guy who has a record on that. He has said...


GIULIANI: No, no, no, no. He doesn't, actually.

CAVUTO: Well, he says, you're not the only one who has a tax- cutting record.

GIULIANI: He had never cut a tax.


CAVUTO: He says he's the only guy who signed on to this tax cut pledge, and you won't.

GIULIANI: But he hasn't done it. Mitt Romney says he wasn't able to lower taxes in Massachusetts because he had a Democratic legislature. I lowered taxes in New York and I had a Democratic legislature. And the debate is over whether I lowered taxes 15 times or 23 times.

So, I'm ahead 15-0 or 23-0 in tax reductions.


CAVUTO: So, why not sign this tax cut pledge? He says, if it's in your bones, that this is something near and dear to you, sign this pledge to say you would.

GIULIANI: I will tell you why. I will tell you, Neil. You take one pledge as president of the United States. It's to uphold the Constitution of the United States. The rest of it is a statement of intentions.

And the reality is nobody has to worry about whether I'm going to lower taxes, because I did it in a place that was harder to do it than in Washington. All the rest of them have never done it. So they got to take pledges. I have a record.

In fact, that's sort of my distinction with most of the rest of the candidates. I actually have results.

CAVUTO: But it seems, Mayor, you're at least leaving options open, the possibility you might have to raise taxes, right?

GIULIANI: The reality is that I will lower taxes and that I will lower taxes like the capital gains tax. I will fight to lower it, will certainly keep it at 15 percent, because I would veto anything to change that. And I will work to try to lower it.

I'm on record as mayor of New York being in favor of doing away with the capital gains tax.

CAVUTO: So capital gains stay the same, you would extend all the president's tax cuts?

GIULIANI: We would extend all the tax cuts, and then we would start working on lowering some of them.

CAVUTO: Even for the top — the top one, that would be extended out?

GIULIANI: Capital gains, corporate tax, marginal tax rates should all be lowered competitively. The inheritance tax should be done away with. We should give the death penalty to the death tax.

What I just said to you is not only my approach and my program, that happens to be the program of the president of France, Nicolas Sarkozy.

If you read his book "Testimony," he wants to lower all of those taxes in France. And he wants to do it...

CAVUTO: No, that guy, you just be careful interviewing him, but that's a whole 'nother...

GIULIANI: And why — but why does he want to lower them? Because France is losing business to the rest of Europe. Well, don't you think America is losing business with a corporate tax that's higher than France's?

So this is something — this is something I can do not just out of theory, the way the rest of them talked about this. In each one of these cases, I actually did this. I lowered the income tax in New York, lowered it by 24 percent, collecting 42 percent more revenues. I lowered the hotel occupancy tax in New York by 34 percent, collecting $200 million more from the lower tax than the higher tax, reduced the tax burden on New Yorkers by 17 percent. And we were collecting $3 billion more.


CAVUTO: All right. Still to come, Mike Huckabee giving a Rudy a run for his money. Could we see a Giuliani-Huckabee ticket?

More of my chat with America's mayor.


CAVUTO: Well, you know, a lot of Democrats talking taxes, and lots of them. Why Rudy Giuliani says it's the last thing we need.

More of my exclusive chat.


CAVUTO: You share the president's view that tax cuts bring in more revenue. Obviously, Democrats don't buy that. And they say that, with entitlement programs, everything hitting the fan, the tax structure, the way it is, isn't affordable. What do you say?

GIULIANI: A $1 trillion tax increase will do tremendous damage to the growth of this economy. It shows a complete lack of understanding of how a global economy works.

CAVUTO: All right. Well, play it out. If Hillary Clinton — I know you don't want this to happen — if Hillary Clinton were to become president and wants to raise the upper tax rate and raise the capital gains rate, what's going to happen under her stewardship?

GIULIANI: Well, if she raises the capital gains rate, she will lose money.


GIULIANI: She will lose money.

CAVUTO: Will we have a recession?

GIULIANI: I never predict recessions. I never predict depressions. Are you telling me, will we have a large number of jobs that flee the United States? Yes. Will their whole problem and issue of outsourcing become worse? Of course it will.

If there was an impact on revenues in the 1980s by increasing the capital gains tax, there will be a bigger impact now, because money is more mobile now. Money can move anyplace. You can do your deal in London, you can do your deal in Tokyo. You don't have to do it in New York.

CAVUTO: Well, her husband, you know, says, "I raised taxes on the rich guys and our economy boomed."

GIULIANI: He raised taxes on the rich guys and then we had a great big — we had a great big collapse just as he was leaving — just as he was leaving office. And what brought us back from that collapse but major tax reductions.

And this is not just a Republican program. They're forgetting John Kennedy. John Kennedy, first in my lifetime to lower taxes. He got big increase in our economy. Ronald Reagan did it, big increase in our economy.

And I don't just believe that it gets you more revenues; I can prove to you it gets you more revenue. I used to walk around with a chart that showed that, by every point that I lowered taxes, I could collect more money, and just what taxes I would lower.

But it's not every tax. Not every tax is as sensitive to the market as others. So you have to know what you're doing here, and you have to have strategy about it. But if you're asking me one that clearly leads to less revenues if you raise it, the capital gains tax is probably the worst one.

CAVUTO: So don't do that?

GIULIANI: If you're going to raise any tax, that's the one where you're more likely going to make more by lowering it.

People who are in business, people who have had experience understand that. The problem for the Democratic candidates, Hillary and Barack and John Edwards, is, they have never run anything. They have never run a city. They have never run a state. They have never run a business. They have never really seen the practical impact of all of these promises they're making.

If you had the kind of responsibility that I had in running the 17th largest economy in the world at a time in which it was in real trouble, you would not make these pandering promises.

CAVUTO: And that's what they are to you?

All right. Let me ask you, polls are polls and you're right to dismiss them, I know, as you do on the stump. But this Hawkeye poll in Iowa shows Mike Huckabee coming out of nowhere and very close to you.

Now, Mitt Romney still leads that state by a lot. But are you worried that Huckabee is actually the rising star there and threatening you?


GIULIANI: No. Polls are polls, and there are 100 of them. And we're ahead in about 98 of the 100, in just about every state. There are a couple of states where we're behind but competitive. I'm not going to win every primary. I'm not going to win every vote.

So, what we have got to do is figure out, can we win enough of them to get nominated, and as early as possible? So we're going to work real hard to win all of them. And we're going to be very ready for the fact that we can't win every single one of them.

But if you are asking me, do I want to be in my position or somebody else's right now, where we're ahead in the national polls by double digits, we're ahead in every big state by sometimes more than double digits...

CAVUTO: But not Iowa or New Hampshire. If you buy the argument that they kind of get people off to the races, you could be in a pickle, right?

GIULIANI: Well, but we may win one or both of those. We may do a lot better in one or both of those than people think.


CAVUTO: Would you ever want — would Huckabee be a good running mate for you?

GIULIANI: In any event, you can't have a strategy of winning Iowa, New Hampshire, and then losing Florida.

CAVUTO: Unless you buy the fact that that gives you momentum for Florida, right?

GIULIANI: Well, we will see.


CAVUTO: But what about Huckabee as a running mate?

GIULIANI: Let's see which strategy works best. We have worked very hard in the so-called big states to put together, I'm not going to call them insurmountable leads, but massive leads, anywhere from a low of 10 to a high of 40 percent.

Now we are spending our time trying to get ourselves into a good position in Iowa, New Hampshire, South Carolina and some of the other earlier states.

In New Hampshire, what we have done so far has worked really well. we have gotten to within one point in one poll. We're competitive...

CAVUTO: Is New Hampshire a must-win for you if you don't win it?

GIULIANI: There's no must-win.

CAVUTO: It's not.

GIULIANI: The must-win are the number of states that get you the delegates that you need to win. But do you want to win every primary? Of course. And do you have a strategy that has a fallback if you don't win? You would better have it, otherwise you're not being realistic.


GIULIANI: President Bush got nominated in 2000. He lost New Hampshire. He lost Michigan. President Reagan lost one of the early primaries very, very quickly.

So you're never going to win all of them. You win as many of them as you can.

CAVUTO: OK. I kept badgering you on the Huckabee comment, but a lot of people...


GIULIANI: Huckabee's a wonderful man.

CAVUTO: A wonderful running mate?

GIULIANI: I think — well, I will tell you about — I don't know about running mate, but I sure like having him at the debates, because he makes me laugh.


GIULIANI: He gets off really funny lines.

CAVUTO: Yes. All right.

GIULIANI: And he's got a nice approach to life. You know, he's a man that is — he's got a happy approach and he's got an optimistic approach to life.


GIULIANI: And then, you know, I have great respect for him.


CAVUTO: Guess which part of this interview has the media buzzing? The next part, Rudy's reaction to a new manager of the New York Yankees — next.


CAVUTO: Well, developing right now, another Joe replacing Joe, as in Joe Torre — the Yankees announcing today that Joe Girardi will take Torre's place as manager. It's a three-year deal worth $2 million a year.

Reaction now from one of the Yankees' biggest fans, even though he took a ribbing for rooting for the Red Sox in the World Series. More of my chat with Rudy Giuliani.


CAVUTO: Two little things.

Boston Red Sox won the World Series. New Yorkers are apoplectic that you were rooting for them.

GIULIANI: I was rooting for them as a Yankee fan. I'm an American League fan.

CAVUTO: Right.

GIULIANI: I have always been an American League fan. The only time I haven't rooted for the American League, interestingly, is when the Red Sox played the Mets. And I rooted for the Mets.

CAVUTO: That was a conundrum.


GIULIANI: ... back then in '86. But I think almost always I have rooted for the American. I rooted for the Red Sox in '04.

CAVUTO: So, this wasn't some Machiavellian political...

GIULIANI: Not only am I an American League fan. I was an honorary coach on the 2002 American League All-Star Team. I don't want to say that I take credit for the tie...


GIULIANI: ... because that was a tie game.

CAVUTO: That's true. That's true.

GIULIANI: And I'm very, very proud of my credentials as a Yankee fan. You remember, Neil, when I was mayor, we won four world championships. Since I have left office, so far...

CAVUTO: Nothing.

GIULIANI: ... so far, Mike hasn't gotten any.

CAVUTO: That's exactly — just today, Joe Girardi announced as the new Yankee manager, three years, $2 million a year. It's a big pay cut from what Joe Torre was getting. What do you think of the Girardi selection?

GIULIANI: Good choice.


GIULIANI: I'm very loyal to Joe. And Joe is a close personal friend. Joe Torre is a close personal friend.


GIULIANI: So I'm going to miss him a lot.

But if they had to make a choice, I think Joe Girardi is a really good choice. I think he's got, you know, experience. He's a very smart guy. I remember him from the 1996 Yankees. He's — he understands — and I sort of am partial to catchers as managers. I was a catcher, not on that level at all, way back in the little league. But it probably taught me as much about baseball as anything I ever did, being a catcher.

And I think Joe looks like he's going to be able to deal with a difficult situation...


CAVUTO: Well, Joe Torre, talk is he could go to the Dodgers.

GIULIANI: Part of my disappointment in losing Joe was not just the personal relationship. It's I don't want to see him coaching another — or managing another team. He's so good.

CAVUTO: Would you recommend, just stop it; you have had a good run; be done with it?

GIULIANI: I think he should — I think he should do — being a commentator.


GIULIANI: He used to be. He was a broadcaster for the Angels.

CAVUTO: That's right. That's right.

GIULIANI: And he's real good at it, very articulate, really understands the game.

But I think Joe still has that — I think he still has that — you know, he wants to get out there on the field. He wants to be with the players.

As I was saying to you before the broadcast, you have got to be different to be a manager nowadays. A major league manager is managing more millionaires than the CEO is in a boardroom of most American companies.

CAVUTO: That's true.

GIULIANI: You have got — this is different now. You can't yell at people. You can't do it. There's got to be a lot of psychology in being a baseball manager. And Joe was the first, I think, of the modern managers. And I think Joe Girardi and the rest of them would do well to kind of copy that approach.

They have to do it a little differently, but this is a much more difficult thing that they're doing than the managers back in the '30s and '40s and '50s.

CAVUTO: Finally, if you can indulge me on one last question — and I know you have to go — speaking of people who are paid a lot of money, the Merrill Lynch CEO, Stan O'Neal, all but out, officially resigning today. The question is what kind of role he will serve in the future.

A lot of pay going out the door, and a lot of people asking, where is the risk when you take — when you run these big companies?

GIULIANI: Well, there's great risk. The risk is you're going to get thrown out...

CAVUTO: Yes, but with hefty pay on the way out.


GIULIANI: But isn't that up to shareholders? I mean, this is — I have — and Americans will learn this as hopefully I become the candidate. I believe that this — America is not great because we have a big, overpowering central government. European governments have big central governments, and look where they are.

We're great because we have a tremendously big free market and private market. And owners and shareholders have to decide what the pay is. If they want to pay people too much, they're the owners. They're the shareholders. They can do it.

And when they see that it is too much, they're going to correct it. And that's a much better way for our economy to grow than to have a bunch of central planners in Washington saying, well, that should be somebody's pay and that should be somebody's pay.

That declines an economy. That makes — that keeps everybody poor. If you have an active, robust free market, everybody moves up.

Hillary Clinton once said that the most destructive force in modern America is the unfettered free market. She's absolutely wrong about that. Of course the market has to be guided by rules, but it can't be overwhelmed by rules.

CAVUTO: Mayor, thank you very much.

GIULIANI: Thank you.


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