This is a rush transcript from "Your World With Neil Cavuto," October 27, 2009. This copy may not be in its final form and may be updated.


This has gotten to be a nasty one. Putting principle over party, not backing down, Republican Governor Tim Pawlenty of Minnesota the latest to back conservative Doug Hoffman in that upstate New York special election that's occurring one week from today, even though it could mean giving a Democrat the seat.

The governor joins me right now.

Governor, good to have you back.

GOV. TIM PAWLENTY (R), MINNESOTA: Good to be with you, Neil.

CAVUTO: What made you throw your — your backing to Mr. Hoffman in this race? It really doesn't concern Minnesota. It really doesn't directly concern you. Why?

PAWLENTY: Well, this is a federal congressional race, so it ultimately affects the whole country to some manner or degree. And in this case, as a party, if we're going to endorse candidates for major office, there have to be at least some minimum requirements that that candidate meets in terms of his or her beliefs and positions on issues, and the endorsed candidate in this case, in my opinion, with all due respect, just didn't meet even the minimum standards in that regard, Neil.

CAVUTO: All right.

So, Ms. Scozzafava, the Republican nominee there, doesn't cut the litmus test for you. But are you afraid that this is dividing Republicans? You and Sarah Palin are backing Mr. Hoffman, and now of course you have Newt Gingrich, who's backing Scozzafava. I'm going to get to something Newt Gingrich told our own Greta Van Susteren.

But are you worried that a Hatfield and McCoy situation developing among Republicans?

PAWLENTY: Well, I'm not worried. This is an aberration. I think you have here a very just poor decision by the small group of party leaders who made this decision. It wasn't a grassroots decision. They endorsed a candidate who has voted to raise income taxes in New York, who's in favor of card check, who's voted in favor or supported the stimulus bill, has voted in favor of bank bailouts, has voted in favor of all sorts of other issues that just are inconsistent with being a Republican.

There's latitude in the party. We're not going to all agree on all issues. So we got to have some room for that, and I agree with that perspective. But in this case they so kicked it in the dugout it doesn't even pass a minimum standard.

CAVUTO: All right. You have a very diplomatic way of answering that question. Ironically, Newt Gingrich was not quite so diplomatic when he was talking to my friend Greta Van Susteren last night. This is from last night, Governor.


NEWT GINGRICH, FORMER SPEAKER OF THE HOUSE: I say to my many conservative friends who've suddenly decided that whether they're from Minnesota or Alaska or Texas, they know more than the upstate New York Republicans? I don't think so.

And I don't think it's a good precedent. And I think if this third- party candidate takes away just enough votes to elect the Democrat, then we will have strengthened Nancy Pelosi by the divisiveness, we will not have strengthened the conservative movement.


CAVUTO: I think he just put you down, Gov.


PAWLENTY: Well, Newt is a friend. I respect him and appreciate all the work that he has done for our country and for our party. We just have a respectful disagreement on this. I think reasonable people can differ on it. So I don't view that as a putdown, I just say to Speaker Gingrich we just respectfully disagree. He's still going to be my friend, I'm still going to work with him on a whole variety of other issues.

But this candidate that the party endorsed is also endorsed by a party that is affiliated with ACORN. I can't even find an issue that she aligns with most Republicans on in terms of her record.

Now, she's making all kinds of promises going forward, but in terms of her record she is so far removed from even a minimum standard it's quite concerning. I think it's an aberration, this is not a pattern that you see of problems like this across the country.

CAVUTO: But nevertheless, I mean, when Ronald Reagan decided to challenge Gerald Ford in 1976 for the presidential nomination — and keep in mind Gerald Ford was president at the time — it was thought to be a friendly intramural dispute, more conservative Republicans challenging the moderate sort of bulk wing of the party at the time.

As you know, Governor, I know you're a very young man — as am I, by the way — all of a sudden it turned into something a lot nastier. Are you afraid that history could repeat itself?

PAWLENTY: I'm not, Neil. This is about value and principle and ideas. You know, Newt Gingrich and others are not the enemy, they are our friends. We're within the range of thought, a party and a movement. This is just one that I think is an outlier, and it has to be called as an outlier.

We don't see this kind of problem generally across the party or across the country, so I'm not that worried about it going forward. But this is a case where we had to take a stand. This candidate that was endorsed by a small group of party leaders is just so far out of what you consider even mainstream Republican positions, it's quite troubling.

CAVUTO: All right. You've also mentioned the spending going on in Washington is quite troubling, and because, as you've put it, we're pouring good money after bad and no way to pay for them.

And now we get this report, Governor, out of New York state, I guess would not surprise you in Minnesota, that when you raise taxes a lot you don't get a lot of money for it, in fact your revenues decline. And if this report is to be believed, the number of folks who can pay those revenues leave.

What do you make of that? Anything that Republicans are trying to make of that? Any ominous signs for Washington? What?

PAWLENTY: Well, I make a lot of it. I think these are the canaries in the coal mine, in California and New York and some other states. We — it's not a matter of political philosophy as much as it is now just a matter of math. They have built up entitlement expectations and spending commitments so high, so far, so fast that even any reasonable revenue projections don't support the spending that they have committed to.

And so there are structural problems. Government at the state level in many cases, at the federal government level, at the local government level is the equivalent of General Motors 15 years ago. It is a legacy perspective. They have made commitments they can't keep. The revenues don't support it. And it needs to be dramatically and fundamentally reformed.

What you see happening in New York, what you see happening in California is going to visit much of the rest of the country within 20 years. These are a preview of coming attractions between government has spent too much.

CAVUTO: Governor Pawlenty, always great having you on. Thank you for stopping by.

PAWLENTY: You're welcome, Neil. Thank you.

CAVUTO: All right.

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