This is a partial transcript from "Your World with Neil Cavuto," November 1, 2005, that was edited for clarity.

NEIL CAVUTO, HOST: Billions for bird flu (search), a call to cut spending in Washington, now a massive tax overhaul proposal. A busy time for this man, the treasury secretary of these United States, John Snow (search).

Secretary, first off, on this flu issue, do you think we need to earmark $7 billion for something that might never happen?

SNOW: Well, Neil, we take out insurance policies. That's a good bet.

CAVUTO: That's a pretty pricey one. That's a pretty pricey one.

SNOW: That's good rational behavior. Well, so is the U.S. defense establishment, an insurance policy, right?

CAVUTO: Well, that's a good point.

SNOW: We're always taking out insurance policies, and it's rational to do so. So sure, I think it makes good sense.

CAVUTO: Now you have talked to a lot of people all around the world, Secretary, so I know your contacts are probably pretty right on. Do they tell you, especially from your travels in Asia, that this is something that's going to be big?

SNOW: Well, there's concern that it could be big. And certainly Secretary Leavitt (search) has called my attention to it. He has called the president's attention to it. And he has traveled the world talking to other health care leaders around the globe, and he has come back convinced that this is something we have to address. The health of our citizens is a priority. It's a priority for the citizens' well-being, it's a priority for security purposes, and it's a priority for the economy. Just think of the consequences to the economy of a pandemic hitting our country.

CAVUTO: So the idea that you might be spending $7 billion on something you will never need, much as it is akin to defense, you argue it's money well spent just to be safe?

SNOW: I think appropriately conceived insurance policies are money well spent, yes.

CAVUTO: What is sense, sir, of just the state of our economy to handle all this money when we keep going deeper and deeper into the red to pay for these things, whether it's hurricane relief, whether it's to prepare for a potential pandemic, there ain't no money there?

SNOW: Well, Neil, you know, the Congress is now wrestling with a whole series of spending cuts, offsets on Hurricane Katrina (search), well-designed offsets. We have got to set priorities and then we have got to find a way to fund them and pay for them. The recent budget numbers were encouraging. We brought the deficit down quite a bit, nearly $100 billion from earlier year forecasts. I think we're going to be able to reach the president's target, I'm confident we will, of meeting our national priorities and bringing the deficit down. That's what we're intent on doing.

CAVUTO: Speaking of legislative priorities, sir, you know, Harry Reid (search) went into a closed session in the Senate today using powers that he is free to use, but Republicans claim it was a sneaky stunt. Do you have any thoughts on that?

SNOW: Well, I missed it. I have been involved with the tax panel and doing interviews and work on tax policy today, and I missed those developments in the Senate.

CAVUTO: You missed the whole drama, huh?

SNOW: Whatever the drama is, I think I missed it.

CAVUTO: All right. Treasury Secretary Snow, always a pleasure, sir. Thank you very much.

SNOW: Hey, thanks, Neil. Thank you.

CAVUTO: All right.

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