Former 2008 Presidential Candidate Mitt Romney on Economy

This is a rush transcript from "Your World With Neil Cavuto," September 16, 2008. This copy may not be in its final form and may be updated.

NEIL CAVUTO, HOST: What does Mitt Romney make of all of this tough populist talk? He's not only a former governor and presidential candidate. Of course, he ran an investment giant, Bain Capital. And I guess those are the kind of guys they're going after.

Governor, what do you make of this rhetoric? It's pretty tough on almost all capitalists, it sounds like.

MITT ROMNEY (R), FORMER MASSACHUSETTS GOVERNOR: Well, you know, I think, at a time like this, a lot of people are really concerned about what's going to happen to the future of our economic system, and a lot of people are pointing in different directions.

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As Steny Hoyer just indicated, there was blame in Congress. There's blame in the administration. Look, there's blame at the Fed. There's blame in the rating agencies. There's blame for the investors. Nobody could escape blame in a setting like this.

But, you know, we can stop the discussion about who's to blame and talk about how we're going to make things better. And, in this case, I think it's time for Barack Obama to say he's going to put a hold on any proposals for massive new programs and he's also going to put a hold on the idea of raising taxes. Raising taxes and increasing federal spending right now is exactly the wrong way to go. He's got to say no to the tax hike. A tax hike right now would be devastating.

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CAVUTO: Governor, do you worry, though — I know it's campaign season, and I know it's rhetoric, and I know it's populist-sounding, and maybe someone has figured in a focus group that's the way to resonate with voters, but there has been more bashing of corporate fat cats, more bashing of corporations, more bashing of profits. This is on the part of the Republican team.

I'm just wondering what's going on here.

ROMNEY: Well, the free enterprise system and capitalism is one of the things that propelled our economy to be the powerhouse that it is globally, despite the enormous troubles it's going through right now.

And our long-term outlook can be positive, but, certainly, we're going to rely on the entrepreneurship of the American people, the risk-taking and capitalism to — to work its magic, and to employ people, and to make things the way we would like them to be for our kids and our grandkids.

So, you know, I know it's tempting to point fingers, but I would rather point in a direction we want to go and talk about how we're going to get this economy going again by...

CAVUTO: Well, at least — at least you're pointing in a direction and not just an arbitrary finger in the air.

(LAUGHTER)

CAVUTO: But let me ask you, Governor, Wall Street was up today, on a day the Federal Reserve kind of said no to — to a lot of stock traders' demands for a rate cut, 48 hours after the Treasury said no to a bailout of Lehman Brothers.

We're getting sort of twin acts of tough love on the part of Uncle Sam. What do you make of that?

ROMNEY: Well, I think what's happening is, the Federal Reserve and the Treasury, they're making a very careful assessment of what kind of systemic action might occur or consequences might occur based upon the failure of a company like Lehman.

And where they see massive consequences, they're going to step in and try and protect the American public with shareholder support — or — excuse me — with taxpayer support. But where they see limited consequence or limited systemic effect, they're probably not going to step in. And that's — that kind of a measured approach, I think, is being well received by people who are making a — an informed assessment of what the future should look like.

CAVUTO: Yes, but I — you know what I wonder, Governor? Why they didn't do this before. If they were so afraid about appearing to have, you know, a ring around their nose and being led by the markets and not ticking them off — and you know this from your Bain Capital days.

Obviously, when you came in to fix up a company, some of the medicine might be tough. And — and many on Wall Street would look unfavorably at that tough medicine, but they would look favorably if it turned out OK.

We're watching the McCain/Palin ticket arriving in Ohio here, as we're talking to you.

But is the message now that — maybe that is the message, that tough love ultimately earns you more tough respect than easy money?

ROMNEY: Well, if people are acting out of the interest of the economy and the American people, I think you're going to find that Wall Street generally recognizes and appreciates that.

But, if you see, instead, people bailing companies out to try and help shareholders, they're going to find that negative, even if they're in the marketplace, because they want to make sure that the — that the people leading our country economically are doing what's right for the economy long term.

CAVUTO: Governor, always a pleasure. Thank you very much.

ROMNEY: Thanks, Neil. Good to be with you.

CAVUTO: Governor Mitt Romney.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

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