LARRY KUDLOW: Steve Forbes-- conservative editor of Forbes Magazine wrote a tough editorial. I want to get your response on that. He asked, "Can it be true? A Republican president repudiating the anti-inflation legacy of Ronald Reagan?" And he calls this thing, "Jimmy Carter Bush." (LAUGHTER) Do you have a response to Mr. Forbes' criticism?

GEORGE W BUSH: I-- I like Forbes. He's a good man. And-- but if I responded to every editorial written about me you and I would be spending hours talking about them.

LARRY KUDLOW: So you don't think you've given up on the-- anti-inflation legacy?

GEORGE W BUSH: I think we just come off with the-- a strong period of economic growth after difficult times. We've been through recession, war, terrorist attack-- Katrina. And, yet, we have 52 consectutiv (PH) months of uninterrupted job growth.

The longest sustained in the country's history. I've tut-- cut taxes. Congress needs to make those tax cuts permanent, by the way, in order to send the signal of-- that this economy of ours is gonna be strong. The deficit as a percentage EDP is below norm. So we've had a good record. We're just in a tough period right now. And--

LARRY KUDLOW: Well, it's just, on this last one, on the dollar sir, if I may, Middle East oil producers are leaving the dollar as their standard. Kuwait is doing it. The United Emirates are doing it. Kutar (PH) is doing it. Some people are saying that this big dollar drop is costing us prestige. That American prestige, in war time particularly, is falling. That our enemies and our friends are ridiculing the greenback. Does that really affect you? Does-- is that something you think about? Loss of prestige from the dollar?

GEORGE W BUSH: I-- I think about making hard decisions now so we'll live in peace and security. The biggest threat we face is-- is a terrorist attack. Or making policies that strengthen these radical and extremists who would like to do us harm. And so what I think about is protecting this-- United States of America. And it requires some tough decisions. And-- I'm willing to make them, and I will continue to make them, so long as I'm the president.

LARRY KUDLOW: Senator Obama, on the campaign trail, I want to read you a quote from one of his recent speeches. "It's a Washington where George Bush hands out billions in tax cuts year after year to the biggest corporations and the wealthiest few who don't need them and don't ask for them.

"Tax breaks that our mortgaging our children's future on a mountain of debt. Tax breaks that could have gone into the pockets of the working families who need the most." And, I might add, the senate and the house are considering a budget which will repeal-- the tax cuts, which is the centerpiece of your-- economic strategy. What is your response to Senator Obama and the congressional Democrats?

GEORGE W BUSH: Well, yeah, I-- I-- I would-- I-- I would leave it generic. For all those who-- say the tax cuts are bad, I just simply ask them to look at what happened after-- we inherited a recession. And after the attacks of September 11th. I think giving people their money back-- makes a lot of sense.

The problem you face-- Larry, is that-- these folks aren't arguing for-- they're arguing for raising taxes 'cause they want to increase government. That's why they want more money in Washington DC. They got all kinds of spending plans. And-- as I told you, our-- you know, the deficits of percentage EDP is below norm. And one reason why is because we have held the line on spending, except for defense.

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