KUDLOW: Let me ask you about the other charges, the spending charge.

Pres. BUSH: Sure.

KUDLOW: Now, it's interesting, I believe the only graphic, the only table in the entire 500-page book , which, by the way, I read very carefully, sir, is about spending.

Pres. BUSH: Yeah.

KUDLOW: And you're basically arguing that the conservative critics are wrong and you are not a big spender. Would you comment on that?

AP

Pres. BUSH: I'm arguing that both conservative critics and the liberal critics were wrong. And if one were to look at the facts, in spite of a recession, in spite of an attack, and in spite of making sure that our homeland was defended and that we were--prevented attack from--by taking aggressive military action and/or holding nations to account who harbor terrorists, like Afghanistan, our spending-to-GDP was lower than my three predecessors. The taxes-to-GDP were lower than three predecessors.

KUDLOW: Mm-hmm.

Pres. BUSH: The debt-to-GDP was lower than only one other--was lower than every president except for President Reagan. And the deficit-to-GDP was lower than every president except for Bill Clinton. And the reason I put that chart in there is to clarify the facts. And my fiscal record was a strong record. I was not about to put our troops into harm's way and not make sure that they were fully trained and equipped, and I was not about to let those who came back from combat have a veterans system that wasn't fully funded. I wasn't about to let the Homeland Security measures lapse because of funding. On the other hand, we did ratchet nondefense discretionary spending.

KUDLOW: You do say, though, towards the end of that chapter, that we're not out of the woods yet, and you do say that we've got spending problems, entitlement problems, debt problems.

Pres. BUSH: Yeah.

KUDLOW: You've got this Erskine Bowles commission on--heaven forbid, I don't want to raise a current event--but there is a...

Pres. BUSH: You just did.

KUDLOW: There is a national discussion going on about across the board reforms.

Pres. BUSH: Yeah, and in my book  I make it clear how difficult it is to reform Social Security, for example, because the Congress tends to be very reactive. The legislative bodies react when the crisis is upon us. I tried to make it clear the crisis was upon us in 2005, and members of both parties were not interested in reforming Social Security. And I would hope that out of this commission comes a kind of unified desire by the legislative body to reform the system now and--because the--as time goes on, the crisis gets more and more acute.

KUDLOW: Should the Bush tax cuts be extended in this lame duck?

Pres. BUSH: Well, here's the way I describe it. If one is interested in job creation in the private sector, it is important to recognize that lower taxes enable the job creators, i.e., small businesses, to have more money with which to expand their work force. And I--it--I would--yeah, I think they ought to be extended.

KUDLOW: Does the incentive model work if it--if it pays more after tax, to work, save, invest and take...(unintelligible)?

Pres. BUSH: Well, of course it does, and my record shows that.

KUDLOW: Do you subscribe to that?

Pres. BUSH: We had over 40-something months of consecutive job growth, and I believe a lot of that had to do with the tax cuts.

KUDLOW: All right, finally--we appreciate your time very much.

Pres. BUSH: Thank you, sir.

KUDLOW: Are you an optimist about this?

Pres. BUSH: Yes, I am an optimist about America.

KUDLOW: You look around, and I want to ask you specifically, global competition is getting tougher with China and India and Brazil. We have Irish debt problems going on in Europe that people are quite worried about. The USA, lot of people think we're already bankrupt. I mean, is there some sort of economic cold war going on, and are we in position to win that cold war?

Pres. BUSH: If--the definition of a cold war, as far as I am concerned, is protectionism, and we've been through periods in our history where we've been isolationist and protectionist, and my judgment is that those "isms" will make it more difficult for anybody to succeed. And you asked if I'm an optimist, yeah, I'm an optimist about America. We're entrepreneurial, we're smart, we're capable, we're innovative. And no question we've been going through a tough time, but in the long run I'm convinced that America can compete. And we shouldn't lose confidence in ourselves. We shouldn't say, well, you know, we're no longer the great economic power or the great, you know, force for good.

KUDLOW: Can we take on China? Can we take on India.

Pres. BUSH: Of course we can. Well, taking on is a different--I wouldn't call it that. I'd say can we compete with and find common ground where we both can succeed? Absolutely.

KUDLOW: Can we keep the American way of life going, or should we be fearful that our kids and our grandkids will not have as good as it--as we have?

Pres. BUSH: I'm confident--I mean, we've been through these kind of spasms of lack of confidence before in our history, and I believe the world for our grandkids, our kids and grandkids, is going to be better than the one in which we live in.

KUDLOW: President Bush, we appreciate your time. Best of luck on the book tour and God bless you.

KUDLOW Thank you, sir.

KUDLOW: Thank you.

Pres. BUSH: Enjoyed it.

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