'Do We Remain on Offense?'
A transcript of our interview with Rudy Giuliani.

Saturday, June 30, 2007 12:01 A.M. EDT

(Editor's note: The following is a transcript of former New York Mayor Rudy Giuliani's interview with The Wall Street Journal's editorial board on Monday, June 25, at the Journal's offices in lower Manhattan. Journal questions are in italics and Mr. Giuliani's answers are in bold. The interview was transcribed by Taylor Buley, a Robert L. Bartley Fellow working at the Journal this summer.)

Welcome.

I'll try to be as brief as I am capable of, maybe three or four minutes. These are the 12 commitments that I have made, and I think I can summarize these into two things that I believe the next election is going to be about, and the next presidency is going to be about. It's going to be about how we approach terrorism and how we approach the economy--meaning the international economy and domestic. I don't think that the two things are separate any longer. In the old days, when you said "approaching the economy," you meant domestic issue. I think now you mean a foreign policy issue.

I think the big distinction and the big choice the American people are going to get to make in November 2008 is: Do we remain on offense or do we go back on defense? Do we go forward with a more--let's call it a more sophisticated being on offense against terrorism, which builds on the successes and the failures of the past (like you always do with any war or major endeavor)--or do we go back to the 1990s, which was essentially the period of time in which we minimized Islamic terrorism, didn't recognize its existence at the level in which it really existed, and dealt with it in a kind of sporadic way--sometimes we would respond, sometimes we wouldn't respond. We never really recognized the full dimension of it. Wrong then, but at least arguably excusable then, because maybe some people didn't see it at that point. You could make this argument going back to Nixon, and maybe even Johnson--the end of the Johnson administration--that the presidents should have seen the Islamic threat and terrorist threat.

The first time I began investigating it was in 1975, when I was in the Ford Justice Department. I was on a task force that looked at terrorists. And it was more from the aspect of homeland security, but it was the first time I really started to study Islamic terrorism, and continuously did throughout. By the '90s we probably should have recognized it. We didn't. The World Trade Center was attacked in 1993; we saw it as a criminal act and not an act of war. It was an act of war. That was a mistake. Khobar Towers, Kenya, Tanzania: modest, almost insignificant responses. Cole: no response. Then September 11 happens. It seems to me, and I thought this was true for a while--coming down here just fills me with memories. I can't come here without thinking about what happened that day.

I would have thought, in the four or five months following September 11, that a bipartisan foreign policy would have emerged on terrorism, and the bipartisan foreign policy would be, "This is a long, long effort for us. We're going to have to be on offense." It means using the military in a proactive, anticipatory way--responsibly. Not all the time--only when you have to. But when there's a clear threat, it means using the Patriot Act, it means electronic surveillance, interrogation techniques that are legal but aggressive. Democrats want to cut back on all that. I believe that all has to be continued, and that we have to find better ways to do it.

It seems the Bush administration wants to cut back on that too?

Yeah, I don't. I think that Bush should not accept the mindset that he is weak. I think that he should be strong. He should even pretend to be strong if he has to. But the president should never act like he's weak. I hope he doesn't, and I have ultimate faith in George Bush.

What do you think about this idea about closing Guantanamo?

I don't think we should close Guantanamo. I think it should stay open. The only caveat I can give, and the only place where I would be at a slight disadvantage, is that I've never gone and looked at it--I haven't had a chance to go look at it. If I looked at it and came to the conclusion that it was as bad as some people claim, then I would say "close it." I don't think that that's the case. I think it's been grossly exaggerated, and many of the reports that I see are that it's not terribly different from any other prisons. I ran the prison system, so I know prisons.

Then on domestic policy, the choice is going to be equally dramatic. It's going to be between whether we go in the direction of--increasing the government economy or increasing the private economy would be the simplest way to describe it. And you can take about six of my promises and say that what I'm saying is that you've got to go in the direction of aggressively trying to give people more choice; trying to give the private economy more investment. And that would include a difference over raising taxes, or lowering taxes; building the school bureaucracy, moving toward school choice; increasing government control of health insurance, maybe giving it complete control, or at least most of the control; increasing employer health insurance or going in the direction of an altogether different model. The paradigm I see is trying to get people to treat health insurance and their health the way that they treat other important issues in their life, and to move away from the paternalistic model.

If we can get 100 million Americans to start focusing an hour a year on making choices about their health, we'd--all the sudden--have a competitive market and we'd solve all problems. Treat health insurance the way you treat auto insurance the way you treat homeowners insurance, instead of the kind of practice that not just poor and middle-class Americans--rich Americans, middle-class Americans, poor Americans--somebody else is taking care of their health. Instead of their deciding "I want a certain kind of policy, this is what I want to cover this is what I don't want to cover."

I think that the President we elect in 2008 will determine how long it takes to prevail against the terrorists. If you select somebody that is going to go back on defense, it's going to take a much longer time and there's going to be more casualties. If you select a president that's going to remain on offense, and even improve on it, it isn't going to be easy. But it's going to mean less casualties, faster. If you select a Democrat--any of the Democrats--who's going to build the government economy, I think it's going to retard America's development, including put us at a tremendous disadvantage in the global economy. I think that if you select me--on this one I'm not sure I speak for all the Republicans--but I think that you'll end up with a president that fights and wins as many battles as he can for keeping it more in the private sector.

Those are the two big issues.

Let me ask you about Iran, in particular, to start. There are two views of Iran--what the regime is up to. Some people think it's a status quo power and merely wants to be recognized in the region as a rightful regional power, and its intentions are benign. And there are those who say it's a revolutionary power who is trying to spread its ideology and influence in the world--and especially in the Middle East. What's your assessment of what the Iranian regime is? And what should the U.S. do about it?

Well, I think that if we've learned any lessons from the history of the 20th century, one of the lessons we should learn is stop trying to psychoanalyze people and take them at their word. If we had taken Hitler at his word, Stalin at his word, I think we would have made much sounder decisions and saved a lot more lives. I don't know why we have to think that [Iranian President Mahmoud] Ahmadinejad doesn't mean what he says; therefore, the more cautious, prudent way to react to it is, he means what he says. The second thing is . . . we shouldn't be surprised that he's emerged in Iran. Iran has been like that since the Ayatollah took over. So they are an irresponsible regime. And I think that America's approach should begin with the clear statement that we will not allow him to become a nuclear power. And everybody should know that, including your allies, that's not a solution American will tolerate, because it would be too dangerous for us to put nuclear weapons in the hands of people who say the things he says and have done the things they've done. It is not a good answer to say, "Well we did containment with the Soviets and the Chinese." There are a lot of differences . . . not that the Soviets were any better then they are, but they were different and they had a big nation state to protect.

I have two fears of Iran becoming irrational if they become nuclear. One is--again, following my own statement that you should take them at their word--since they say they are suicidal, maybe they really are--in which case they'd be totally uncontrollable as a nuclear power. Even if they're not suicidal, they could be a little delusional. And delusional means that they could get away with handing weapons off to somebody and think that we couldn't put our hands on them--particularly because of the mistakes over the Iraq war. The burden next time for America is going to be much higher. You basically have to have fingerprints, photographs and eyewitnesses that say that they did it. So they might think that they can hand it off to one of these terrorists groups. They could do a suicide bombing with a nuclear device, and either we wouldn't be able to touch them, or the international community would stop us from touching them, or . . .

I think that it all depends on their evaluation of the American president. If they think that they have an American president that's going to be ambiguous and worry about this stuff--kind of a John Kerry type who is going to worry what Europe thinks--they're going to be more likely to take advantage of it. If they think that they have a president who isn't going to care as much about that, I think that it's much more likely that they won't do it. So I think that there is no risk in taking a strong position. I think that's going to be a very big, defining issue. If you look at the two Democratic debates, and the three Republican debates, in even the little bit of questioning about Iran there was a very different approach.

Do you think the Bush administration's strategy in diplomacy has been adequate to addressing the potential threat from Iran?

I think that we all have to make--maybe you don't, because you get leaks that I don't get--but you have to make certain assumptions. Publicly, I don't mind their position. I probably would prefer somewhat stronger language. What I really want to know is what's the bottom line--and I don't know the answer to that. I have a suspicion of what it is, but it really comes from my intuition. I think President Bush believes the same things I just said.

So what's your bottom line?

My bottom line is that we can't let them to become nuclear. I said that during the debates.

Does that mean taking all steps?

Whatever is necessary.

Including military?

Whatever is necessary.

What do you think the prospects are for a peaceful resolution of the current standoff?

Better if they believe that than if they don't. If they believe that an American president will utilize any steps necessary to stop them from becoming nuclear, there is a much better chance that the sanctions will work, because you have leverage--and in a strange way, I think that a much better chance the sanctions will work because our allies or semi-allies will have an incentive for making them work, because they don't want that to happen. The American president has to be willing to undergo a certain amount of anger and--the way Reagan was, a lot of Europe hated Reagan; they thought he would make nuclear war more likely.

Semi-allies? That's a good term I've never heard before.

Like Russia, China and . . .

Oh, I thought you meant France.

No, no. I meant ones that seem to--in some cases--be playing two sides against the middle with Iran and places like that. But if they thought that we were really serious, I think we'd have a better chance of handling it with sanctions. And not so much because it would impress Iran, but I think it would impress them to really push Iran.

Iran is holding four Americans hostage right now. How should we be handling that?

Well, I don't know how we're handling it.

How would you handle it?

I think that we should make very, very serious demands on them, and we should increase the sanctions tremendously. We should put a lot of pressure--make them pay for it, like Britain should have made them pay more for what they did.

Do you have any particular sanctions in mind?

We do everything we can do. I think that the art here is to get other governments to start sanctioning them. And find ways for them to cooperate with us. I'm not sure, because I don't have the classified information, how that's working--if that's working effectively enough.

Would you support secondary sanctions?

Yes. I think that we should keep stepping those up. But I think that conceptually it works much better, and for real works much better, if we let them know what the end of the line is. Reagan used to follow this approach--I think he actually did it in a letter once to the Soviets--of letting them know what our final position was, so that there was no confusion. It takes a while for an adversary to understand that you mean it, but I think after a while it sinks in.

John Kennedy wrote a paper about the First World War, and he came to the conclusion that it happened because countries didn't realize what the full intentions of another country really were. And I think that it's effective--particularly for the United States of America and you're a country, whether the rest of the world believes it or not, but we operate on principle, and we are the strongest military power on earth and we should exercise it responsibly--I think it makes sense to tell them what we would accept and what we wouldn't accept. And I think if they believe that, I think these things would work better, because there'd be some leverage for it.

I know of your devotion to Winston Churchill, but of living policy advisers that you would place your faith in, which do you choose?

Well, first I want to make clear that I don't get advice from Winston Churchill. Although I do read all of his books.

That's what I meant. Today.

Well there's one of them right there, there's another one--where's Steve? Steve [Goldsmith, former Mayor of Indianapolis] stepped out. Ted Olson is an advisor to me, quite a bit, he and I have been friends for--gosh I don't remember--a long time. I have two policy meetings, just about average two a week. Mike Boskin has helped us put together. . . . Professor [Charles] Hill has helped us on foreign policy. I just wrote an article for Foreign Affairs that will come out in September. He helped me with that article.

Let me ask you a bad question. The Republican whisper is "Yeah, Giuliani is great on 9/11 or crime, but he has bad personal judgment," and the name that comes up is Bernie Kerik, again and again. How do you respond to that criticism, and what lessons do you take home from the Bernie Kerik episode and your relationship with him?

Well, first of all, I have a sign on my desk that says "I am responsible"--and I am. I'm responsible for Bernie Kerik. I selected him. I should have checked him out better, so the lesson I learned from it is check people out more--check them out better. But if you look at Bernie Kerik, and whatever mistakes I made with Bernie Kerik, there is nobody in public office as long as I've been that hasn't made a similar number of mistakes. And if you balance the mistakes with the successes, I don't think there's anyone who's had too many more successes than I've had in selecting people. I'm not infallible.

Bernie was a great police commissioner. He wasn't just good, he was a great police commissioner, and he was a great Corrections Commissioner. People don't remember what he did in the Corrections Department. New York City Corrections Department was the most violent in the country. Rikers Island was the most violent jail in the country. "60 Minutes" did a thing in the early '90s on Rikers Island and how dangerous it was--how many corrections officers were hurt there; how many people were killed there; out of control. Commissioner Jacobson was the first one who instituted it. Bernie was like his deputy and played a large role in this. Bernie took the Compstat system we used in the Police Department, he varied it to fit the jails, called the Teams Program. I used to go to their meetings--because I used to go to Rikers Island, because I knew jails--because I had run the Bureau of Prisons, and I wanted to see their improvement. They used to have a meeting every week--big, long short story--he brought down violence in the jails; I think it was 90%. It was the second one of our programs to be awarded the Kennedy School's Most Innovative Program in Government award. "60 Minutes" eventually did a profile about how this remarkable transformation had taken place--from the most violent to the safest prison system in the country. Other prison systems modeled themselves after it.

So when I selected Bernie as police commissioner, he was my security guy. The reality is that he was a highly decorated New York City police officer. I think he won the highest medal for saving the life of his partner. He had four years in Saudi Arabia. He had just transformed a department that was more difficult to transform than the Police Department. The fact is that I selected him because I thought that he would continue.

I had three Police Commissioners: Bratton, who was a terrific change agent--not the best for consolidation, I thought, but a terrific change agent. Bratton's doing terrific over in Los Angeles right now. He thinks change. "How do I change this place?" He's not ever comfortable with things being the same, and the Police Department needed that. Howard Safir was a great executive. He was a former Marine, built the Marshall Service--and I saw him do that, the U.S. Marshall Service--so I made him my second. Howard left because I did one of these things that I hope President Bush has done: About 18 months to go, I sat all my commissioners down and I said, "You can stay. You've got to decide in one month. You either stay until the end or you go now. Look, I need to find somebody, because I can't be sitting here in December of 2001 without any commissioners." I was always worried about terrorism. I lived through 2000, when we were going to be attacked by terrorists in 2000. We were going to be attacked by terrorists at the U.N. 50 celebration. Howard decided to leave, for a lot of reasons. He had gotten prostate cancer, like I did. For a lot of reasons, I didn't want to lose him. Then I had to select Bernie. We didn't check him out carefully enough. We should have. We should have done a better background check on him. Same thing is true when I named him. But I learned from that; I will be more careful about background checks. But Bernie Kerik is good and bad, it's not all bad and I will never regret having him with me on September 11--he helped to save my life, he helped to save a lot of other people's lives. And for some reasons that I attribute maybe to God's beneficence, of my three police commissioners, he knew the most about terrorism because he had been in Saudi Arabia and he had worked there--he understood it. So when we started the day after September 11, the day after that, and the day after that, going on "what's going to happen next? How do we plan for it, how do we plan for anthrax what do we do?" He was very, very valuable. And then you look at all the time I've been in office, and all the people I've appointed, most of them have been terrific.

Would you consider appointing Bratton to a government job under your presidency?

Sure, sure. Bratton is terrific. But I am a manager and administrator by nature, and certain people are good for certain things and other people are good for other things. And sometimes when you want to make a change it's a certain kind of person, and sometimes when you want to consolidate it's another kind of person. The main reason I selected Bernie at the time was crime had gone down--I mean homicide had gone down 60%. After the second year crime went down we started to get stories and editorials and whatever, "It can't go down anymore." You can't reduce crime 100%, that's impossible. You're never going to get it at a 100% reduction. So there was always a pressure to get more reduction--when you're down 60%, how do you go to 70%? And I felt that Bernie gave me the better chance at doing that because of what he had done in the Corrections Department, where he had done miracles. And I knew that he could motivate the police officers because he was one of them. He was a guy that had been in a shootout, he had saved his partner's life, he was a hero, he had all kinds of medals and I knew he was a good administrator. The other part of it I didn't know.

I wonder if we can go back to the legal architecture that you said you would bring for wiretapping. It has gone through a lot, and has come under a tremendous amount of pressure and it's not what it was in the beginning. How would you reboot the legal architecture of the domestic war on terror here, once you were in office?

First thing I would do if I got elected--or maybe when they start giving you the briefings--I'd want to know more about how . . . I see sometimes the results, like the people arrested in New Jersey, the people arrested in Brooklyn. I did have a long conversation with a U.S. attorney in New Jersey about the news and it gave me some confidence that there's a lot more going on than we realize. But I'd want to see what was going on. What's our intelligence base in this country? What's our intelligence base overseas? How effective is it? Since [former CIA Director George] Tenet said we are going to restore human intelligence, at that time he said it would take 10 years. It got him in a lot of trouble when he said it, but it actually made sense to me that it would take about that long. But I'd like to know how much progress has been made at restoring human intelligence--I don't know. I don't know the answer to that.

I think that terrorism should be approached the way we approach organized crime and the way we approach crime. I'd want an evaluation about how accurate are we. Are we 70%, 80%, 90% accurate? Can we sit down, and do we have on paper the leading groups? Do we have the primary actors? Are we evaluating whether our intelligence is improving? How effective are we being in finding them? And more importantly, how effective are we being at taking their money away? Because if you can cut down their money, you start to reduce them to local players.

The concept I had with organized crime was you're never going to stop crime. There's always going to be--you know--gangs in different places that commit crimes. The problem with organized crime was that it had become national and international because it had so much money. It had infiltrated labor unions; it had infiltrated legitimate businesses like the garment industry, the waste industry, the Fulton Fish Market. If we could take that away from them, as well as put them in jail--because in the past we used to put them in jail and all we were doing was helping the line of succession. You put one of them in jail; another guy would come along and take over. You help to destroy one family; the other four families become stronger. The idea was take away their assets, take away their businesses, take away their restaurants--that's what I used the RICO statute for. I was very, very excited and happy--in the middle of coming out of September 11 and trying to lead the city out of it--when I heard that the Justice Department (probably in September or October of 2001) had seized the assets of some of the terrorist groups. I said, "That's great. They're on the right track. That's the way to do it." I don't know how much more they've done of that, but I would want to make sure were doing that and I would want to make sure we have the legal tools to do it.

I've supported the Patriot Act. I supported the extension of it. I think I wrote several op-ed articles because I thought the Patriot Act was really necessary. I knew "the wall" [of separation between intelligence and law enforcement]. I knew it because I suffered from it as the mayor. I had a large commitment as the mayor to the joint terrorism taskforce. New York City detectives worked next to FBI agents. It was the first of its kind. I didn't start it--it started way back with Commissioner McGuire. And the idea is that the FBI agents and the cops--the detectives--are partners. They sit in the same offices, they go out and investigate the same cases. They stopped what would have been a catastrophic Islamic terrorist attack in Brooklyn a couple years before September 11. Two very alert New York City police officers saw these guys who looked suspicious on a subway in Brooklyn, told their desk sergeant, the desk sergeant called the joint terrorism task force, they come in the next morning--with a search warrant--they enter the guy's house in Brooklyn and the guy is going for a toggle switch to blow up the whole compound. They shoot him, arrest those guys and--you know--you find them with all kinds of plans. I had plenty of experience with that.

It seems to me that you have to have the ability to get those warrants quickly. You have to have the ability to have the FBI and the CIA--and inside the FBI--talk to each other so you can put the pieces together. I hope--I think--that is happening now. And you have to have a very aggressive effort to go after their assets. And are there barriers to that? I don't know, I don't know all the answers, but if there were I would like to see them cured.

In your discussion on Iran you mentioned the need to get other governments to go along with our policies. Could I ask you how you see the U.N. fitting--or not--into a foreign policy and national security strategy under your presidency?

I'm only laughing because I've been disciplined to be diplomatic. The answer is that I don't think we should have false expectations for the U.N. being able to be particularly useful in solving any major dispute. They haven't solved one--or even approached one--in 30 or 40 years.

Yet we're the biggest funders of the U.N.

Maybe we should look at that, and we should scale down our expectations of what the U.N. can do. I mean, after all, even Clinton did that. Clinton went to NATO instead of the U.N.

Would you scale down the amount of money that we give?

I would certainly look at it if they don't reform, and use it as a lever to get them to reform. When I say reform I don't have great expectations that the U.N. is going to live up to its original commitment to promote a freedom for people and peace. But I do think that they can carry out their lesser commitments better--the humanitarian mission with less corruption. And we should discipline them to do that. I think America has to work through the coalitions that have had--haven't always been successful--but have had success. NATO is a useful coalition to broaden and expand. Its original mission is in Europe. You can see its mission is already much broader than Europe. I think that you could expand NATO: You could look to include some of our Asian allies in NATO. I think that the other way to go is to look at some of these coalitions that seem to be effective at solving a particular problem and then see if you can work through them more.

To take advantage of opportunities--I think that [Venezuelan President Hugo] Chavez and [Russian President Vladimir] Putin offer opportunities. Maybe this is just the way I think. I think that for every action there is an equal and opposite reaction. And their actions are very, very strong. Chavez, I think, brought about [Mexican President Felipe] Calderon's election in Mexico. I think if Chavez had not emerged the way he did; [leftwing challenger Andres Manuel] Lopez Obrador was going to get elected. Last time I was in Mexico, which was a few years ago, Lopez Obrador's approval rating was like 70%, and he was defeating anyone. And I think that Chavez's actions frightened--correctly frightened--the middle-class, business people in Mexico that South America and Latin America were going to head in the wrong direction. And I think that elected Calderon. I think that we should try to organize those governments in Latin America that see the danger of Chavez, and we should work with them to promote an understanding of what democracy can do, what free markets can do.

And I think we should stop using America as a model for Latin America. I think it would be much better if we used China and India as models. These are two countries that have more poverty than Latin America. And one of them--I don't know what you call China now--one is a communist country, or whatever it is, and one was a socialist country (and a really advanced socialist country), and both of them have broken away from that and are embracing capitalism and free market solutions. And whatever other problems they have, they're moving anywhere from 20 to 30 million people out of poverty every year. Latin America is not having that kind of experience. Maybe we have to figure out--with some kind of Voice of America or coalition--maybe we should use those two models for Latin America so it gets away from the Big Brother, domineering America--you know, the United States example. The reason I say this is that I know people in Latin America who believe that that would work.

Does that include outsourcing monetary policy?

Outsourcing? No, no, no. What it means is trying to get businesses to come in and invest and give people jobs--the way India has done, and the way China has done. The thing that's happened in China is--however they've done it--because they are moving people out of poverty, Western businesses see this tremendous market emerging and it's like a cycle. They see this market emerging, they do more business there, or they want to do business there--and they don't see that in Latin America.

I guess what I'm asking is how important is the fact that Chinese are basically using the Federal Reserve to anchor their currency. How important do you think it is to the development of China and how well China has done?

I think it's important. I can't tell you I can evaluate exactly how important it is.

So you wouldn't encourage them to pull the plug on the pegging of the yuan?

Not particularly.

So you don't think they're manipulating their currency?

Sure they are. Sure they're manipulating their currency. But they have a massive monumental problem. What are they growing at--about 9% or 10%? Is that about right? They've got an economy that's growing enormously. At the same time, they've got a billion people--maybe 900 million people--in poverty. I think the Chinese have not conceptually figured out: "How do we get to the next stage?" I don't think they've figured out how to get from here to a country in which almost all of those people are out of poverty and what happens. "Does our economy collapse at some stage? Does our society collapse at some stage?" So I think that they are very, very concerned about keeping this tight control over their society because they're worried about how that all happens. But these are a lot better worries then what they were thinking about 30 years ago. So I see China as a mixed, half-empty, half-full glass.

You mentioned bipartisanship, beginning with the war on terror, and I think what we see is unending bad faith from the part of the opposition. Do you think it's possible to create genuinely bipartisan opportunities politically with the Democrats? Would that be a governing strategy of yours? Bush came to office promising to be a "uniter and not a divider," but it didn't turn out that way. Do you think that happened on account of his own failures, or from the nature of political life in America?

You know, I'm a Republican and a friend of President Bush's, so maybe I see the world more from his side than I do the other. But I think I'm being objective about this. I think he tried more than they did. I do. I think that he came to office 100% committed to that. He had done it in Texas; he was convinced he could do it in Washington. He did with No Child Left Behind, and whether you agree with that or you don't--and I agree with some of it and I disagree with some of it--but it was a big bipartisan victory. He did it with Teddy Kennedy. Then he had September 11 and he had six months of bipartisan foreign policy.

That's where Americans need it more--maybe it's growing up with the Cold War--it seems to me that maybe America should struggle very, very hard, Republicans and Democrats, to approach the big challenges we face with unity. I wouldn't even call it bipartisan. The more united we are the stronger we are going to be--against terrorism, or against the big enemies that we have. I don't think there's anything wrong with partisan domestic policy--I think it should be. I used to say this after September 11: "Let's see if we can keep our approach to terrorism united and together, because we've got plenty to disagree about." We can disagree about taxes; we can disagree about schools, we can disagree about health care. And I think that's very healthy.

Can the next president do that? You have to try. You have to try even for a practical reason. If it were a business, the government is owned 50/50 by Republicans and Democrats. Over a period of time the ownership shifts a little. Sometimes it's 53% Republican and 47% Democrat. Or it's 55% Democrat and 45% Republican. But it's pretty hard nowadays to get anything done without 60% support. And I'm talking about both the folks in Congress and the concept of governance.

You have to be willing to compromise. You have to figure out where you can compromise. And I think the real art of leading is to locate the things that are so important, so critical--life and death or whatever--that you're not going to compromise. And then try to be as flexible as possible about all the rest, with the idea that Reagan had, which is if you can achieve 60% or 70% of your agenda, that's better than achieving only 20%. So I have these 12 commitments--if I have a first term of office and I can achieve seven or eight of them, I would think I'd be very successful. And maybe a few of them--one or two--I would have to give up to get the others, or maybe I'd have to water them down to get part of them.

You've got to be willing to compromise with the other side. At the same time you need to know, "What are the things that are critical that I'm not going to give up on?" The way I did it as mayor was I knew I was elected to reduce crime. That was the rationale for my being mayor of New York. They weren't going to elect a Republican prosecutor in New York unless they were desperate. And they were desperate: It was, "We'll even give him a chance to do it." And I would not have compromised the things I needed to do that for anything. I also knew I wanted to lower taxes, because I felt that I would not be able to solve the deficit problem if I didn't lower taxes, and I just had an instinct--well it was more than an instinct, it was a very strong view--that the only way to get out of this deficit is if New York City's economy grows again. And we were anticompetitive. So I wouldn't compromise that. But in order to get that I had to give up other things.

What I do on taxes is I would always ask for gigantic tax decreases that would be attacked by the New York Times as "irresponsible," then I would get half of what I wanted, or a quarter of what I wanted. And I would cut out all the cultural programs, and then I would restore some. And then I would have to restore some I didn't like. When they looked at my budget and said, "Gee, you know, spending came down, but it didn't come as much," I had to make tradeoffs. The fact is I kept spending below the rate of inflation and the growth of the population. It was probably the most conservative performance of anybody in office during that period of time.

George Will wrote that I ran the most conservative government over the past 50 years in the country. And I thought it was the second most. I thought Reagan's was the most. But in order to do that--you can go look at New York's City's programs and budget and say "How did you approve that? How did you approve this?"--I had to hold my nose and sign it.

And federal tax rates now?

I think that federal tax rates have to be reduced in order to remain the same. I supported the Bush tax cuts because they reminded me of mine. I think those tax cuts have to remain in place, and we should probably--as we're going forward we certainly have to look at an agenda for lowering them some more. In fact, if you want to keep them the same you've got to try to lower them some more. It's part of the art of getting it done. And be willing to withstand the criticism that it's an unrealistic budget. I lowered the New York City income tax 24%, and by the time we were finished we were getting 40% more revenues with a 24% decrease in the tax rate. I did the same thing with the hotel occupancy tax: I got that lowered, city and state, by about 33%, and were collecting about $200 million more from the lower one than the higher one.

The president lowered taxes, and there's more revenue from the lower taxes than there were from the higher taxes. I believe that you have to constantly look for ways to do that, and look for ways to cut out spending. The other thing that I would do is I would impose budget cuts on all agencies every year. It's the only way to budget. You task them with--sort of like Jack Welch's approach, to always get rid of the bottom 10%--you task them every year to find 5%, 10% in savings, or 15% or 20%, whatever you and the OMB [Office of Management and Budget] decide is the right thing to do. It's to save money, but it's also a discipline that has them going to their agency and figure out what is not efficient--what isn't working. We haven't done that since Reagan. I did that every year. I did that every year when I was the mayor. It didn't mean that I might start off the budget cycle with "Everybody has a 10% cut, go show me what you're cutting and then we'll figure out how important it is or how important it isn't." We would rarely get 10%, but we would get cuts, and it's also the way you hold the spending.

So it sounds like you're suggesting Bush hasn't been good on spending?

I think Bush has been very good on taxes, and has not been good on spending. And I think that the Congress wasn't good on spending. I think that it's one of the primary reasons we lost Congress in 2006. I think his record on taxes has been terrific. I think it's a shame he doesn't get the credit he deserves for the way the economy has performed, because I think his tax deductions have something to do with that. But I think that on spending, the Republican Congress and the president didn't do what they should have done.

You have a president with a 29%-30% approval rating--very unpopular. What do you think his biggest mistakes have been?

Well, first of all, I think President Bush made the one big decision of his presidency correctly. I think that we're all kind of involved in an agenda developed by CNN, and MSNBC--and even to some extent the other side of it, FOX. What I mean by that is immediate news, immediate reactions to things--unbelievable numbers of polls. You read the polls on Iraq--it depends on how you're going to ask the question. "Do you want to get out of Iraq?" Sure. "Do you want to get out immediately and just retreat?" No. If you say "retreat," things change. If you say "get out" it goes in a different direction. I think that the president is subjected to that quite a bit.

Nobody knows what the next year ahead will bring. I think that they are going to look back on the president and say that as a new president faced with an attack that no other American president had ever been faced with--a domestic attack of a magnitude greater than Pearl Harbor. Within 10 days, he took a failing policy and turned it around. He took a policy of years and years of denial, picked it up in 10 days--and his speech on September 20, 2001 is still the best road map for what to do about terrorism. I sat there in Congress and listened to it: It was all the things that I was thinking myself, and experts were saying to me had to be done, and I believe he saved America some attacks in the interim as the result of that. That's a big achievement. And I think that the analogies to Truman are not incorrect ones. Truman had a lot of problems, a lot of controversy, there was some corruption in his administration--but who the heck remembers any of that? What you remember is the Berlin airlift; the Marshall Plan; Korea. Truman couldn't run for reelection, he was so unpopular.

When you refer to the biggest decision you mean Iraq?

The whole going on offense against terrorism and recognizing the mistakes that we had made in the past in being in denial about Islamic terrorism.

So why is he so unpopular?

Because that's unpopular. That, from the very beginning, a large part of American elite opinion has been--I remember, R.W. Apple or somebody in the Times wrote, about a day or two into Afghanistan, that we were in a "quagmire." I remember reading that and saying, "My goodness, it's started already." I mean, how could you be in a quagmire after two days? I think that there's almost a self-fulfilling prophecy to it. You look at that and say, Maybe there are things that could have been managed better. Maybe much more of a communications effort, which the Reagan administration was so good at. And I'm not talking just about the president. I'm talking about the entire administration. The administration has admitted this: The plan for how to stabilize Iraq certainly wasn't a good one. And then there wasn't a quick enough reaction to the facts on the ground that showed you that it wasn't a good one. So I kind of look at that as if you come into office and it's still there, you've got to try to straighten it out and you have to try to learn from it in the future.

Maybe having been a mayor I can see some of this better. By that I mean, if you've got to create a democracy, democracy is only a theory that doesn't mean very much when people live in fear. I used to say that about crime in New York, that the most important civil right is being safe--reasonably safe, never perfectly safe. But it doesn't matter if you have other civil rights if you can't go out at night. If you can't go out, what does it matter if you have the right to assemble? You're too afraid to go out and assemble. So if you're going to create an election in Iraq when the infrastructure of that society has crumbled--which means people can't go to work, people can't go out, more people are being killed then used to be the case, right in front of you--then democracy is a theory down the road, but your life has disintegrated. I don't think we saw our responsibility clearly enough at the beginning to keep up the infrastructure of Iraq. I think if we did we wouldn't have de-Baathified the way we did, I don't think we would have sent the army home the way we did.

Do you think it was a mistake to send the army home? To disband the army?

I think it was a mistake to disband the entire infrastructure of Iraq. I think it clearly was a mistake. The question is: At what point should you have recognized that it was a mistake? A general, back in December or January at one of our policy sessions when the president was formulating his new policy, said the following to me. This is a general who supported the surge, and supported the objective in Iraq and still thinks we can accomplish it: "Just think of it this way: Suppose when you were the mayor of New York, all your opponents got together and deposed you--threw you out of office--and they were going to take over New York. But then they didn't just depose you, they got rid of your fire commissioner, your police commissioner, your health commissioner, your sanitation commissioner, your corrections commissioner--got rid of all of them. Then got rid of all 250,000-300,000 civil servants. And then, just to make sure, they got rid of the entire police department and sent them home with their weapons--let them take their weapons home. And now, they said, 'Run New York.' What would happen?"

I said, "The place would fall apart."

Is that a good analogy though?

I don't know if it's a good analogy, but it gives you an idea.

This was a totalitarian regime hated by its own people. Say you were the regent of Germany in 1945, and you say "OK we conquered the country but the Nazis are good at running it so we're going to leave them in charge of the police and . . ."

Nope, but we did. It depends on how far down do you want to go. And the reality is that we did leave people in power in Germany, Italy and Japan who were involved in the war effort against us. The people who ran the local schools, the people who ran the local factories who were technically members of the Nazi party, Mussolini's party, formerly supporters of the Emperor and the war against us. No. 1, you have to figure out who actually believes in this and who's going to carry it forward in the future. And secondly, you have to practically run a country, and if you throw out the entire infrastructure of a country. . . . It took us six or seven years, basically, to get Germany, Italy and Japan back, and we didn't do that. What the heck are you going to do with a country like this one when you throw them all out and then you try to run the country? To then take away all those people who know how to run the country, who know how to run the factories, under the theory that they're all connected to Saddam because they technically were part of his party even if they're local people . . .

Well that's not what happened.

It is, we got rid of four or five thousand people

No, no. It was like tens of thousands of Baathists. For the record, that's what it was.

Factories weren't reopened--are still not reopening.

Well, that may be true but it wasn't because of de-Baathification.

That's what I've been told.

On Iraq, the timeline, there seems to be a disconnect between the timeline of what General [David] Petraeus says Baghdad needs to succeed and Washington politicians saying September is a big date. Even Republican Senator [Mitch] McConnell said that September was going to be a date to change policy. If Petraeus reports that "I just need more time. Maybe another year, maybe another six months before we can draw down." What do you say to those Republicans who say--and they're going to say it--"we don't have time because we're going to lose Senate seats if we don't withdraw." What's your response?

I'd tell them that getting this right is much more important than winning Senate seats." This is a much bigger thing than winning Senate seats.

And you would give Petraeus all the time he needs?

Sure, if I thought he was right. I had a similar, on a lesser scale, issue with the police department or the fire department or whatever. If No. 1, that's General Petraeus's advice; if No. 2, you believe it's the right evaluation of the situation, which I guess the administration is going to get some separate views on this--which is a good thing--but if they come to the conclusion that he does need a year or two more, and it makes sense to invest in that, then the political part of that comes second, and that's what you have to explain to the American people.

So six months out and you're on the campaign trail. The results of the surge are inconclusive, but Petraeus says "I can use more time" and you're taking a beating for it, what are you going to say?

If I believe that General Petraeus is right, then I take the beating and you try to explain it to people. I think the American people in November 2008 are going to select the person they think is strongest to defend America against Islamic terrorism. And it is not going to just focus on--as some of the media wants it--just Iraq. I think Americans are smarter than that, and that comes from talking to a lot of people. The American people can separate Iraq, in the sense of--I shouldn't say "separate," actually: You have to connect it to the overall war on terror. It's understanding what leadership is about. Leadership is first figuring out what's right, and then explaining it to people; as opposed to first having people explain to you what's right, and then just saying what they want to hear.

If you were president now, would you pardon Scooter Libby?

I wouldn't do it right now. I would certainly consider it in the future, and I guess the big question the president has to face is if they actually put him in jail. I think the option the president really has is commutation.

The part of it that I find outrageous is the sentence. The prosecution itself, I have two views of, and it's not to be cute; it's to be a lawyer. One view is, I do not--and the prosecutors never explained themselves, so I would give them the opportunity to explain themselves--I am baffled by why you would investigate something you know the answer to. I don't understand that. And the idea was who leaked [Valerie] Plame's name--and you know near the very beginning who it is--and you come to the conclusion, at some point, that it's not a crime. Well, you should be able to come to that conclusion at the very beginning. You don't investigate non-crimes. I never remember doing that. I remember being wrong sometimes, but I never remember investigating a non-crime. And you don't investigate when you know who did it. So I don't understand the whole basis for the investigation. When I read the testimony in the newspapers, and it seemed to me that if you can satisfy yourself that there's a basis for the investigation, the government did prove beyond a reasonable doubt that he didn't tell the truth--so that leaves you in a very funny position. The investigation doesn't seem to have a basis, but at the same time how come he testified that way? If I were the judge--and I'm not--it seems to me that there is enough confusion about this that you don't give a jail sentence; and No. 2, you certainly give him bail pending appeal. I cannot imagine why you wouldn't give him bail pending appeal.

There are enough close questions on the legitimacy of the investigation. Here's a theory that I would argue before the circuit court: The perjury has to be material--it has to relate to what you're investigating. If someone goes in front of a grand jury and tells a lie about an insignificant fact, it's a lie but it isn't perjury. There's all kinds of lying that isn't criminal. In order to prove the crime of perjury, you have to prove beyond a reasonable doubt that the person deliberately said something false, that they knew was false about a material matter--something important to the investigation. If the investigation is about a non-crime, when you know who did it, how could anything be material to it? To me, as a judge, that would say that there is a legitimate legal question here. Give him bail pending appeal; the guy is not going to run away. He can certainly post a big enough bond to make sure he is not going to run away. I used to agree to bail pending appeal most of the time--unless it was a mafia guy or a killer--the only time I didn't agree to bail pending appeal was if I had a really legitimate question that the person running away.

You'll forgive me for asking this one last question: Roe v Wade, should it be overturned?

Should it be overturned? I don't answer that because I wouldn't want a judge to have to answer that. I don't consider it a litmus test. I think a conservative strict constructionist judge could come to either conclusion. You could come to the conclusion that it was incorrectly decided at the time--how many years ago? Thirty years ago--or a judge could come to the conclusion that it was the law for so long that it shouldn't be reversed now, instead it should be limited.

It reminds me of something I have more experience with, which is all the criminal law decisions of the Warren court. There was a certain period of time when the thinking was--I probably have given speeches about this and written articles about it somewhere or other--I thought that the exclusionary rule (the Escabedo case) was incorrectly decided. I can't find, in the Fourth Amendment, anything that says you should penalize society for the mistakes of a cop. There's nothing in the Fourth Amendment that suggests a remedy to a violation of the Fourth Amendment. Same thing for the Fifth Amendment: There's nothing that says you have to warn people of their rights. We don't warn people of a lot of their other rights. Why do you have to warn people of their rights? The Warren court created those two, sort of, extensions.

The subsequent conservative courts have, instead of overturning those because law enforcement sort of depended on them and organized around them, kind of developed a reasonable interpretation of them--they've kind of cut back on them. The exclusionary rule has a good faith exception, which kind of makes it just about acceptable. It means if a cop makes a mistake but he didn't do it on purpose, you don't exclude the evidence. Fifth Amendment: If somebody blurts out a confession, and there's not enough time to give the warnings, it's OK now. That's a very legitimate approach that a strict constructionist could take--even a conservative that doesn't want to disrupt society too quickly.

So I would leave it to a judge to decide that, and my endeavor will be to find judges who have intellectual honesty, which means that they are going to work as hard as they can to interpret what other people mean. That's going to lead them to different conclusions sometimes--you and I can look at the Second Amendment or the Fourth Amendment and we can come to slightly different conclusions about it--but at least they're not going to be trying to figure out what it should mean.

Larry Silberman wrote the Parker decision, a couple of months ago, in the District of Columbia (it was about the Second Amendment). There was this big debate, an academic debate, about whether the Second Amendment is a personal right or the Second Amendment is some kind of a "civic right." I'm not sure I understand what a civic right is but--to me it's a fairly easy conclusion: The first 10 amendments are all about personal rights. And if you just don't happen to like the Second Amendment, you can't decide that it isn't a personal right.

So you agree with Silberman's opinion?

I don't think you can disagree with it. It's the same language--"the people shall be secure against unreasonable search and seizure;" "the people have the right to bear arms." Whenever the Framers put those words down, it was to give a personal right. There's nothing that suggests, other than your view, that guns should be restricted more--that suggests that it's anything other than that. And I don't know what Larry Silberman's views on guns are--he could be very antigun as far as I know, or pro-gun--but I think a judge has to put that all aside and you've got to go honestly figure out what the people who wrote this mean.

I just had breakfast yesterday with a friend of mine who has been a federal judge for many years, and we were talking about this. It's a really serious issue when a federal judge in particular starts to execute their own social and political theories, because it really deprives us of freedom.

You don't think our politics would be a lot healthier if Roe were overturned and we could debate abortion in the political arena instead of having judges decide it? We wouldn't be hassling you about it.

I don't know. It would just be different politics. I know where I come out on the policy. On the policy, I believe that you have to allow people to make different decisions about this because people of equally good morals come to different conclusions about it. And in a government like ours, when you get to an impasse like that, you're much better off for government to allow an area of free decision making. You can do things to restrict abortions, to try to keep that just in that area and not let it expand. I often say, the way to do this is to eliminate abortions by free choice. If you want to educate people about all the ways in which you can eliminate abortion, but then ultimately you've got to leave the zone where people can make their own decision about it. That's the policy I would come out in favor of.

Who on the court meets your intellectual honesty litmus test right now?

Alito, Roberts--I would have appointed either one of them--Scalia clearly does, and Thomas. I would have appointed any one of the four of them--I worked with three of them. Not that there aren't times they write a decision and I disagree with it, but probably eight out of 10 times I agree with them.

Thank you.