Special Guests: Todd Buchholz - Former White House Economic Policy Director

NEIL CAVUTO, HOST: Anyway, my next guest says if the economy is such a big deal in New Hampshire, where I think as Martha was pointing out earlier as well, the state has been doing pretty well, that has got to be a worry for the president of the United States.

Todd Buchholz is a top economic adviser to George Bush Senior. Todd, I'm Barack Obama. I am looking at that in the state with unemployment barely at five percent. I should be a rock star. But in that state, I'm not. What is going wrong?

TODD BUCHHOLZ, FORMER ECONOMIC ADVISER TO PRESIDENT GEORGE H.W. BUSH: Well, look five percent or so in New Hampshire. Look at these swing states that the president will have to compete in. Florida roughly 10 percent unemployment; North Carolina about 10 percent; California, Illinois all about 10 percent unemployment.

So The president can't relax much about anything these days, if he really cares about getting reelected.

CAVUTO: So I noticed in Iowa too, which had a lower than the national average unemployment rate, stronger than average individual state GDP or growth in that state -- in other words, these are two relatively stronger than the rest of the country states. They are concerned about the economy. They're concerned about how things are going.

You wouldn't expect that in states that are doing this well. So I am wondering for the Republicans, how do they or do they take advantage of that?

BUCHHOLZ: Well, the U.S. economy is not in good shape. And even those people who are doing relatively well, those people who have jobs or live in states that doing fairly well, they know that something is wrong. They know that something is rotten in Washington.

They know that the economy is not performing as well as it should. And they know the U.S. is not competing as well as it should. And there's more than a strong suspicion that the president's policies haven't helped very much on this front.

So the president is going to get some blame for this. It's very difficult for the president to distract the American people from this central problem. Look at it this way: back in 1992 when George Herbert Walker Bush was defeated by Bill Clinton, and James Carville had that famous model, "it is the economy, stupid," the national unemployment rate was about 7.4 percent, significantly better than it is today.

Even at 7.5 percent, President Bush couldn't escape the attacks. I think President Obama will be under heavy attack and justifiably so.

CAVUTO: We will watch. We will see. Todd, good seeing you. Happy new year.

BUCHHOLZ: Good to be with you.

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