"Some of these groups not only engage in crime and violence not only in Mexico and along the border, but they come across and kidnap, murder and carry out assassinations," Walters told reporters. "These groups do not respect the border."
Walters said some of the US$400 million in U.S. drug aid approved for Mexico earlier this year under the Merida Initiative could be ready in a matter of days.
Walters praised Mexican President Felipe Calderon for mounting a police and army offensive against the cartels, whom he called "terrorist criminals."
"They have a choice: Come in and face justice, or die," he said of the drug gangs.
He also said the United States did not object to the Calderon administration's current legislative proposal to allow people caught with small amounts of some drugs to seek drug treatment rather than prison terms.
"There has been an impression left that this is legalizing the possession of amounts of drugs. That is not what Mexican officials tell me the bill does," Walters said. "For the lower quantity, for use, you will still face jail time, you'll be given an option if you're an addict to get treatment."
"I think the parameters and the intentions, that is exactly what we do in the United States."
But Walters accused countries such as Bolivia and Venezuela of failing to cooperate in the fight against drug trafficking, and said drug corruption has penetrated Venezuela's government.
"I think everybody knows that this rot is setting in on wider and wider portions of Venezuela government, and the Venezuelan government shows no sign it's responding. It's going to get worse," he said.
He said Bolivia's cocaine production is not hurting the United States - where little Bolivian cocaine is shipped - but is contributing to drug problems in Brazil, Argentina, Europe and other places.
Venezuela and Bolivia both insist they can combat drug trafficking without U.S. help. Venezuela's Hugo Chavez recently called Walters "stupid" for saying cocaine smuggling through Venezuela had quadrupled in four years.