Former Massachusetts Governor Mitt Romney joined me in Las Vegas yesterday to discuss his new jobs and economic plan. He also shared some thoughts on his new Republican rival, Texas Governor Rick Perry.
Full transcript follows below.
LARRY KUDLOW, host:
North Las Vegas, an international truck dealership, we welcome Governor Mitt
Romney back to the show. Thank you very much.
Governor, zero jobs in August; but actually we haven't created a net new job
in 10 years in this country. We may be on the front end of another recession.
The stock market is plunging. OK. How can you fix that if you were elected
president? What's in your new plan?
Former Governor MITT ROMNEY: Well, you have to recognize that the world has
changed, the economy has changed. We're still following the old policy, the
old strategy. It's not working anymore. I joked that President Obama is
following a pay phone strategy, we're in a smartphone world. And so what we
have to do is recognize that our companies are competing globally. We got to
bring our employer tax rates down to be competitive. Bureaucracy regulation
KUDLOW: Corporate. Corporate tax rates?
Gov. ROMNEY: Corporate tax rates. Bureaucracy regulation has to be
modernized, streamlined. Government has to see itself as an ally of
enterprise, not an opponent. We got to open up trade for American goods. The
last two and half years, the president sat on his hands with regards to trade.
We got to get markets open to American products, push them into those
products. We got to clamp down on nations like China that are cheating,
stealing our intellectual property. We got to get serious about energy.
Look, we're an energy rich nation. We're acting like an energy poor nation.
Let's use the energy that we have. The list goes on.
I've got 40--excuse me, 59 items that we have to address to get America's
economy structured for the new economy, and that's going to put Americans back
KUDLOW: All right. A lot of meat on the bones, a lot of topics. Before I
can throw--toss is back to Bill Griffith, my colleague, let me just ask you,
on the campaign trail you took some flack for saying that corporations are
people, but you are sticking to your guns. Can you tell us, we're the
business and financial station, why are corporations people? What are you
Gov. ROMNEY: Well, I hope people understand that when you tax corporations
that the concrete and the steel and the plastic don't pay. People pay. And
so when you tax corporations, either the employees are going to pay or the
shareholders are going to pay, or the customers are going to pay. And so
corporations are people. This old 1960s "We don't like companies" shtick
isn't working anymore for President Obama. That's just not the right course.
We recognize we want small businesses, middle businesses, even big ones to
grow and thrive and hire people. We like business. We're not anti-business,
we're pro-business in this country.
KUDLOW: All right. Let me go and toss it over to my friend and colleague
Bill Griffith up in Englewood Cliffs. Go ahead, Bill.
BILL GRIFFITH reporting:
Larry, thank you.
Governor Romney, we welcome you here. Let me ask you a more market oriented
question, if I may. Right now Wall Street is focused sole--to a great degree
on what's going on in Europe as they wrangle with their debt crisis, and
they're doing a lot of soul searching over there on how to restructure the
Eurozone to solve that crisis. One extreme is to create what the New York
Times labeled the United States of Europe, a central authority. On the other
end it would be just to disband the Eurozone altogether. In your view, what
would be in the best interest of the US economy and our banking interests here
and there for Europe to do? Should there be the central authority or should
they disband the Eurozone, or is there something in between?
Gov. ROMNEY: Well, I got to be honest with you, it is tough enough to figure
out what we have to do for America to continue to lead the world and to put
our people back to work and to help the middle class, and so I'm not going to
weigh in on what I think Europe has to do. But clearly, their problems are
not just temporary, their problems are structural. You have nations that are
cobbled together with one monetary policy, despite having very different
fiscal policies, and that simply can't go on on an indefinite basis. And
either those nations on the periphery are going to have to adopt fiscal
policies that are consistent with those of nations like France or Germany, or
you're going to see continued stress in the euro. My own view is they have to
recognize that, show the world that they do recognize that, that they've taken
structural change. And on that basis, you'll get investors to once again have
some confidence in the future of the--of the European currency markets.
KUDLOW: All right, let me just pick up. I want to come back to the
corporate. You're going to drop the corporate rate to 25 percent, is that
Gov. ROMNEY: That's correct.
KUDLOW: And what will you do about taxing overseas profits of US companies?
A lot of people think repatriation would give the whole economy a shot in the
Gov. ROMNEY: Yeah. I've been talking about that for a long, long time. As
you know, it makes absolutely no sense to say to a company, `If you've got
money overseas and you keep it there and invest it there, you won't pay US
tax. But if you bring your money home and invest here and create jobs here,
we're going to tax you.' It doesn't--that just doesn't make any sense at all.
We got to go to a territorial tax system which says, `Look, you're going to
pay taxes in the territories where you're competing. We want you to bring
money home without having a repatriation tax.' Let's get the trillion dollars
or so some estimate is parked outside the country back home, creating jobs
here. My Democrats friends say, `Well, some companies will just send it out
as dividends.' It's like, `Yeah.' And that'll go to shareholders, and it will
go to pension funds and retirees.
KUDLOW: Just terrible things.
Gov. ROMNEY: It's not all bad.
KUDLOW: That would be a terrible thing.
Gov. ROMNEY: And they'll--and they'll buy stuff. That's a heck of a lot
better than having the government take money from one person and give it to
KUDLOW: And it'll pay for itself.
Gov. ROMNEY: Take the--yeah, it'll pay for itself.
KUDLOW: Yeah. And then some. It'll pay for itself.
Gov. ROMNEY: It'll do more than pay for itself.
KUDLOW: But I was surprised in your documents that you're not going for
fundamental tax reform for the individual personal tax code. Explain to me.
As I understand it, you want to keep the Bush tax cuts in place.
Gov. ROMNEY: Yeah. Yeah.
KUDLOW: But you don't want, for example, Governor Huntsman, your friend and
colleague and so forth, he wants to go, what, eight, 14 and 23, and he wants
to eliminate most of the deductions. Why did you stay away from fundamental
personal tax reform?
Gov. ROMNEY: Well, I lay out in our plan that I do want to see down the road
a restructuring of our tax system with a broader base and lower rates. But my
plan is about getting Americans back to work right away. And the place I've
targeted is on middle income Americans. The people who have been most hurt by
the Obama economy are middle income Americans, and so I say to anybody who's
making under $200,000 a year, we're going to eliminate all taxation on
interest dividends and capital gains for you so that you can save, so that you
can invest, so you have more money, so you're able to care for your kids and
their future and your retirement as you think is best. That, for me, is the
place we need to move immediately.
KUDLOW: All right, I'm going to sign off here. We're going to continue with
Governor Mitt Romney in a second. I'm going to just toss it back to Bill
Griffith on "Closing Bell." Thank you, Bill.
GRIFFITH: You bet, Larry. Thank you.
And, Governor Romney, thank you for being with us here. And don't forget, you
can see the rest of Larry's interview with the governor tonight at 7 PM
Eastern time right here on CNBC on "The Kudlow Report."
KUDLOW: All right. Let me continue with you on this issue. Now you're going
to eliminate--I'm sorry--you're going to abolish capital gains and
Gov. ROMNEY: Yeah.
KUDLOW: ...for singles earning $200,000 a year, is that correct?
Gov. ROMNEY: Or less, that's correct.
KUDLOW: All right. Now about the top people? Why are you not including
them? And I raise this because you've got some people who have who have been
ankle biting you on this question. They said years ago, in the middle 1990s,
you argued that the flat tax--Steve Forbes' flat tax was a fat cats tax, and
George Will rhetorically in a column asked, `What does Governor Romney think?
What constitutes a rich person? What constitutes a fat cat? What's the
dividing line?' Tell us why you made it 200,000.
Gov. ROMNEY: You know, there's nothing magic about a particular dividing
line. You pick a point where you're getting the great majority of Americans.
Look, there are many people who think we should have zero tax on capital
gains, interest and dividends for everybody, as--the very, very wealthy. But
recognize that means that Bill Gates and Warren Buffett would pay no income
tax at all. And some people say, `Well, that's a good thing for growth of the
KUDLOW: But you're referring to the capital gains tax?
Gov. ROMNEY: And I--yes, exactly.
KUDLOW: And the dividend tax, those are different.
Gov. ROMNEY: No. If we eliminated capital gains, all tax for the--for
everybody, even those making millions a year on interest dividends and capital
gains, then Bill Gates and Warren Buffett would pay no tax at all because
their income is overwhelmingly if not entirely capital gains interest and
dividends. And so the very, very wealthiest would pay no tax at all. My
guess is that the American people would feel that, you know, right now the
people that are hurting in this country are not the very wealthy but the
middle income folks. And so the place I want to focus my effort and my break
and also encourage more investment savings is for middle income Americans.
KUDLOW: So you agree with Buffett then, there should be higher taxes on the
upper income people.
Gov. ROMNEY: Well, listen, I believe in keeping...
KUDLOW: But would you also tax wealth?
Gov. ROMNEY: I believe, Larry, I believe...
KUDLOW: Would you tax wealth?
Gov. ROMNEY: Well, of course not. We have right now a 15 percent tax on
capital gains. That's the rate that I would keep in place for now. And what
I would say is we would remove the tax for people in middle incomes. Their
tax would go to zero. The tax for higher income folks would stay the same.
KUDLOW: All right. Let me move on. You talked about trade and you sort of
have a two-edged sword going here in your package. You want free trade deals
but you're very tough on China, in fact, uncharacteristically tough on China.
Piracy, counterfeiting, I get that. How can China be brought into the WTO or
play by--at an all-out...(unintelligible).
Gov. ROMNEY: Well, the people are going to always threaten that if they
don't get their way, they're going to do something that's hurtful. And
sometimes people get frightened and say, `Oh, I better give them what they
want.' But, you know, we've been doing that for a long time and China
continues to steal our intellectual property. They hack into our computer
systems. They manipulate their currency such that their products have a
substantial disin--excuse me, substantial advantage relative to our products
in the world. They buy far more--excuse me, we buy far more of their products
than they buy from us. Their government doesn't buy anywhere near the
products from America they should be buying.
KUDLOW: How can we force them?
Gov. ROMNEY: And so, look, what you say is, `Hey, look, you signed
KUDLOW: All right.
Gov. ROMNEY: `You've agreed to follow certain practices. If you don't
follow those practices, why, then, we're going to take the corrective actions
which are outlined.'
KUDLOW: What would the correction actions be?
Gov. ROMNEY: Well, you take a--when you negotiate, you let them know that
you're willing to take whatever action is necessary, and that would include,
for instance, if they've stolen intellectual property on a particular series
of goods that you're going to put tariffs on their products if they don't
abide by the rules.
KUDLOW: So you agree with Don Trump. Essentially Donald Trump wants to put
tariffs on their imports.
Gov. ROMNEY: You know, I'm not going to adopt the policies of someone else
that I haven't read. I can tell you that I agree with my policies that I
describe in my book, which is to say that in places where people have taken
advantage of us and have killed American jobs or are threatening to do so,
that we're not going to sit back and just say, `Oh, we got to do this because
we owe them a lot of money.' We're going to say, `You know what? We don't
want a trade war, but we're not going to endure a trade surrender.'
KUDLOW: All right. So tax cuts for corporations. Tax cuts for the middle
class, keeping the Bush tax cuts in place, free trade but tough on China,
deregulation. You have a big deregulation point.
Gov. ROMNEY: Yeah.
KUDLOW: Let me ask you this, economics on the campaign trail, it's getting
pretty rough and tumble. Yesterday, once again, Governor Perry slammed you.
He said Governor Mitt Romney did not create jobs in Massachusetts and he,
Governor Perry, created jobs in Texas. What's your response to Governor
Gov. ROMNEY: You know, I'm not responding to Governor Perry right here.
He's not here. I'll probably get the chance to do that at some point. But
I'll talk about my record on that.
KUDLOW: But it must get under your skin?
Gov. ROMNEY: Why would I be worried about what other people say? I've been
in politics now for long enough to not worry about what others are saying, but
instead to talk about what I believe.
KUDLOW: Did you create jobs in Massachusetts?
Gov. ROMNEY: Well, of course I did. Of course I did. The unemployment rate
went down as I was governor of Massachusetts. We were losing jobs every month
when I came into the state. We turned that around and created jobs every
month. And, you know, I'm proud of the fact that when I was governor, the
three of the four years I was there, our unemployment rate was below the
national average. You know, each state has some differences. I'm pulling out
those differences and we'll talk about the prospects we have for seeing the
entire country have as its leader a person who has not just watched other
people create jobs but someone who's actually created jobs. In 25 years in
business and at the Olympics, I created jobs.
KUDLOW: All right, that's where I was going. OK. You give as good as good
as you take. You have charged that Governor Perry is a career politician and
that you have spent the bulk of your career in the private sector. Do you
understand how the economy works better than Governor Perry?
Gov. ROMNEY: You know, I haven't spoken about Governor Perry, but what I
have said is that career politicians don't know what it takes to get this
economy going again, and, you know, evidence number one is what's going on in
Washington, DC. You're seeing the president come out with more of these
stimulus plans. Plan one, two, three, four and five didn't work. He's going
to do another one that's going to have the same output because they don't
understand what it takes to get businesses to invest in America and to hire
people. I do. I've done that. I've competed around the world. If people
want somebody-if they think the most characteristic of a president is someone
who understands how the economy works and is expert in turning around
enterprises, then I'm the guy. If there are other measures that they want to
select upon, well, maybe I'm not the guy. That's the choice that they'll have
KUDLOW: Well, just interesting on these choices. People are kind of freaked
out by the debt limitation debate, and there's a lot of economists who are
actually saying that that whole debate, which came right up to the edge of a
default and still really didn't make a dent in our spending and our borrowing,
damaged the economy. That what we're seeing now in a potential double dip is
in part caused by that. I want to ask you, is it possible for you and other
Republicans to make any common ground at all with President Obama, who gives
his jobs speech on Thursday night?
Gov. ROMNEY: Well, of course. We'll see what he has to say in his jobs
speech. But I've found in my interactions with people on the opposite side of
the aisle that we can find ways for us to find common ground. There are a lot
of Democrats who realize that spending is too much. But, Larry, you have to
understand, back in the days of John F. Kennedy, government at all
levels--federal, state and local--consumed about 27 percent of the economy.
Today it consumes 37 percent of the economy. And Republicans like me are
saying, `Look, that's too much. We're not going to keep growing the
KUDLOW: Where would you target it?
Gov. ROMNEY: I'd get the federal government down to 20 percent. Right now
it's close to 25. Get it down to 20 percent. We've got to cap the amount
that the federal government is spending. We can't let government keep growing
and growing because you're seeing in Washington a class of people, permanent
politicians, career politicians who have never worked in the private sector,
never really built an enterprise, never signed the front of a payroll check,
and they think they know what's right for America. And they don't. They need
to go home and get a job.
KUDLOW: What about President Obama's infrastructure bank proposal? He also
talks about targeted tax credits. But I want to go into infrastructure bank.
Is that the answer to an economy that hasn't really grown in 10 years?
Gov. ROMNEY: Well, I'm afraid we do need to see better infrastructure in
this country and we need to encourage the investment in airports, in new
flight systems, in highways and bridges. Our bridges are in terrible
disrepair. And there are a wide array of ideas about how to do that.
KUDLOW: Could you support a government project bank?
Gov. ROMNEY: Well, I...
KUDLOW: It sounds like Fannie Mae.
Gov. ROMNEY: I will--look, I don't want the government getting into more and
more enterprises like Fannie Mae and Freddie Mac. I'll look at ways to see if
we can't get our highway system updated and get our bridges rebuilt. That's
something that we can do. And there--and there--what I want to make sure is
that we have revenue streams to pay for it, not just more money coming out of
the general fund. And guarantees. Look, this idea of the government
guarantees, that that doesn't cost anything, that's wrong, as we've learned.
Government guarantees are real cash and can end up hurting the taxpayers.
KUDLOW: All right, Governor Mitt Romney, we're going to leave it there.
Thank you for visiting us. It's a warm day here in North Las Vegas, but it's
a great pleasure to have you back. All best on the campaign trail.
I'm Larry Kudlow, folks. We'll be right back with "The Kudlow Report" in just