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CNBC "Kudlow & Company" -Transcript

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CNBC "Kudlow & Company" -Transcript

MR. KUDLOW: Earlier today I spoke to presidential candidate Senator Joe Biden, Democrat from Delaware. We talked about politics and war. But first, we talked about his new book "Promises to Keep," on life and politics. And I began by asking him about the key theme of the book -- overcoming great setbacks and getting yourself back up. Here's what Senator Biden said.

(Begin videotaped interview.)

SEN. BIDEN: Well, my dad, from the time I was a kid, my dad would say the measure of success is not whether you get knocked down, it's how quickly you get back up. And what I wrote about is it wasn't about politics or policy or about my years in the Senate. It's about the lessons I had learned in politics and in life that have made me who I am and what I believe. And it's all about getting back up. Everybody gets knocked down. The question is you get back up just like this country has always gotten back up.

MR. KUDLOW: Well, great stuff. I've known a thing or two about getting whacked down and trying to get up, so I appreciate that very much. It's kind of why I wanted you to get that out.

Senator, let me talk a little bit about last night's debate in front of the unions. It seemed to me that the Democrats are really making a sharp turn towards protectionism. I want to ask you, do you really believe that's going to pay off?

SEN. BIDEN: No. I don't think we should be talking about protectionism. I think we should be talking about fair trade, balanced trade. And I do think -- I come from a business state, as you know, Larry, the state of Delaware, and I think American business has to understand we basically have picked all the low-lying fruit out there. And you've go to be able to -- in order to be able to have reasonable trade agreements, you've got to have some labor standards and some environmental standards or it's just a race to the bottom. And I think that's the one thing most people agree on where I'm not going to be part of this race to the bottom.

MR. KUDLOW: Senator Obama and Senator Clinton really sounded like they wanted to repeal NAFTA, go after China. You know, there's a big headline today on the Drudge Report, you may have seen it. Chinese officials are saying if the United States creates trade barriers, they're going to retaliate by selling the U.S. dollar.

SEN. BIDEN: Bingo!

MR. KUDLOW: You know, when I hear that talk, it says that could make 1930 look like a picnic, sir.

SEN. BIDEN: Bingo! Bingo! That's what I said last night. I pointed out that China has the mortgage on our house, man. We owe them $900 billion. We've financed the tax cuts. We've financed the war. And we've financed it through China and other countries. And the first thing we've got to do is get our house in order. I mean, the idea that they own almost $1 trillion of our debt means we have very little impact on their foreign policy, cooperation as well as economic policy.

MR. KUDLOW: So you're not joining this anti-China, anti-trade, protectionist parade?

SEN. BIDEN: Well, I kind of am joining. I'm joining that we better start getting our house in order. We better in fact deal with the idea that we've got to pay our way. I mean, continuing to finance everything we do through foreign indebtedness is just the stranglehold on our foreign policy as well as our trade policy.

MR. KUDLOW: All right. Let me just ask you one more quick question on domestic, and then I want to get into the war. Social Security -- I don't hear anybody in either party on the campaign trail or in the debates talking about a fix for Social Security. It used to be a front-page story. Nobody's talking about it. Do you have a thought on that?

SEN. BIDEN: Yeah, there is a fix, Larry. It's really not that hard. Medicare is the hard fix. To fix it, you've got to raise the amount of income susceptible to Social Security tax or we're going to gradually raise the age. That requires a bipartisan consensus. I don't think that's going to be hard to get. You could do that and extend the life of Social Security by another 35 or 40 years beyond 2040. So I think the reason people aren't talking about it is everybody has basically given up on the idea of privatization or partial privatization. That was the --

MR. KUDLOW: Have you given up on that? What about investor savings accounts? You know, markets return much more than governments.

SEN. BIDEN: Yeah, but markets are more volatile than government, and I think the idea that we're going to take the one thing that has about a 1 percent overhead that people have come to rely on and start to screw around with it when it's fixable, I think it's a mistake. I'd rather us find other means by which we in fact encourage investment and savings and reward that rather than do it through the Social Security system.

MR. KUDLOW: All right. Let me turn to some foreign policy issues. A big flap on foreign policy, as you know, Senator Obama suggested if there were actionable intelligence about catching Osama bin Laden and other al Qaedas that the United States should either bomb or go in or take an action in the Pakistani badlands. Seems quite sensible to me, sir. What's your take?

SEN. BIDEN: It is sensible. It's been U.S. policy for four years. The surprising thing about Mrs. Clinton, Senator Dodd and Obama's mix-up about all this is the two things they're arguing. One, does that make sense? Yes, it makes sense. It's been our policy. But it's ironic that in order to be able to take action on actionable intelligence you need cooperation from inside Pakistan. So the idea you're going to announce ahead of time that you're going to disregard the attitude of the very people you need cooperation to take action on is counterintuitive. You just act. You don't announce it, you do it. That's the first point. And the second point is Senator Obama says, you know, what we've got to do is we've got to condition the billion dollars in aid to cooperation. We already have that. That's a law that Tom Lantos and I wrote into the law. It's the law. So the surprising thing is that my colleagues don't know the facts as they exist right now. That's the surprising thing to me.

MR. KUDLOW: Are you surprised, Senator -- there's a lot of new polling data out showing greater support for the war and this new counterinsurgency called the surge. And also on the front pages of a bunch of newspapers -- I know you've seen it, because you're an expert -- John Burns of The New York Times, Robert Burns of the AP, Mike O'Hanlon and Ken Pollack of Brookings Institute. They're all saying that this is a war we just might win, and the surge is working. What is your take on it? Is the surge working?

SEN. BIDEN: My take is parts of the surge are working. But if you read what they say beyond that, they all say, Larry, that there's no ultimate solution without a political solution. And they all point out there is no political progress between Sunni, Shi'a and Kurds. The administration and many people in my part continue to operate on a central, flawed fallacy, and that is that it's possible to have a strong, central government in Baghdad made up of a unity government that all the parties can trust. The only way this is going to work is -- and you will need troops to make it work -- the only way this is going to work is if you give each of the parties breathing room within their own regions, have a limited central government with control over distribution of the oil as well as the borders and the army. But give them local control. The reason why it's working in Anbar province, Larry -- and I've been there many times -- is that we finally are localizing this. What did we do? We went to the tribal chiefs and said you take care of your local police.

MR. KUDLOW: Okay, given that, given all that -- and I appreciate you being open to this. And General Petraeus just gave another radio interview last night on Alan Colmes saying essentially the same thing, the surge is working. This would be the wrong time to pull out troops.

It would send the wrong message, would it not?

SEN. BIDEN: Well, it would. But at least what I'm talking about is changing the function of the troops, using the troops not in the middle of this civil war. The place it's working -- it's not working Baghdad, it's not working in the major cities, it's working in Anbar province. And you look at cities like Tel Afar with 215,000. We did the same thing before. We went in with 10,000 multi-national forces, us and the Iraqis, we settled things, we drove out the bad guys, we rebuilt the city. And guess what? We left then. And now the city's back to 80,000 people. And so it matters to what happens on the political side of it.

MR. KUDLOW: Well, General Petraeus noted a number of towns outside of Anbar where it's actually working, and the local people have come over to us. But I want to ask you a last question, sir -- very disturbing to a lot of people. Number-three man in the House, Mr. Clyburn of South Carolina, actually made a statement saying that if General Petraeus testifies in September that the surge is working, the new counterinsurgency strategy is working, that that would be bad for Democrats, because they wouldn't be able to get a troop withdrawal through. How can it be that what's good in Iraq, helping American interests, would be bad for the Democratic Party? I don't get that. It sounds incredibly defeatist to me.

SEN. BIDEN: Well, I didn't hear the statement, but I guess what he means is that ultimately, unless there's a political solution, it doesn't matter how many troops we have there. And so if you continue to keep troops there in the absence of an end-game that says we're going to be able to leave without leaving chaos behind, then it is a net loser to continue to spill blood and treasure indefinitely. You need a political solution. I know that Congressman Clyburn believes that, so I must assume that's the context in which he meant it.

Look, this is bigger than Democrat and Republican and who is president.

MR. KUDLOW: Right. Well, that's where I was going on this. I mean, that's what I understand, Mr. Clyburn said that 47 Blue Dog Democrats would desert the party if Mr. Petraeus gave a positive report. And he said that, quote, "would be a real big problem for us." To me, sir, that would be a real great victory to us, meaning America.

SEN. BIDEN: Well, if the report coming from Petraeus is two pieces -- one, the surge is working and why it's working. As you know, Larry, our own chairman of the Joint Chiefs of Staff said there's been no political progress, and we cannot -- emphasize cannot -- keep 160,000 troops there through this time next year. So you better get a political solution. And if the surge is working now, the fact of the matter is you can't sustain the surge. The urgency is getting political reconciliation. That requires local control, in my view, considering what the surge is doing.

MR. KUDLOW: All right. We're going to leave it there, Senator Joe Biden.


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