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CNBC Kudlow & Cramer Transcript

Location: Unknown

December 18, 2003 Thursday

HEADLINE: Senator John Kerry, Democratic presidential candidate from Massachusetts, discusses his campaign


LARRY KUDLOW, co-host:

The political ad wars are in full swing as we approach the first presidential election primaries. With Howard Dean in the lead, the Kerry campaign has decided to focus almost exclusively on Iowa and New Hampshire. With us this evening is Senator John Kerry.

Welcome to KUDLOW & CRAMER, Mr. Kerry. We appreciate your coming on. Sir, I want to begin...

Senator JOHN KERRY (Democrat, Massachusetts, Presidential Candidate): I'm glad to be on, but let me correct that very quickly. That is not accurate. In fact, I will be in New Mexico tomorrow, and I will be going to other states. So I'm not sure I...

KUDLOW: No, I appreciate-I'm going to punish the script writers on that. I knew that as soon as I read the TelePrompTer.

Sen. KERRY: No, it was in an article. I read it this morning.

KUDLOW: Oh, all right. There you go. You can't...

JIM CRAMER, co-host:

Oh. Yeah. Well, you can't trust the papers.

KUDLOW: You can't trust the papers. There's nothing new there.


KUDLOW: Senator Kerry, last week or 10 days ago-I don't know-there was a very straightforward resolution in the United Nations. It says anti-Semitism is a form of bigotry and racism that should not be tolerated, just straightforward UN resolution. It got clobbered. And that's one of many reasons why a lot of people think the UN is simply not reliable. You, sir, have put the UN in the driver's seat. You say you'd like to internationalize the war in Iraq and elsewhere. Why do you depend so much on the UN? It doesn't seem to have an ounce of moral authority or courage.

Sen. KERRY: I don't depend on it and I would not accede our security to it, and unlike Howard Dean, who said you need the permission of the UN to move forward, I would never accede our security or veto to any other nation. That's not what I'm saying. But the UN has provided an important tool, for instance, in Bosnia, in Kosovo, in Namibia, in Cambodia. I mean, historically, good presidents with skills in diplomacy have been able to use the UN in order to achieve the kind of broad coalition like George Bush 41 did. I mean, his father did an excellent job of bringing countries together. I believe that all we needed to do was show greater patience, greater diplomatic skill, and we could have had other countries at our side in a meaningful way, and the American people would not be paying $87 billion, and our soldiers would not be almost alone in being targeted in Iraq.

KUDLOW: Well, let me say, as I recall, we went into Kosovo sans UN. But let me read you a quote from the new Iraqi foreign minister.

Sen. KERRY: That's correct, but...

KUDLOW: Let me just read you this quote from the Iraqi foreign minister. Quote, "The United Nations as an organization failed to help rescue the Iraqi people from a murderous tyranny that lasted over 35 years. Today, we are unearthing thousands of victims in horrifying testament to that failure," end quote. Now, again, it just seems to me the UN is completely unreliable and without moral backbone. Why go there?

Sen. KERRY: Lawrence, look, it depends on what we do with respect to the skill of our diplomacy. I repeat what I just said to you. I would never accede our security to the UN. I do not look to the UN to provide the leadership. I look to us to provide the leadership. I think it's the job of the president of the United States to build a coalition. I think every president for 50 years has worked hard to strengthen our alliances, to proceed multilaterally when possible. There is strength in numbers. You know that. It's a matter of just basic good old American common sense. And in this case, I think the president rushed to war in a way that now has the American taxpayer carrying an enormous burden and the American soldier taking enormous risks. I think there was a better way to do this, and I think most Americans of common sense do, too.

CRAMER: All right. Senator Kerry, let me switch over to the economy and particularly to the fact that you seem to be the only candidate of either party taking seriously the mutual fund scandal. Is the SEC doing its job when it comes to protecting the 95 million investors who use mutual funds?

Sen. KERRY: No, they didn't do their job. There are 15 mutual funds, there are 12 brokerage houses. That's a pretty sweeping indictment of an industry that thought it was OK to give sweetheart deals to their favorite investors who got to literally place a bet after the race is over. I mean, how many people would like to bet on the World Series when the game's over? How many people would like to bet on a football game Sunday night instead of Sunday morning?

Look, this is a disgrace. And what they were doing was the old, you know, you scratch my back, I'll scratch yours. The return was that the investors who got the sweetheart deals would agree to invest more money there. The American investor-I mean, the average person in New Hampshire, Iowa, other states across the country loses money because of that sweetheart arrangement. And I think people all over this country-I heard you talking earlier. I'm not saying-look, I'm pro-business. I'd like to see us grow our economy. I'd like to see us make more millionaires. I believe in the virtue of the marketplace. But if the marketplace is tilted, if it's crooked, if people don't have faith in it, everybody else suffers. You know that there are countless numbers of good businesspeople in New York. There are great CEOs, there are great companies. But they're all hurt when the marketplace is rigged the way it's been against the average person.

CRAMER: All right.

Sen. KERRY: And I think it is really incumbent on us to democratize the corporate ethic today and to undo these sweetheart arrangements that the Bush administration has with too many corporate entities.

CRAMER: All right. But let's talk about a policy that President Bush put in that directly benefits your wife and many other Americans that have big dividends, but in particular the Heinz family gets a gigantic dividend. Would you get rid of the I think terrific, terrific exclusion of dividend income if you became president of the United States?

Sen. KERRY: I would get rid of the way George Bush did it. I always thought that the exclusion ought to go to the individual, not to the corporation, not to the individual, because that way, we could actually give the corporation a greater ability to reinvest, do R&D, create jobs, do the things we needed to do to kick the economy into gear.

CRAMER: Even though that would be a gigantic cut in income to your family?

Sen. KERRY: That's irrelevant. You don't make decisions based on that. And I never have. I do what's right for the country, and what's right for the country is not to give people a favored tax cut.

KUDLOW: But would you have done it differently?

Sen. KERRY: I think-I mean, look, Warren Buffett...

KUDLOW: John Kerry, would you have done it differently? You and I have talked about cap gains down through the years. I believe you. You are a pro-business guy.

CRAMER: Absolutely.

KUDLOW: But, look, Bush inherited this investment bust, so he cuts taxes, cap gains, dividends, small business, depreciation for corporations, and it seems to be working.

Sen. KERRY: Yeah. I'm...

KUDLOW: How would you have done it differently, sir?

Sen. KERRY: I'm for s...

KUDLOW: How would you have done it differently? It's a serious question on my part.

Sen. KERRY: All right. It absolutely is a serious question. I appreciate it. I am for a zero capital gains tax on any new investment up to $100 million, providing it's held for five years, targeted towards the so-called 26 critical technologies. And those are the areas where most IPOs would take place. I think that would excite capital formation. That would excite job creation in America. I'm for a manufacturing job credit. But I believe that what the president did was, in fact, just line the pockets of people who are already the wealthiest and doing the best in America without any guarantee that their investment would even be made in the United States of America.

CRAMER: OK. Senator Kerry, unfortunately, we have...

Sen. KERRY: So I don't think it was the best policy, I don't think it was the best choice. And let me just repeat-Warren Buffet, the second richest man in the United states of America, said, 'I don't want this, I don't need it. It's not good economics.' He thought it would be much smarter, rather than giving him $310 million tax free, to give 310,000 families in America $1,000 each. I happen to agree.

CRAMER: OK. All right.

Sen. KERRY: I think we wanted to keep consumer spending bolstered at that point in time because that's what was holding up and driving our economy.

CRAMER: All right. Senator Kerry, unfortunately, we have to leave it there, but thank you so much for coming on KUDLOW & CRAMER...

KUDLOW: Thank you, sir.

CRAMER: ...and for...

KUDLOW: Thank you, sir.

Sen. KERRY: Great to be with you.

CRAMER: ...those candid views. Excellent. Thank you.

Sen. KERRY: Thank you.

Copyright 2003 CNBC, Inc.

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