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CNBC Republican Presidential Candidate Debate


Location: Dearborn, MI


MS. BARTIROMO: Governor Romney, here in Detroit, Michigan, alone, one in every 29 homes went into foreclosure in the first six months of the year. Whose job is it to fix this problem, the government or private enterprise?

MR. ROMNEY: It's everybody's job. It's inexcusable that Michigan is undergoing a one-state recession, that the rest of the country is growing and seeing low levels of unemployment, but Michigan is seeing ongoing high levels of unemployment, almost twice the national rate. Industry is shrinking here, jobs are going away.

This is just unacceptable, and therefore, everyone's going to have to come together to solve the problem. And that means from the president's standpoint, the president's going to have to stand up and say: You know what? -- to the auto industry -- the door's always open. We're going to work with you and make sure that you have a listening hear and someone who will participate with labor and with management.

Number two, we're going to make sure that we invest in technology and research -- a lot of that relating to energy, fuels; automotive research like material science to help boost Michigan once again. We're going to have to fix the schools; as Newt Gingrich pointed out, 22 percent of Detroit kids don't -- or excuse me -- 22 percent graduate from high school. That's unacceptable. We're also going to have to do a better job keeping our taxes down. Jennifer Granholm has made a big mistake by raising taxes. I was, frankly, a little nervous to -- by being here tonight. I figured that she was going to put a tax on the debate before we got finished. (Laughter, applause, cheers.)

And we're going to have to go work, as well, to make sure that there's a level playing field around the world as we compete, to make sure that American goods are pushing into other markets; that goods coming overseas aren't getting an advantage as they do now with embedded taxes. There's a lot we can do to strengthen Michigan.

And in some respects, what Michigan is seeing the entire nation is going to see unless we take action now to get Michigan stronger.


MR. MATTHEWS: Let's go to Governor Romney. Your difference with Mayor Giuliani on tax cutting?

MR. ROMNEY: Well, we both agree with the need to cut taxes and have fought to do so. And I did so in my state too. We both believe in cutting back on spending as well.

But if you want to cut taxes, you're going to have to cut spending. And the best tool that a governor has and the best tool the president has had is a line-item veto. And Mayor Giuliani took the line-item that the president had all the way to the Supreme Court and took it away from the president of the United States. I think that was a mistake.

He also fought to keep the commuter tax, which was a very substantial tax, a(n) almost $400 tax on commuters coming into New York.

And when it's all said and done, if you're a New York taxpayer, city taxpayer, your state and city tax combined could reach as high as 10 percent, and in our state, if you're a Boston worker, it's going to be more like 5.3 percent.

So we both have worked real hard to get the taxes down, to get the spending down, but I'm in favor of the line-item veto. I exercised it 844 times. Thank heavens we had a line-item veto, and I would like to see it at the federal government level as well. We need it.

MR. MATTHEWS: Mayor Giuliani, respond.

MR. GIULIANI: I mean the difference is that under Governor Romney, spending went up in Massachusetts per capita by 8 percent; under me, spending went down by 7 percent. The line-item veto is unconstitutional. I took Bill Clinton to the Supreme Court and beat Bill Clinton. It's unconstitutional. What the heck can you do about that if you're a strict constructionist?

And finally, the point is that you've got to control taxes, but I did it, he didn't. I controlled taxes --

MR. ROMNEY: (Laughs.) I'm sorry.

MR. GIULIANI: -- I brought taxes down by 17 percent. Under him, taxes went up 11 percent per capita. I led, he lagged.

MR. MATTHEWS: Sir, a rebuttal here, final rebuttal.

MR. ROMNEY: It's a nice line, but it's bologna. Mayor, you got to check your facts. No taxes -- I did not increase taxes in Massachusetts; I lowered taxes, number one.

Number two, the Club for Growth looked at our respective spending record. They said my spending grew 2.2 percent a year; yours grew 2.8 percent a year.

But look, we're both guys that are in favor of keeping spending down and keep taxes down. We're not far apart on that. The place we differ is on the line-item veto.

I'm in favor of the line-item veto. I had it, used it 844 times. I want to see Libby Dole's line-item veto put in place, the president's proposal to have it put in place. I'm in favor of the line-item veto. I'd have never gone to the Supreme Court and said it's unconstitutional.

MR. MATTHEWS: Do you believe it is?

MR. ROMNEY: I do not believe the line-item veto is -- properly structured is -- the president just last year introduced a line-item veto that is -- that passes constitutional muster. Elizabeth Dole did the same thing. I'm in favor of the line-item veto to make sure that the president is able to help cut out pork and waste. Washington is finally going to have to have a reduction in spending. Republicans got spending out of control.

MR. MATTHEWS: John Harwood.

MR. GIULIANI: You got to -- I mean, you have to be honest with people and you can't fool all of the people all of the time. The line-item veto is unconstitutional. You don't get to believe about it. The Supreme Court has ruled on it. So you can bang your head up against a stone wall all you want. I am in favor of a line-item veto, except you have to do it legally. And as the mayor of New York, if I had let President Clinton take $250 million away from the people of my city illegally and unconstitutionally, I wouldn't have been much of a mayor.

MR. ROMNEY: That's -- (inaudible.)

MR. GIULIANI: So I took --

MR. ROMNEY: That's what it was about.


MR. SEIB: Governor Romney.

Governor Romney, trade keeps popping up here, so let's bore in on it a little bit. By one estimate, the U.S. has lost 5 million jobs to overseas trade since 1989, and the U.S. must borrow every day $2 billion from overseas to pay for its imports. President Bush says trade is still good for America.

Are you a Bush Republican on trade?

MR. ROMNEY: Well, I believe in trade, but I believe in opening up markets to American goods and services. And it's been calculated that the average family in America is $9,000 a year richer because we have the ability to sell products around the world, and a lot of people in this country make their living making products that go around the world.

But it's also true that the people who negotiate these agreements, the people who sit down with the Chinese and sit down with the Mexicans and others, are people, by and large, who've spent their life in politics, and the politicians come together and try and understand how the economy works.

I think I'm probably the only guy on the stage who's spent most of his career in the business world. I understand how the economy works. I understand how if you make a certain adjustment in the agreement, it's going to have a huge impact on the United States.

And so for instance, if we agree to sit down with China, I understand that if we don't get real careful and protect patents and designs and technology, that what we tend to sell the most of, those kinds of things, intellectual property, is going to get stolen by the Chinese or by others, that we have to recognize agreements have to be in our benefit, not just in their benefit. And so as I look across the agreements we've made, I recognize we're going to have to do a better job. We're going to have to have people who understand how the business world works, how the economy works, and make sure that the playing field really is level by having people that know something about the economy and understand the business world being part of that effort.

I want to make sure that the American worker gets a fair shake. We need to make sure that the Chinese begin to float their currency, and they protect our designs and our patents and our technology. We need to make sure that the American workers don't have to carry the burden of extra taxes as we sell our products around the world. They come here without that tax embedded. We can do a better job, and I want to do a better job for the American worker.

And by the way, this is key for Michigan. And for me, Michigan is personal. I'm going to go to work to help Michigan. (Applause.)


MS. BARTIROMO: Very quickly down the line, same question. Should a Dubai company be able to own 20 percent of NASDAQ? Congressman?


MS. BARTIROMO: Governor.

MR. ROMNEY: Of course you let a country invest in the United States, because we're going to have to stop thinking always in terms of defense and trying to keep other people out. The key is that America can compete around the world and win, and we do. In product after product, service after service, we're the best in the world. But we have to make sure that as we enter into agreements with other nations, we make sure that those agreements are in our benefit as well as theirs; usually that's the case, but not always, and in some cases it's not.

We're going to make sure that our goods and services are sold around the world, that they're not held up, that our technology is not stolen. And we're going to make sure that America gets the best shake in these agreements, and we -- and for heck -- you got to realize this country can compete with anyone in the world, has before. We'll always -- we do not rein in -- put a moat around ourselves. We've put down the drawbridge and say, "Let's go out and compete."


MR. MATTHEWS: Thank you.

Governor Romney, that raises the question, if you were president of the United States, would you need to go to Congress to get authorization to take military action against Iran's nuclear facilities?

MR. ROMNEY: You sit down with your attorneys and tell you what you have to do, but obviously, the president of the United States has to do what's in the best interest of the United States to protect us against a potential threat. The president did that as he was planning on moving into Iraq and received the authorization of Congress.

MR. MATTHEWS: Did he need it?

MR. ROMNEY: You know, we're going to let the lawyers sort out what he needed to do and what he didn't need to do, but certainly what you want to do is to have the agreement of all the people in leadership of our government, as well as our friends around the world where those circumstances are available.

But the key thing here is to make sure that we don't have to use military action against Iran. That's what you hope to be able to do. And that's why we're going to (have to ?) put a lot tougher sanctions on Iran, economic sanctions, credit sanctions. We're also going to have to get serious about treating Ahmadinejad like the rogue and the buffoon that he is.

And it was outrageous --


MR. ROMNEY: -- for the United Nations to invite him to come to this country. It was outrageous for Columbia to invite him to speak at their university. This is a person -- denied the Holocaust, a person who has spoken about genocide, is seeking the means to carry out. And it is unacceptable to this country to allow that individual to have the control of launching a nuclear weapon.


MR. ROMNEY: And so we will take the action necessary to keep that from happening. And I think each person on the stage, but certainly in my case I would make sure we would take the action necessary to keep Iran from having a nuclear weapon.


MS. BARTIROMO: Quick follow-up: Governor Romney, you said government shouldn't get involved in business and free markets. Yet we subsidized farmers to the tune of $26 billion last year. Will the government end up bailing out farmers again?

MR. ROMNEY: I believe in domestic supports for our agriculture industry. I don't want to see our food supply be in the same kind of a jeopardy situation that our energy supply is in. And clearly there's a responsibility of government to make sure that our farmers are treated on the same basis as farmers in Europe and other markets that we compete with.

We're in the middle of the Doha Round, the WTO talks, and if we find a way to bring down subsidies around the world, that'll be good news.

But with regards to energy -- and that's really the heart of what we're describing here -- one side of this is, of course, the fear; the fear of the fact that we face global warming, that we face serious competitive challenges globally unless we become serious with getting prices of energy down. But the other is the opportunity. It's a great opportunity for America to develop technology to lead the world in energy efficiency as well as energy production. And whether it's nuclear or liquefied coal, where we sequester the CO2, far more fuel- efficient automobiles -- by the way, where bureaucrats don't write the rules, but where business people come together and say let's find a way to make sure that the American -- the domestic industry can thrive. These are some of the incentives that have to be behind our policies with regards to our investments --

MS. BARTIROMO: Thank you.

MR. ROMNEY: -- in new technologies like ethanol.


MR. MATTHEWS: How do the Republicans win back confidence on the economy, Governor Romney?

MR. ROMNEY: First by being confident, not going out with a message of doom and gloom of all the problems we have, but instead pointing out that the future's going to be even brighter than our past, and I'm entirely convinced of that.

This nation has everything it needs to succeed around the world and at home. We have the heart of the American people, which is sound and alive and well. We have technology, innovation, capital. We need to have leadership that'll tell us the truth and actually lead. And vis-a-vis meeting with most likely Hillary Clinton, I can't wait to talk about the fact that I spent my life in the economy. I understand how jobs come and why they go. I know how to get a health care plan not just talked about but actually implemented. I know how to make sure that we keep our taxes down and our spending down. I know how to help American companies do business around the world and stop those foreign companies from coming in here unfairly. That's what I've done throughout my career. I can't wait to debate with her, because I've done it; she's just talked about it.


MR. SEIB: Governor Romney, as you well know, health costs are a huge issue for the automakers in this city. Do you think the Republican Party should take the lead in ending the employer-based health care system we have now and replace it with something else? And if so, what would that be?

MR. ROMNEY: Well, I don't believe in replacing what we have, but I believe in improving it. And the way we improve something is not by putting more government into it -- of course that's what Hillary Clinton wants to do; Hillary care is government gets in and tells people what to do from the federal government standpoint. In my view, instead, the right way for us to go is to bring in place the kind of market dynamics that make the rest of the economy so successful.

So my plan gets everybody in America insured, takes the burden of free riders off of our auto companies and everybody else, and says let's get everybody in the system.

And to do that, we say, look, we're going to have states create their own plans. We did it in our state, and it's working. We're not going to have the federal government tell them how to do it.

Number two, we're not going to spend more money. Hillary Clinton's plan costs $110 billion. Mine says, let's use the money we're already spending a little more wisely.

And number three, instead of having the federal government give you government insurance, Medicare and federal employee insurance, let's have private insurance. Our solutions as Republicans have to be able to deal with the big issue of our time economically for the American family, and that's health care. Get the cost of health care down. Get everybody insured, but not in a government takeover, but by using the dynamics that have always made our other markets so successful.

And one more thing, and that is, our health care system right now really penalizes individuals that might want to buy their own insurance, as opposed to buying it through their company. And that's why I propose that people should be able to get their insurance individually, and it should be -- and get the same tax treatment as to whether the company buys it for them, or they buy it for themself. And all medical expenses would be tax deductible.

This issue, health care, is not a Democratic issue. It's a Republican issue. It's a Democratic fundraising opportunity. They go out and use it to raise money. But the right thing for health care is for us to apply market dynamics to get people insured, and to bring the cost of health care down. The plan that we put in place is doing just that.


MR. MATTHEWS: Thank you, Governor.

This is a 30-second answer.

And the question is, are unions good for America? And please act like you're a member of a union and limit it to 30 seconds. (Laughter.) Okay?

I'll start with Congressman Paul. Please, we have limited time.


MR. MATTHEWS: Governor?

MR. ROMNEY: Senator McCain is sure right on that point. With regards to unions overall, there are some good ones and some not so good. The good ones are those that say, "How can we do a better and better job helping our members have better and better skills, and making sure that the enterprises they work in are more and more" --

MR. MATTHEWS: Can you name a few "good" unions?

MR. ROMNEY: Yeah, like the Carpenters Union, for instance, does a great job training their members and making them more effective and more efficient, and they get higher compensation as a result of it.

There are also bad unions. I'm probably not going to name specific bad unions, but there are -- (laughter) -- but there are bad unions as well, which -- who go too far and who forget that in order for them to be successful, the enterprise that they're involved with has to also be successful.

And -- I mean, I remember my dad had a conversation long ago --

MR. MATTHEWS: Okay, we have to get --

MR. ROMNEY: I'm just going to tell a story --

MR. MATTHEWS: These are 30 seconds. I'm sorry, Governor.

MR. ROMNEY: (Inaudible) -- okay.

MR. MATTHEWS: I have to cut you off. I'm sorry.


MS. BARTIROMO: Thank you, Governor.

Governor Romney, Arab Americans are feeling a bias after September 11th from their fellow Americans. Since we're in Dearborn, Michigan, one of the largest Arab Americans -- populations in the country, how would you change that?

MR. ROMNEY: Well, of course, we remind people that this is a nation that recognizes the equality of all individuals. We welcome people from all nations to come here. We also want to make sure that our nation is kept safe. And we're going to pursue any avenue we have to to assure that people who might be preaching or teaching doctrines of hate or terror are going to be followed into a church or into a school or a mosque or wherever they might be.

But we welcome people of all backgrounds and faiths, and we don't discriminate against people based on those things. The countries that we're battling around the world -- they're the ones that distinguish based on those things, and we don't. And we of course welcome Arab Americans here in Dearborn and in places across our country.


MS. BARTIROMO: So how do you explain the loss of business in New York going to London? How do you explain some companies complaining about Sarbanes-Oxley and complaining about -- (inaudible) -- society in America?

MR. GIULIANI: Well, I explain it based on some of the mistakes that we make when we overregulate and we overtax. Our corporate tax rate is the second highest in the world. The president of France wants to lower the corporate tax rate.

Everybody around the world wants to lower corporate tax rates but the leading Democratic candidates, who want to raise taxes 25 or 30 percent. (Applause.) That would be a disaster for this country.

MS. BARTIROMO: Governor Romney, same question.

MR. ROMNEY: Is London going to replace New York? Of course not. Should we fix Sarbanes-Oxley and take out Section 404 as it applies to smaller companies? Of course we should.

Is this country the hope of the world? Absolutely.

And would I support the Republican nominee? Of course. I want that nominee, however, to come out of the same mold as Ronald Reagan. And that's somebody who is strong for our military, strong for our economy and strong for our family values.

And by the way, in terms of supporting these guys -- (applause) -- I'd -- you know, I've come to know these people now over these debates. How many -- is this our sixth debate, I think, something like that? And this has a lot -- this is a lot like "Law and Order," Senator. (Laughter.) It --

MR. MATTHEWS: Okay, thank you.

MR. ROMNEY: No, it has a huge cast, the series seems to go on forever --


Senator --

MR. ROMNEY: -- and Fred Thompson shows up at the end. (Laughter, applause, cross talk.)


MS. BARTIROMO: What -- Governor Romney, what is the greatest, long-term threat to the U.S. economy?

MR. ROMNEY: Our sense of optimism. America has to be optimistic and recognize that there's nothing we can't overcome. We face extraordinary challenges, absolutely. We face jihadism, the emergence of Asia as a competitor, our overspending, our overuse of oil, the failure of our health care system, and yet we can't be burdened down with that. We have to recognize that what we have as Americans is the envy of the world. We have technology, we have innovation, we have great schools, we have great families, we have great homes; what we need to have is leadership that'll tell us the truth, lay out the vision of where we can go and actually lead, and I want to be able to do that for America.


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