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CNBC "Kudlow & Company" - Transcript


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MR. HARWOOD: It's your money, your vote, and joining us now is Republican presidential candidate Mitt Romney from New Hampshire.

Thanks for joining us, Governor.

MR. ROMNEY: Thanks, John. Good to be with you.

MR. HARWOOD: Before we begin, I'd like you to hear something Mike Huckabee said on Monday when I interviewed him. It might surprise you. I asked him whether he was a supply-sider on economics. Let's listen.

(Begin videotaped interview segment.)

FORMER ARKANSAS GOVERNOR MIKE HUCKABEE (R) (Republican presidential candidate): Absolutely! I think that nobody who looks at my policies as well as my tenure as governor would say anything other than I'm maybe the most fiscally conservative person, because I actually balanced a budget.

MR. HARWOOD: That's not what Mitt Romney says.

MR. HUCKABEE: Well, you know, he's my opponent. Of course he's not going to compliment me. Although before he was running against me for president, he made some statements publicly that he thought I would make a wonderful president. I think he was right then, he's wrong now. But he's changed his position on about everything, so we're not surprised that he's come up with a new one on that as well.

(End videotaped interview segment.)

MR. HARWOOD: So Governor, let me ask you about both halves of that clever little attack from Mike Huckabee.

MR. ROMNEY: (Laughs.)

MR. HARWOOD: One, the assertion that he's a supply-sider on taxes and implicitly that he's got the same position as you. And second, that you flip-flop so much that nobody can take what you're saying too seriously.

MR. ROMNEY: Well, it's too bad Mike has decided to succumb to personal attacks. I actually said, introducing him to a speech, he'd be a great guy for president, he's a wonderful guy, and if he's our nominee, I will support him, he would be a good guy. But I don't think he's the right guy right now and a couple of things -- one is because of his view on spending and taxes. Being a supply-sider has two parts. One is holding down spending, the other is holding down taxes. And when he was governor, he raised spending from 6.7 billion (dollars) to 16 billion (dollars). That's quite a record. And he raised taxes by $500 million. If that's a supply-sider, I'm not sure I want to be one. I'm a real supply-sider. I held down spending, and I fought to hold down taxes. I actually lowered taxes.

And then with regards to the views about the future of our country and what we need to do going forward, I want to build our economy. I believe that by keeping taxes down and spending down, we'll have a good, strong economy for the future.

MR. HARWOOD: Governor, let me ask you about one other economic policy statement that he made earlier in the campaign, since it does seem to be down to the two of you in Iowa for first place, and then we'll go on to New Hampshire where the economic issues will get even more important. But in the Reagan Library debate earlier this year, Governor Huckabee said that it was criminal for CEOs to take huge bonuses while jobs are going overseas, and that if Republicans don't stop it they don't deserve to win in 2008. Do you agree with him that that practice is criminal? And what would you do about it?

MR. ROMNEY: Well, it's certainly not against the law, and in that sense it's not criminal, but I think he probably meant it in a metaphorical sense. I do think that leaders of corporations have to be very aware of the impact very large bonuses have on the views of labor and others with regards to the fairness of their employment. But I'm not going to have the government get involved in telling people how much money they can earn. We're in a free-enterprise system, and people who take risk and start businesses or make investments are going to get the return that's associated with their risk and their investment. But yeah, that's not government's role.

But of course, the reason I'm running for office is trying to help not the highest-income folks in America. They'll do just fine. But I want to help middle-income Americans that are facing some real challenges and lower-income Americans. And one of the ways that I can do that is by lowering the tax burden as quickly as possible on savings for middle-income Americans, and that's part of my tax plan.

MR. HARWOOD: Governor, Mike Huckabee has sort of cast himself as the populist candidate on economics in the Republican Party so far, just as John Edwards has done on the Democratic side. What do you think is the role for populism as this economy begins to turn down, potential for recession next year? Does the Republican Party need a little touch of populism to be more politically appealing? And do you see any part of that notion right substantively as well?

MR. ROMNEY: Well, I don't think we as a party or we as a nation move forward by policies of jealousy and trying to tear down other people. Divisiveness doesn't work. John Edwards ran his campaign based on two Americas last time up. That just didn't sell in America. Americans want to see everyone be prosperous, want to see our country grow and be successful. And we come together on major issues, so a divisive campaign is not the right way to go. I do believe that we can put in place policies which strengthen our economy and help middle-income and moderate-income Americans. And the way we do that is, one, by keeping our tax rate down, lowering our corporate tax rate, trading with other nations on a level playing field, investing in research and technology, getting health care for all our citizens. These are things we can do that help all Americans. And the right approach is not by, if you will, try to play a class card, but instead working to raise the level of living for all our citizens.

MS. CARUSO-CABRERA: And Governor Romney, there's some suggestion that we may be in a recession next year. What do you think? Is that possible? And if you were president, what would you do about it?

MR. ROMNEY: Well, recessions are always possible, and at this stage, I don't think it's inevitable. I think the Federal Reserve was right to take action, to lower the interest rate, to provide additional credit to our markets so that the subprime mortgage crisis does not spread too far throughout the credit market, but it continues to spread there.

MS. CARUSO-CABRERA: Should they do more?

MR. ROMNEY: One thing we can do is to reduce the burden on the American taxpayer to lower taxes. The last thing you want to do in a setting like this is to raise taxes, and that's, of course, what the Democrats are all planning on doing as soon as they get in. The right course is to lower the tax burden on the American people and create a stimulative effective which, of course, can help pull us out of any downturn we may be feeling.

MR. HARWOOD: Governor, let me ask you about the housing crisis which has really become the biggest individual economic story over the last year. Perhaps 2 million American homeowners facing the possibility of foreclosure next year when their interest rates bump up. Do you approve in principle with what Hank Paulson and President Bush have done with this voluntary plan to freeze interest rates? And do you rule out doing anything more if it's not effective enough in preventing foreclosures?

MR. ROMNEY: Well, what Hank Paulson has described with a voluntary program, of course, is always available to holders of mortgages. And there ought to be a very active effort.

Hopefully that one is sufficient, but if not we might consider putting together cooperatives of servicing organizations or other entities that work together with homeowners that are able to keep making payments based upon their original loan requirements rather than have a home go into foreclosure. In most cases or in many cases, throwing a home into foreclosure will mean less of a return to the mortgage holder than it would have meant if they could allow the homeowners to stay in the home and meet the obligations they had originally agreed to. So let's find a way to keep people in their homes, to voluntarily have those that hold the mortgages work out with those people that are being stretched right now a process that allows them to keep their home, make their payments and not have homes go into foreclosure.

MR. HARWOOD: Do you rule out, Governor, any cash assistance from government to homeowners to help them stay in their homes?

MR. ROMNEY: Well, that's not the course that I think is essential at this point, but I don't think you rule out various options that might be available. The president talked about the FHA, for instance, providing potential support for homeowners in these circumstances. And there also may be cases where homeowners were defrauded by mortgage lenders that may be out of business now. There may be unusual circumstances but by and large, the lenders here, I don't want to see us bailing out. They took a real risk, and they have a responsibility to live with their risk. But I think the lenders ought to be convinced that they're much better off by having someone continue to make payments on mortgages than have the home go into foreclosure.

MR. HARWOOD: Governor, let me ask you one more question on economic policy and specifically on trade. In our CNBC debate earlier this year, you indicated that the Bush administration didn't have trade negotiators who sufficiently understood the needs of American business and therefore hadn't cut very good deals. I think some people were surprised to hear that assessment, because this is a very pro-business administration. What exactly would you do differently on trade policy from President Bush?

MR. ROMNEY: I'm not sure I said it exactly the way you said it. I think I made the point that it would be helpful to have at the top of the United States in the president's office a person who spent 25 years in business, an individual who, like myself, had done business in 20 different countries or more, who has an understanding of how the economy works at the grassroots level. And I think that kind of awareness and experience would indeed be helpful for the president of the United States. It's one of my, if you will, distinguishing qualifications and experiences that I think would be helpful in the White House. So I'm not talking about all the trade negotiators. I'm instead talking about having a president with extensive business experience, economic experience, international experience which I would bring to the table.

MR. HARWOOD: Governor, I appreciate your taking the time to join us from New Hampshire. Good luck on the campaign trail.

MR. ROMNEY: Thanks so much. Good to be with you.

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