CNBC "Kudlow & Company" - Transcript

Interview

CNBC "Kudlow & Company" - Transcript

SEN. HARRY REID (D-NV): (From videotape.) We need both our president and senators committed to working with us instead of against us. The first year of this session has made it painfully clear that Congress is divided between Democrats who want change and Bush Republicans who are satisfied with more of the same, with the status quo.

MR. KUDLOW: Democrats have a 51-49 majority in the U.S. Senate, but many believe Republican leader Mitch McConnell of Kentucky actually runs the place. I began by asking if it's true, do you run the place?

(Begin videotaped interview.)

SEN. MCCONNELL: Well, the Senate is an unusual institution. It's the only legislative body in the world where a majority is not enough. It takes 60 votes to do most things, and I have a party ban at 49 and Senator Reid has 51. So what it means, Larry, is you've got to meet in the middle if you're going to do anything, and I think here at the end of the session, the majority finally realized that if they wanted to accomplish things, like getting an energy bill the president might actually sign, like getting an alternative minimum tax fix that the president would sign, they needed to deal with Republicans in the Senate. We also are very proud of the fact that we insisted on holding to the president's top line on the various appropriation bills. And the significance of that, Larry, cannot be overstated. They wanted $22 billion more over the 12 appropriation bills, and they said that was not a significant difference. Well, the way to look at it is if we had spent that additional $22 billion, we look at these figures over 10 years, because it goes in the baseline and then magnifies itself. We saved over $200 billion to the taxpayers of America by just simply adhering to the president's recommended spending caps for all of the appropriation bills. So we had a heck of a year. My members left town, most of them yesterday, feeling very good.

MR. KUDLOW: I want to come back to that budget bill in just a second, but one more political question, sir. A lot of people in Wall Street, a lot of investors are worried that because twice as many Republicans are standing for the Senate next year than Democrats, this could be a Democratic roll, and they might get 60 votes. I know it's very early in the game, but can you just give a sense, what are you thinking about this tough Senate election for the GOP?

SEN. MCCONNELL: Well, the numbers are not great. We have 23 members up, they only have 12. Now, the reason for that is we had a really good year six years ago. But most of our seats are in good shape. And as long as we can stay in the high 40s -- look, I'm not going to predict that you're looking at the next majority leader here. The numbers are just not good. But as long as we can stay north of 45, roughly where we are today, we're a major force. I also think we've got a great chance of electing another Republican president. So you couple a Republican president with a robust Republican minority in the Senate, and I think the taxpayers of America, with that particular set of players, could breathe a big sigh of relief. Because we know what the majority would like to do. Chairman Rangel of the House Ways and Means Committee laid out the mother of all tax increases. The Democratic majority gets up every day. They stand for three things -- taxation, regulation and litigation. They're trying to promote that on all fronts, and we need to be able to stop that. It's not good for the country.

MR. KUDLOW: Mr. Rangel is going to be coming on this program later, and I just want to ask you, I know it's fashionable to beat up on Charlie Rangel. But what about his idea for a corporate tax cut? To me, that's probably one of the most sensible things we could do right now.

SEN. MCCONNELL: Sounds good to me provided he's not going to raise a whole lot of other taxes in order to, as the Democrats put it, pay for. When you hear a Democrat saying you want to pay for something, what they mean is in order to get any relief anywhere on spending or taxes, they're going to raise taxes on somebody else. Yes, a reduction in the corporate tax rate is a good idea, particularly because we have one of the highest corporate tax rates in the world. But you need to read in the fine print, Larry, and find out who they want to raise taxes on in order to, quote, "pay for" any reduction in the corporate tax.

MR. KUDLOW: All right. Let me go back to the budget issue. The Wall Street Journal called the budget plan one shear, what did they say, one budget shear, not two. And I want to ask you about a contentious issue, unresolved, maybe a GOP loss, that is 9,000 earmarks summing to $8 billion in this omnibus appropriations bill. Now, I thought President Bush wanted to knock these earmarks down. I thought you all wanted to knock them down. It's like here we go again. Doesn't this hurt the Republican brand, the comeback that supposedly the GOP is making in terms of tough on the budget, tough on earmarks and tough on corruption?

SEN. MCCONNELL: Well, there certainly have been some bad earmarks in the past. But you've got to remember, you can knock out all the earmarks, and it wouldn't save any money. We determine how much we're going to save when we set the top line. Then the issue is, who decides where the money goes? And many members of Congress on both sides of the aisle believe that they can decide better how money is to be spent in their states than some bureaucrat who doesn't know anything about it. So it's pretty hard, Larry, to produce a bill in which members basically conclude they're all potted plants, and they're not going to make any decisions whatsoever about what happens in their states. I think the thing to focus on is the size of the pie. How much did the majority want to spend, and how much was it allowed to spend? They wanted to spend $22 billion, have a $22 billion bigger pie which would have been over $200 billion in new spending over 10 years. We defended the president's top line. It was a remarkable accomplishment. Nobody would have predicted at the beginning of the year that that could have been done. And most of my members, let me add, think that we had a better conclusion to the appropriations process this year than we did when we were the majority.

MR. KUDLOW: Well, I know, but it just seems like a tough sell to the taxpayers who may not understand all of these inside-the-Beltway intricacies. I mean, I'm looking at a release from Senator Jim DeMint's office. DeMint is very much opposed to this. We had John McCain on the program last evening. He said if his schedule permitted, he would have voted against it. But look, rodent control in Alaska, $113,000. Olive fruit fly research in France, 213 grand. A hunting and fishing museum in Pennsylvania, 200 grand. The Lincoln Park Zoo in Illinois, 37,000 (dollars). I mean, people don't understand this. And what I don't understand is President Bush had been on a roll vetoing, vetoing, threatening to veto. As you yourself said, this whole appropriations bill is going to come in a lot lower than originally thought. But the earmark is a blemish. And conservative columnists and radio people are going to take this and run with it. It just seems like here we go again. Why can't the GOP really clamp down on the earmark problem?

SEN. MCCONNELL: Well, Larry, it sounds like you're trying to snatch defeat from the jaws of victory here. If anybody would have predicted at the beginning of the year that we would have been able to meet the president's top line on the appropriations bills, they would have laughed. They would have said you are crazy. Can you find something in a $933 billion package that probably shouldn't have been done? Of course you can! But the big picture is, how much are you going to spend overall? How much are you going to sock the taxpayers with the bill? This was an extraordinary accomplishment with a Democratic majority in the House and Senate to save over $200 billion for the taxpayers in discretionary spending. Can you find something in the bill that all of us would agree is not good? You bet! But you're having to search to find some way to snatch defeat from the jaws of victory. This was a remarkable accomplishment.

MR. KUDLOW: All right. Well, I'm just giving facts out here. But let me ask you in our remaining seconds, sir -- we do appreciate your time very much. As we come into 2008 early in the year, what will your top priority be in the Senate?

SEN. MCCONNELL: Well, I think as we begin the year, we need to extend the Foreign Intelligence Surveillance Act. We need to be able to get retroactive liability for the communications companies that stepped forward in the wake of 9/11, did their duty and helped protect the homeland.

MR. KUDLOW: Liability protection, right.

SEN. MCCONNELL: Absolutely. We also need to make sure that you can intercept terrorist-to-terrorist communications overseas without going to get a warrant in a U.S. court. All of those are important features. We need to protect the homeland by extending and revising the Foreign Intelligence Surveillance Act.

MR. KUDLOW: Senator Mitch McConnell, happy, holy, merry holidays to you and your wonderful bride, Secretary Chao.

SEN. MCCONNELL: Thank you, Larry. Good to be with you.

(End videotaped interview.)

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