CNBC Kudlow & Cramer - Transcript

CNBC News Transcripts

SHOW: Kudlow & Cramer (5:00 PM ET) - CNBC

HEADLINE: Senators Charles Grassley and Max Baucus discuss Senate action on the manufacturing front

ANCHORS: JIM CRAMER; LARRY KUDLOW

BODY:
JIM CRAMER, co-host:

Many agree, the manufacturing sector needs help. The Senate's tied up in knots about it right now. This is a story that I hope I can understand, because I don't understand who would be against this bill. But maybe these two senators, senators Charles Grassley and Max Baucus, both members of the Finance Committee, can explain it.

Senator Grassley, let me start with you. I don't get it. Tax relief. We need manufacturing companies to hire people. This seems like to do something that would be good. Explain to me why good is bad down there.

Senator CHARLES GRASSLEY (Republican, Iowa; Finance Committee Chairman): Well, it isn't against the underlying legislation, which Senator Baucus and I put together in a bipartisan way and was voted out of our committee 19-to-2 and all of the Democrats voted for it. And so it's what is being done with this bill, and some members are using it to attach non-germane amendments to it, and that's where the fuss is about.

LARRY KUDLOW, co-host:

Senator Baucus, could you just briefly walk us through the main parts of this bill?

Senator MAX BAUCUS (Democrat, Montana; Senate Finance Committee): Yeah. Briefly, it's a replacement legislation for the current ETI, sort of export stimulus regime that we now have in place. The WTO ruled that illegal, so we in the Congress are attempting to pass legislation that gives American business, particularly American manufacturers, a boost that is still WTO legal. And to do that, we're enacting a 9 percent deduction on domestic manufacturing; that is on any manufacturing that's done domestically in the United States, irrespective of whether the products are shipped overseas, to make-that will make WTO legal.

CRAMER: All right. Senator Baucus, white-collar overtime got thrown into this. Obviously, anybody who works hard, I believe, should get overtime. Why does that have anything do with this issue, though?

Sen. BAUCUS: Well, the major issue in the US today, I think for most people, is jobs. There's the loss of jobs in America. We've lost about three million jobs-that's on a net basis-in the last several years. And we're also losing not only manufacturing, but service industry jobs. And the thought is if somebody has got to work overtime, that that person should be able to maintain the current overtime provisions, namely time and a half, because that's time away from a person's family or whatnot. The basic point being that we've got to get more good-paying jobs in America, and if you're working overtime, you should get paid for it.

KUDLOW: Senator Grassley, how would this bill treat service sectors, financial services, accounting and legal, Hollywood entertainment, music and so forth? Those are all huge exporters.

Sen. GRASSLEY: Well, anything that's classified as manufacturing under a definition that's about 20 years old would continue to be the definition under this. And so we don't change that definition. So the definition that's in the code right now, which basically is manufacturing, it does include part of what Hollywood would do. It includes some agriculture, obviously, because you're making a product out of our natural resources. So it's pretty broad-based, and it goes beyond corporations. It would include individuals, farmers, self-proprietorships, Subchapter S, things of that nature as well, as long as they're manufacturing and it's domestic manufacturing. But we're not going to give this tax benefit to American companies that manufacture overseas.

CRAMER: All right. Senator Baucus, a couple years ago, there was a homeland security debate, and it was pretty-it looked, at the time, that Democrats made a stand, which said, 'Look, we're really going to fight this, because we need job protection for the people involved with homeland security.' I think this caused a landslide for Republicans, frankly. I thought it was all so ghastly. Here, the Democrats seem to be making a stand again on something that is, I think, positive. How will this play out for the fellow members of your party? How come it won't play out again like another botched thing like the homeland security where they obviously got in the way of something everybody thinks is good?

Sen. BAUCUS: Well, I think we're going to have an agreement we'll reach fairly quickly here in the Senate which provides for a specified number of amendments that will be brought up in the Senate, which would include the amendment with respect to overtime pay. So it's a moot issue. We're going to vote on it. It'll probably pass, so that issue is not going to be holding up passage of the underlying bill.

KUDLOW: Senator Grassley, just in our remaining moments, in the House, there's been some movement to just simply reduce the US corporate tax rate. Do you have an objection to that? Is that why you've gone around, just different aspect?

Sen. GRASSLEY: I have an objection to it, because it's going to lead to the export of more jobs. We've got a very big problem about-because of the high cost of capital with our manufacturing in the United States going out overseas, and we want to encourage, along the same lines of what Canada has done, manufacturing domestic. We want to preserve jobs. We want to keep the penalties that's being put on our exports now because of the illegal tax policies by Europe. We want to cut down on that sanction. We want to reduce the tax rate, preserve jobs and enhance jobs and do it in manufacturing.

KUDLOW: All right. Senators Grassley and Baucus, we thank you very much for coming back to K&C, and hope you can resolve this thing as soon as possible.