CNBC Interview With Senator Charles Grassley

Interview

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MR. KUDLOW: Confirmation hearing for Treasury Secretary Nominee Timothy Geithner has been postponed, that in the wake of the controversy surrounding his failure to pay payroll taxes.

Republican Senator Charles Grassley of Iowa joins us live from Capitol Hill.

Mr. Grassley, great to see you, sir. Happy New Year.

SEN. GRASSLEY: Larry, Happy New Year to you too.

MR. KUDLOW: Let's go to the Geithner story. How long the delay? And why?

SEN. GRASSLEY: Well, the delay was because we had to after a month of seeking information from Mr. Geithner and from the screening committee for the transition team, we put together a report that came out yesterday and our members need time to reflect on it and that's the only reason for the delay. If this hadn't come up, I think it's very important that this would have been handled very quickly to get a new Secretary of Treasury sworn in very quickly. But the delay is for that reason.

MR. KUDLOW: Senator Grassley, you are a tax expert, former chairman of the Finance Committee, currently the ranking Republican leader on the Finance Committee. It sounds like Mr. Geithner has two problems here, he didn't pay his payroll taxes once, he got that squared away in 2001 and paid them and then it cropped up a second time, sir, if my facts are right in '03 and '04 and then he did pay them.

But does it bother you; does it bother your colleagues that he made the same mistake twice?

SEN. GRASSLEY: Well, of course, that's very much an issue, you know, and when it comes to Mr. Geithner, I don't think there's any question about his qualifications to serve as a good Secretary of Treasury and, of course, the need for a strong person in that position now with the economic problems we're in.

This is a disconcerting situation we're in. He has come and explained it to us, that it was a stupid thing to do. He's sorry. And that's about all you can say at this point, that's about all he can say at this point because that's where he's coming from and most people believe in his sincerity, but what we have to do is make sure a person like me who has fought for transparency in government, you know, I've known about some of these problems. We finally got the last of the information last weekend. It's my responsibility to lay out on the table and that's for other members of the committee and that was what the purpose of the meeting was yesterday.

He appeared with us to answer questions similar to what he had done for Senator Baucus and me earlier this week and now it's out there for our colleagues to study. It's out there for the public to react to, and I think that in a collegial body like this, we have to talk about it.

MS. FRANCIS: Senator, what is your gut right now, I mean, as you understand the facts, is it enough to block him getting the position?

SEN. GRASSLEY: Well, I think I have a responsibility as a leader for the Republicans and I haven't done this only with one or two members so far to get there and visit with them and discuss it with them and get their reaction.

MS. FRANCIS: But for you, personally?

SEN. GRASSLEY: Well, for me, personally, let me give you an answer I would give you like I just gave for the Secretary of Agriculture. I make up my mind on a confirmation or not for judges and for cabinet people after the hearing is over. So ask me next Wednesday.

MR. KUDLOW: Senator, does another delay kill the nomination?

SEN. GRASSLEY: No, not at all.

MR. KUDLOW: How far can you go on this, sir?

SEN. GRASSLEY: Well, you know, right now, you're interviewing me less than 24 hours after this information gets out. Why don't you interview those of us on the committee over a period of the next few days? We've got a time to think about this. I think we ought to give it consideration.

MR. KUDLOW: All right.

SEN. GRASSLEY: We've got to reestablish credibility in markets and having people that are credible in the Secretary of Treasury's position is important.

MS. FRANCIS: Are you worried about not having this resolved before the inauguration?

SEN. GRASSLEY: No, if it's resolved soon after the inauguration, I think, that that will be soon enough, but you know, these are critical times. The economy is very bad. We need strong leadership. Nobody questions his leadership, but there are questions about, you know, sloppiness that need to be resolved and have to be resolved to the satisfaction of a large number of people on the committee it seems like.

MR. KUDLOW: Senator Grassley, we appreciate it, sir.

MS. FRANCIS: Thank you.

MR. KUDLOW: And we hope to see you again on this very issue.

SEN. GRASSLEY: Thank you.

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