CNBC "The Kudlow Report" - Transcript
Interview
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MR. KUDLOW: Earlier I spoke with Republican Senator Mitch McConnell. He's the GOP leader in the Senate. And I went right to AIG "Bonusgate" and asked him how they expect to recoup the money. Here's what he said.
(Begin videotaped interview.)
SEN. MCCONNELL: Well, it shouldn't have happened in the first place. You know, Treasury just gave AIG another $30 billion just two weeks ago. Why were none of these questions asked then? I mean, everybody in the business world needs to understand, if you take the government as your partner, you're going to have to operate very differently. And the outrage that all of us feel as a result of this could not be more forcefully expressed. And you know, I warned Secretary Paulson of this back in October. The Senate, interestingly enough, Larry, Senator Snowe of Maine offered an amendment to the stimulus bill that might well have prevented this kind of bonus. It mysteriously disappeared in the conference committee on the stimulus bill controlled by the Democratic majority here in Congress. This is the kind of thing that just can't happen if you're going to have the government as your partner. These are tax dollars that are being squandered. The outrage is enormous.
MR. KUDLOW: Let me ask you, isn't it logical and reasonable to assume that the Treasury Department, both under Bush and under Obama and the transition, knew about this? There have been numerous reports that these contracts have been known for quite some time. Therefore, it is kind of a surprise or a sham in a way that everybody is excited, oh, I'm shocked to see this, from President Obama through Treasury Secretary Geithner. I mean, I think that begs credulity.
SEN. MCCONNELL: Not if you're up here in Congress. I mean, we're not doing this every single day. This is not our sole responsibility like it is over at Treasury. Larry, there's nothing more important for the secretary of Treasury to be doing right now than this, working with the financial system and trying to restore this country's financial health. I mean, they are the ones, on a day- to-day basis in charge of this oversight. I can tell you without fear of contradiction I was surprised by it, but I doubt if the secretary of the Treasury was surprised about it.
MR. KUDLOW: Right. That's the key point I'm going for.
SEN. MCCONNELL: Yeah.
MR. KUDLOW: And I want to ask you how much of this eventually will devolve to him in terms of blame and responsibility. And really, this guy has had such a shaky start, from his tax problems right through to his disastrous first speech and congressional hearings. Can he survive this, Geithner? Should he survive this?
SEN. MCCONNELL: Well, I don't know. But I mean, the buck stops there. Somebody has got to take responsibility for this. I mean, he's the secretary of the Treasury. He's the one that handed them a check two weeks ago for $30 billion, apparently with no questions asked.
MR. KUDLOW: So the money is out the door. And I don't know how one gets that money back.
SEN. MCCONNELL: Well, at the very least, we're looking for a refund, the taxpayers are. I can tell you that.
MR. KUDLOW: All right. There's, what, a sales tax? Senator Dodd wants to put a tax on it or somebody wants to put a tax on it. Is that viable in the Senate?
SEN. MCCONNELL: I don't know but I think the best thing to do for AIG would be to give the money back to the taxpayers.
MR. KUDLOW: Can't you sit down -- I mean, after all, the U.S. owns AIG. I mean, can't we just sit down? This is what Mr. Jack Welch told us last night. This is the way it's going to work, fellas, you know. It's like a board of directors meeting. This is the way it's going to work. You're going to return the money. End of conversation.
SEN. MCCONNELL: I think so. I mean, you would think that the government which owns 80 percent of the company would have some influence over this. I mean, it's just stunning to me, astonishing that this would have happened in the first place.
MR. KUDLOW: At the end of the day, doesn't this really illustrate or underscore once again this sort of government bungling that government should not be engaged in these private sector activities, that government should not be nationalizing? I mean, AIG probably should have gone into bankruptcy on the way to liquidation. Government just can't do this. It bungles it. And here it is again, a big bungle.
SEN. MCCONNELL: Well, it's hard for me to disagree with what you just said. And you know, I advised people, I gather you've heard this, too, Larry, that the Treasury Department was encouraging banks to take some of their money because they didn't want to stigmatize those that didn't want to. Listen, the smartest thing I would say to everybody out there in the financial industry who has the government as your partner, get rid of your new partner as quickly as you can. Because if you take the taxpayers as your partner, these are the kinds of requirements we're going to have, and government is not equipped to run business.
MR. KUDLOW: Let me just, in the remaining moments, give you some lightning round stuff here. We've got the policy stimulus budget coming up for a vote. Tax hikes on investors, on successful earners and a cap-and-trade tax on energy which will affect the entire economy, including all earners, middle-class earners and so forth. Will this be stopped or will it go through, in your judgment?
SEN. MCCONNELL: Well, we're going to do everything we can to stop it. What you're talking about is the president's budget plan, his blueprint for how he'd like to see the federal government operate over the next 10 years. It doubles the national debt in five years, triples it in 10 years, gives us the biggest tax increase in history, nationalizes health care and imposes an energy tax which I think is now being referred to as a light-switch tax of $3,100 a year on every family in America. This is a massive shift in emphasis in our country, something designed to turn us into a European country as rapidly as possible. On the heels of that, they want to get rid of the secret ballot in labor union elections which means that we'll have union units everywhere, units of unions in virtually every company in America. They are trying to, Larry, take advantage of this crisis. The president's chief of staff in fact said it. You don't want to waste a good crisis, take advantage of the situation. They are trying to Europeanize the country overnight.
MR. KUDLOW: What happens here? You've got the mortgage deduction cutback, you've got the charitable deduction cutback on top of the other items. And thank you for mentioning card check. I guess my final question is, is there a moderate coalition, somewhere left and right of the center, that can stop these items, any of them or some of them? How do you see it right now? And when is the vote coming?
SEN. MCCONNELL: Well, the budget is one of the few items that can be passed with a simple majority. The Democrats can pass this all by themselves if they choose to. I think they're very worried about their own members. I see that the administration is now launching a campaign with its own campaign operatives to try to convince Americans that this $3.6 trillion budget is a good idea. What I really think it is is directed at Democratic members of the House and Senate who are going to be very uncomfortable about this proposal.
MR. KUDLOW: What's the timetable on this, sir?
SEN. MCCONNELL: We'll be voting on the budget in the House and the Senate within the next couple of weeks.
MR. KUDLOW: All right. Senator Mitch McConnell, Republican leader, I thank you very much for your time, as always.
SEN. MCCONNELL: Thank you.
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