CNBC Digital Video: Senator Chuck Schumer Sits Down with CNBC’s Chief Washington Correspondent John Harwood

WHEN: Tuesday, October 18th

WHERE: CNBC.com's Speakeasy with John Harwood

Sen. Chuck Schumer is up for re-election this year, but that's not why he's becoming a focus of attention. His New York seat is safe. If enough other Democrats win, however, Schumer stands to become the next Senate majority leader. To make that happen, Democrats need a net gain of five Senate seats. If Hillary Clinton wins the presidency, allowing her vice president to break ties in the Senate, Schumer needs only four. Even as a politician with sharp instincts, he would face steep challenges in overcoming the gridlock that has largely paralyzed the capital. In any event, the Senate will be closely divided along partisan lines, and Republicans remain favored to retain control of the House. Schumer sat down near Wall Street over bagels with me to discuss an array of issues: his constituent Donald Trump, his former Senate colleague Clinton, how he'll differ from outgoing Democratic Senate leader Harry Reid, prospects for legislative progress in the post-election lame-duck congressional session and beyond.

A partial transcript from Speakeasy with John Harwood featuring Senator Chuck Schumer follows. All references must be sourced to CNBC.com:

JOHN HARWOOD: A lot of Americans are looking at the end of this election and saying, "what is going on?" What do you say to them?

CHUCK SCHUMER: When middle-class incomes decline, America is a different place. In general, we're a bright, sunny, optimistic people. And the only time America becomes sour is when middle-class incomes decline. So that candidates who say, "I'm going to just blow up the whole system. I have no idea what I'm going to put in its place," a la Donald Trump, have more – you know, could never even get started 10-15 years ago, but have some traction now.

JOHN HARWOOD: What would be your candid assessment of Hillary Clinton's flaws as a candidate?

CHUCK SCHUMER: I served with her for eight years. And we're both Type A personalities. And I'm from Brooklyn. I can tell a BS artist pretty good. She is not. She's a straight person in the sense that she doesn't try to say one thing and mean another and all of that. She's more cautious than I am. That's her nature. That's who she is. That's not a bad trait for a president with difficult decisions. She's a very careful person. Very careful.

JOHN HARWOOD: Do you feel, given that we've got three weeks left, that things are flowing in a direction that you're going to be the majority leader next year?

CHUCK SCHUMER: Certainly more like than not. We have a lot of things going on for us. The one big thing against us is all this Koch brother money. The Koch brothers are putting in an obscene amount of money into politics. You don't see a lot of it. A lot of it's dark.

JOHN HARWOOD: If you become the leader, you're going to have a narrow majority in any circumstance. Those middle-class families whose incomes have been going down. What can you do for them?

CHUCK SCHUMER: I believe we have to get things done. I don't want to just put things on the floor of the Senate that fail to say, "See? We tried," and go home and use it as an election issue.

JOHN HARWOOD: You're going to have, on your left flank, Elizabeth Warren, Bernie Sanders putting intense pressure on you and Hillary Clinton. Tell me how you're going to balance that.

CHUCK SCHUMER: Look, they know we got to get things done.

JOHN HARWOOD: You actually think Elizabeth Warren tends to be a team player?

CHUCK SCHUMER: Absolutely. She is going to surprise everybody. She's going to be both a progressive and a constructive force.

JOHN HARWOOD: What should the sequencing be for infrastructure, immigration, tax reform—

CHUCK SCHUMER: Immigration reform, which passed the Senate 68 to 32. Schumer-McCain, two – one person on the left side. The mainstream conservatives in the Senate and House, who are a majority and who I – some of my – I don't mean to be cliché, but some of my best friends in the Senate are in this group. They will say to the hard right, to the 50 Congressmen who seem to tie things in a knot and Paul Ryan, you know, go take a hike. The two things that pop to mind because Schumer, Clinton, and Ryan have all said they support these are immigration and some kind of international tax reform tied to large infrastructure program. If you can get overseas money to come back here, even if it's at a lower rate than the 35 it now comes back at, and you can use that money for a major constructive purpose such as infrastructure, if you did an infrastructure bank, for instance, you could get $100 billion in equity in the bank and get a trillion dollars of infrastructure—

JOHN HARWOOD: But it would be a permanent lower rate, not a holiday rate?

CHUCK SCHUMER: Yes, you can't do a one-shot deal.

JOHN HARWOOD: They say you guys will never, ever, ever agree to overhauling entitlement programs to make them more solvent. Will you?

CHUCK SCHUMER: Middle-class incomes. That's job number one. In terms of cutting those benefits, I am not interested a bit.

JOHN HARWOOD: So if you're a Republican Senator, what will you find different about Chuck Schumer than Harry Reid?

CHUCK SCHUMER: I'm not going to compare myself to Harry Reid, but you will find that Chuck Schumer's calling you up and saying, "What is on your mind? How can we work in a way that you and I can – or my caucus and your caucus can agree on things?"

JOHN HARWOOD: If you encounter a situation where you can't get 60 votes for a Supreme Court nominee for a President Clinton, would you consider changing the rules?

CHUCK SCHUMER: I hope we won't get to that. And I'll leave it at that.

JOHN HARWOOD: Would you say the same thing about a legislative filibuster?

CHUCK SCHUMER: I'm not going to go speculate about if we get to a bad place. I'm going to work hard to get to a good place.

JOHN HARWOOD: I'm not hearing about the hallowed traditions of the Senate and how they can't be disturbed.

CHUCK SCHUMER: I am hopeful we can keep those traditions and get a lot done.

WEB EXTRAS

SCHUMER ON TRUMP

JOHN HARWOOD: You've known Donald Trump for a long time. He's been a donor of yours. Is this the person that you have always known or has something surprised you?

CHUCK SCHUMER: Yes, but what's surprised me is more so. Everyone knew he had a big ego. Everyone knew that he would just sort of like to talk about himself. But the extreme of it surprised me.

JOHN HARWOOD: He likes to say that when he donates to politicians, he owns them, and they do what he wants. Did he own you?

CHUCK SCHUMER: No. I don't recall him ever asking me for something.

JOHN HARWOOD: Yesterday, he was talking about a conspiracy to stop him.

CHUCK SCHUMER: Yeah.

JOHN HARWOOD: He used terms referring to Hillary Clinton and international bankers that some people historically have associated with anti-Semitism.

CHUCK SCHUMER: Yeah. He is totally tone-deaf to what is racism, what is bigotry. And I wouldn't accuse him of being a racist or bigot himself, but he tolerates it and uses it in ways. Whether he's aware or not, it's poisonous for America.

SCHUMER ON TPP

JOHN HARWOOD: Tell me about, in terms of getting stuff done, the rest of the year. There has been a lot of hope from the White House, the administration, some of the business community and others who believe in trade expansion, that the Trans Pacific Partnership can get done before the next president takes office. Is that going to happen?

CHUCK SCHUMER: It's all up to – you got the wrong guy sitting in this seat. There's only one person who will decide that. Just one: Mitch McConnell. If he puts it on the floor, it could get done. I think if he puts it on the floor, it may well get its 51 votes in the Senate even if some Democrats change their views. But it's an iffy question for the House to get a majority in the house. I just don't know what he's going to do. And he hasn't consulted me or anyone. What I was saying was – oh, that's what got me onto Bob Dylan. You don't need a weatherman to know which way the wind blows. So the Republican electorate is more against free trade than the Democratic electorate. That's an interesting fact that I didn't know until this year.

JOHN HARWOOD: Merrick Garland. Do you see the Republicans, if Hillary Clinton wins the presidency, going ahead and putting him up for a vote and him being confirmed?

CHUCK SCHUMER: A lot of it depends on the election results. If Hillary gets 350 electoral votes, and we have 52-53-54 senators, it's more likely he'll do that than if Hillary wins by a narrow margin and we have 50 votes. And it's probably certain he wouldn't do it if Trump wins or if he has the majority - either one.

SCHUMER ON BOB DYLAN

CHUCK SCHUMER: I'm so glad he won the Nobel Prize. I love that man. And did you see what they said when they gave him the prize?

JOHN HARWOOD: What?

CHUCK SCHUMER: They quoted a couplet from "Lay, Lady, Lay." "Why wait any longer for the one you love when he's standing in front of you?" They put that in. Those Nobel committees, those old guys in the Nobel committee put that. Bob Dylan had a huge and profound influence on me. And that, you know, like when the Giants win in football, I'm just happy. But anyway. Sorry. What was the question? When I talk about Bob Dylan, I go in reverie.

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