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CNBC EXCLUSIVE: CNBC TRANSCRIPT: REPUBLICAN PRESIDENTIAL CANDIDATE MITT ROMNEY ON CNBC’S “SQUAWK BOX” TODAY

Steffanie Marchese
Wednesday, 7 Mar 2012 | 10:53 AM ET

When: Today, Wednesday, March 7, 2012

Where: CNBC’s “Squawk Box

Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Republican Presidential Candidate Mitt Romney today, Wednesday, March 7th on CNBC’s “Squawk Box” (M-F, 6-9AM ET). All references must be sourced to CNBC.

Video: Mitt Romney: Americans Not Happy With Obama's Policies

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JOE KERNEN: WELCOME BACK TO "SQUAWK BOX." JOINING US NOW, FORMER MASSACHUSETTS GOVERNOR AND PRESIDENTIAL HOPEFUL MITT ROMNEY. GOVERNOR IT IS GREAT TO SEE YOU THIS MORNING. HISTORICALLY SLOW AND STEADY WINS THE RACE, YOU WON MORE STATES AGAIN LAST NIGHT. MORE DELEGATES LAST NIGHT. YOU’VE GOT A NICE LEAD IN OVERALL DELEGATES AN INTRADE, I DON’T KNOW IF YOU’VE SEEN IT THIS MORNING GOVERNOR, 89.9 FOR YOU TO BE THE NOMINEE. WHAT'S YOUR LEVEL OF CONFIDENCE TODAY. IS IT 90 -- UP OR DOWN FROM 89.9%?

MITT ROMNEY: I DON’T APPLY PERCENTAGES TO IT BUT I MIST ADMIT THAT AFTER LAST NIGHT, I FEEL PRETTY DARN GOOD. WE HAD A VERY STRONG RESPONSE ACROSS THE COUNTRY. EVERYWHERE FROM ALASKA TO VERMONT. AND WE GOT TERRIFIC SUPPORT FROM SOME OF THE MOST CONSERVATIVE LEADERS IN OUR PARTY LIKE JOHN ASHCROFT, ERIC CANTOR, TOM COBURN. WE'RE GETTING THE KIND OF SUPPORT ACROSS THE PARTY THAT I NEED TO BECOME THE NOMINEE. SO I'M ENCOURAGED.

KERNEN: YOU ARE HEARING ALL THE MURMURING. WHAT'S YOUR PLAN TO ENERGIZE THE WHOLE PARTY, ALL THE DIFFERENT FACTIONS OF THE PARTY IF YOU DO BECOME THE NOMINEE?

ROMNEY: WE DO, OF COURSE, HAVE SOME OTHER CANDIDATES IN THE RACE THAT HAVE GREAT QUALITIES AND ARE OUT APPEALING TO THEIR RESPECTIVE CONSTITUENCIES. AND RON PAUL, FOR INSTANCE, HAS A VERY STRONG TEAM OF PEOPLE THAT SUPPORT HIM. AND NEWT GINGRICH. AND, OF COURSE, RICK SANTORUM. BUT WHEN WE HAVE A NOMINEE, WE WILL COME TOGETHER BECAUSE BARACK OBAMA HAS ORGANIZED A CONSERVATIVE COMMUNITY. LET'S PUT IT THAT WAY. THE COMMUNITY ORGANIZER HAS ORGANIZED US IN A BIG WAY. WE'RE GOING TO COME TOGETHER BECAUSE WE REALLY BELIEVE HE NEEDS TO BE REPLACED. THAT HE'S OVER HIS HEAD. THAT THE DEBT HE'S AMASSED, THE JOBS HE HAS NOT CREATED SUGGEST THAT THIS IS A GUY WHOSE TIME HAS COME FOR EARLY RETIREMENT.

KERNEN: WHAT DO YOU THINK THE PRESIDENT AND HIS PEOPLE ARE GOING TO SAY ABOUT YOU WITH THAT BILLION DOLLARS THEY HAVE, AND HOW DO YOU PLAN TO COUNTER IT?

ROMNEY: THEY ARE GOING TO GO AFTER ME ON A PERSONAL BASIS AND TRY TO MAKE ME INTO SOMETHING I'M NOT. BUT YOU KNOW WHAT? WE'RE GOING TO TALK ABOUT THE PRESIDENT'S RECORD. WE'RE GOING TO ASK PEOPLE, ARE YOU HAPPY WITH WHAT'S HAPPENED IN TERMS OF JOB CREATION IN THIS COUNTRY, HOW LONG IT'S TAKEN FOR US TO RECOVER. ARE YOU HAPPY WITH THE TRILLION DOLLARS OF ADDITIONAL DEBT EVERY YEAR? ARE YOU CONCERNED ABOUT THE SIZE OF GOVERNMENT? ARE YOU HAPPY WITH THE INTRUSIVENESS OF GOVERNMENT IN YOUR LIFE? ARE YOU HAPPY WITH HIGH GASOLINE PRICES IN PART BECAUSE THIS ADMINISTRATION HAS NOT BEEN WILLING TO TAKE IN ENERGY FROM OTHER PLACES ACROSS AMERICA? YOU GO THROUGH THE LIST OF THE PRESIDENT'S POLICIES AND YOU RECOGNIZE THE AMERICAN PEOPLE ARE NOT HAPPY WITH HIM. I'LL BE TALKING ABOUT HIS POLICIES AND, OF COURSE, THEY'LL BE TALKING ABOUT PERSONALITIES.

GUEST HOST, THOMAS STEMBERG: MITT, I BELIEVE THAT YOU SHOULD LOOK AT WHAT PEOPLE DO AND LESS AT WHAT THEY SAY. YOU TOOK OVER THE STATE OF MASSACHUSETTS. IT WAS IN A SIMILAR QUANDARY THE COUNTRY IS IN TODAY. YOU TOOK A $2 BILLION DEFICIT. TURNED IT INTO A SURPLUS IN A RAINY DAY FUND. WHAT WERE THE STEPS YOU TOOK AND HOW WILL THAT TRANSLATE TO WHAT YOU DO AS PRESIDENT?

ROMNEY: WITH REGARDS TO BALANCING THE BUDGET, I HAVE THREE MAJOR APPROACHES. I'VE APPLIED THEM BEFORE. FIRST, LOOK AT ALL THE PROGRAMS THAT EXIST IN THE FEDERAL GOVERNMENT. AND YOU ASK A SIMPLE QUESTION. IS THIS PROGRAM SO CRITICAL IT'S WORTH BORROWING MONEY FROM CHINA TO PAY FOR IT? AND ON THAT BASIS, WE'RE GOING TO GET RID OF A LOT OF PROGRAMS, SOME PEOPLE LIKE, SOME PEOPLE DON'T LIKE. I DON'T LIKE OBAMA CARE. WE'LL GET RID OF THAT. THAT'S EASY. NUMBER TWO, SUBSIDIES FOR AMTRAK. FUNDING FOR PLANNED PARENTHOOD. NATIONAL ENDOWMENT FOR THE ARTS AND HUMANITIES. SOME OF THESE THINGS ARE GOING TO ELIMINATE FEDERAL SPENDING. NUMBER TWO, YOU TAKE OTHER PROGRAMS LIKE MEDICAID AND FOOD STAMPS AND HOUSING VOUCHERS. YOU GIVE THEM BACK TO THE STATES. YOU GROW THEM AT THE RATE OF INFLATION, NO FASTER. THAT SAVES ABOUT $100 BILLION A YEAR. AND NUMBER THREE, SHRINK THE SIZE OF THE GOVERNMENT THAT'S LEFT, COMBINING AGENCIES THROUGH, ATTRITION DROPPING ABOUT 10 PERCENT OF THE EMPLOYEES. AND YOU ALSO LINK THE PAY OF FEDERAL WORKERS WITH THE PAY IN THE PRIVATE SECTOR. THOSE THINGS SAVE ABOUT $47 BILLION A YEAR. SO WE CAN TAKE OUT ABOUT $500 BILLION OUT OF THE GOVERNMENT AND GET IT DOWN – STREAMLINED BACK TO 20% OF THE GDP LEVEL.

STEMBERG: HOW ABOUT ENERGY? YOU MENTIONED GAS PRICES. WHAT WOULD YOU BE DOING DIFFERENTLY?

ROMNEY: WELL, YOU KNOW, I THINK PEOPLE RECOGNIZE THAT THE PRESIDENT CAN'T PRECISELY SET THE PRICE AT THE PUMP BUT HE CAN DECIDE HOW MUCH OF THE MONEY THAT'S BEING PAID FOR OIL AND GAS IS COMING -- IS GOING TO OTHER NATIONS. AND TO GET THAT MONEY STAYING HERE AND TO CREATE JOBS HERE AND TO STABILIZE PRICES HERE, HE OUGHT TO BE TAKING ADVANTAGE OF ALL OF OUR OFFSHORE AND ANWAR AND NORTH DAKOTA AND OKLAHOMA AND TEXAS OIL AND GAS RESOURCES INSTEAD OF TRYING TO HOLD THEM OFF. NATURAL GAS IS A HUGE WIN FOR US. AND THROUGH THE EPA, HE'S BEEN TRYING TO HOLD THAT OFF. COAL IS, OF COURSE, A MAJOR SOURCE OF OUR ELECTRIC POWER. HE'S MADE IT MORE DIFFICULT TO GET THE COAL. MORE DIFFICULT TO USE THE COAL. AND, OF COURSE, THE KEYSTONE PIPELINE BRINGING ENERGY IN FROM CANADA, THAT WAS A NO-BRAINER. HE FAILED THAT TEST. IF WE WANT TO GET AMERICA ENERGY SECURE YOU HAVE TO TAKE ADVANTAGE OF THE ENERGY RESOURCES WE HAVE. AND FORTUNATELY WITH RECENT DISCOVERIES FROM PENNSYLVANIA, NORTH DAKOTA, OKLAHOMA, TEXAS, OHIO, THERE'S A LOT OF ENERGY IN THIS COUNTRY. LET'S TAKE ADVANTAGE OF IT.

ANDREW ROSS SORKIN: GOVERNOR, ON YOUR TAX PLAN, THERE HAS BEEN -- SOME PEOPLE WHO HAVE SCORED IT AND SUGGESTED THAT IT COULD COST US $3 TRILLION ULTIMATELY. HOW DO YOU RESPOND TO THAT?

ROMNEY: WELL, THEY DON'T LOOK AT THE FULL PLAN. WHAT I SAY IS WE'RE GOING TO CUT THE TOP MARGINAL RATE ACROSS THE BOARD BY 20%. AND AT THE SAME TIME, WE'RE GOING TO LIMIT THE DEDUCTIONS AND EXEMPTIONS TO PAY FOR MOST OF THAT. AND THEN ADDITIONAL GROWTH WILL PAY FOR THE REST OF THAT SUCH THAT OUR PLAN DOES NOT INCREASE THE DEFICIT. AND THEN COMBINE THAT WITH THE SAVINGS I JUST DESCRIBED WITH TOM IN TERMS OF CUTTING BACK SEVERAL GOVERNMENT PROGRAMS OR ELIMINATING SOME OF THOSE PROGRAMS AND WE FINALLY GET AMERICA TO A BALANCED BUDGET. SO ALL TOTALED, IT'S A VERY STRONG PRO-GROWTH POLICY THAT GETS THE ECONOMY GOING AND CUTS BACK ON THE SCALE OF GOVERNMENT. THAT'S THE COURSE WE HAVE TO HAVE. BY THE WAY, THE REASON I THINK I DID SO WELL LAST NIGHT, ACROSS THE COUNTRY IS THAT PEOPLE UNDERSTAND WE'VE GOT A PRO-GROWTH PLAN THAT WILL PUT PEOPLE BACK TO WORK AND SCALE BACK THE SIZE OF GOVERNMENT.

BECKY QUICK: GOVERNOR, YOU WON THE MAJORITY OF THE STATES AND THE MAJORITY OF THE DELEGATES WHO WERE OUT THERE LAST NIGHT. BUT IT WAS NOT DECISIVE ENOUGH TO KNOCK ANYONE OUT OF THE RACE. GINGRICH WAS SAYING THAT HE IS THE TORTOISE IN THIS RACE. HE'S GOING TO BE STICKING AROUND. SANTORUM SURE LOOKS LIKE HE'S GOING TO BE STAYING IN THIS RACE FOR SOME TIME TO COME. HOW LONG OF A RACE ARE YOU PREPARED TO FIGHT, AND WHAT HAPPENS IF THIS GOES ALL THE WAY TO THE CONVENTION?

ROMNEY: WELL, I AM PREPARED TO FIGHT ALL THE WAY TO BECOME THE NOMINEE. AND, YOU KNOW, I WAS PLEASED WITH OUR SUCCESS LAST NIGHT. OBVIOUSLY, WE'VE GOT A VERY STRONG LEAD IN DELEGATES. A VERY STRONG LEAD IN TERMS OF THE NUMBER OF PEOPLE WHO HAVE ACTUALLY VOTED FOR OUR CAMPAIGN. WE'VE ORGANIZED A VERY EFFECTIVE TEAM. I'M REALLY PROUD OF THE FOLKS ACROSS THE COUNTRY THAT HAVE BEEN MAKING THE CALLS, KNOCKING ON DOORS, TURNING OUT VOTERS. THIS IS THE NATURE OF A CAMPAIGN THAT YOU HAVE TO HAVE TO TAKE ON THE OBAMA MACHINE. SO I'M PLEASED IT'S WORKING. AND WE'VE GOT THE TIME AND RESOURCES AND A PLAN TO GET ALL THE DELEGATES. WE THINK THAT WILL GET DONE BEFORE THE CONVENTION. BUT ONE THING I CAN TELL YOU FOR SURE IS THERE'S NOT GOING TO BE A BROKERED CONVENTION WHERE SOME NEW PERSON COMES IN AND BECOMES THE NOMINEE. IT'S GOING TO BE ONE OF THE FOUR PEOPLE THAT ARE STILL RUNNING.

KERNEN: GOVERNOR, WE JUST WERE TALKING ABOUT HOW MANY JOBS WE NEED TO GET BACK TO WHERE WE WERE BEFORE THE CRISIS. THAT'S LIKE 6 MILLION OR 7 MILLION. GIVEN THAT SOME OF THOSE CONSTRUCTION JOBS AND HOUSING JOBS MAYBE WERE NOT NECESSARILY REAL IN THE FIRST PLACE, WHAT DO YOU THINK FULL EMPLOYMENT IS RIGHT NOW IN THIS COUNTRY, AND HOW DO WE GET THE JOBS TO GET THERE AND WHAT CAN THE GOVERNMENT DO?

ROMNEY: WELL, WHAT THE GOVERNMENT CAN DO IS MAKE AMERICA THE MOST ATTRACTIVE PLACE IN THE WORLD FOR SMALL BUSINESS AND MIDSIZE BUSINESS AND BIG BUSINESS. WHAT IT'S BEEN DOING OVER THE LAST THREE YEARS IS EXACTLY THE OPPOSITE OF THAT. OBAMACARE CERTAINLY DID NOT ENCOURAGE A BUSINESS TO HIRE MORE PEOPLE. CHANGE IN THE NATIONAL LABOR RELATIONS BOARD AND THE RELATIONSHIP BETWEEN MANAGEMENT AND LABOR, THAT ALSO DID NOT ENCOURAGE PEOPLE TO HIRE MORE FOLKS. TALKING ABOUT RAISING THE TAX RATE, THE MARGINAL TAX RATE FROM 35% TO 40%, YOU REALIZE SMALL BUSINESS IS LARGELY TAXED AT THAT INDIVIDUAL RATE. AGAIN, THAT DISCOURAGES HIRING, IT DOES NOT ENCOURAGE IT. ALMOST EVERY SINGLE POLICY THE PRESIDENT PUT IN PLACE, DODD/FRANK AGAIN MAKES IT HARDER FOR SMALL BANKS TO MAKE LOANS. ALL THESE POLICIES HAVE MADE IT HARDER FOR AMERICA TO BE AN ATTRACTIVE PLACE FOR ENTREPRENEURS AND INNOVATORS, JOB CREATORS, YOU CHANGE THOSE POLICIES YOU GET OUR TAX RATES COMPETITIVE WITH OTHER NATIONS, YOU GET REGULATORS SEEING THEIR JOB IS NOT JUST CATCHING THE BAD GUYS BUT ENCOURAGING THE GOOD GUYS, YOU TAKE ADVANTAGE OF OUR ENERGY RESOURCES, YOU CRACK DOWN ON CHINA WHERE THEY DON'T PLAY BY FAIR TRADE RULES, YOU DO THOSE THINGS AND AMERICA ONCE AGAIN GETS THE ECONOMIC ENGINE IN GEAR.

KERNEN: BECAUSE WE GET THE FEELING WE'RE NOT A 5% UNEMPLOYMENT COUNTRY ANYMORE. WITH OUTSOURCING AND WITH ALL THESE STRUCTURAL PROBLEMS THAT MAYBE WE SHOULD BE -- WELL, WE'RE HAPPY TO BE APPROACHING 8% -- FROM ABOVE 8%. NO ONE'S SATISFIED. BUT YOU HEAR THAT'S SOME TYPE OF VICTORY IN THE UNEMPLOYMENT PICTURE. WHERE CAN WE GET ? CAN WE GET BACK TO 5% OR ARE THOSE DAYS GONE?

ROMNEY: WE COULD OF COURSE GET BACK TO 4% OR 5%. THIS NEW 8% IS AN EFFORT ON THE PART OF THE ADMINISTRATION TO TRY AND DECLARE VICTORY. DON'T FORGET, BACK IN JANUARY WHEN THE PRESIDENT HAD JUST BEEN REELECTED -- OR ELECTED FOR THE FIRST TIME, HE SAID IF WE LET HIM BORROW $787 BILLION, HE WOULD HOLD UNEMPLOYMENT BELOW 8%. THE 8% NUMBER WAS A FRIGHTENING NUMBER. IT HAS NOT BEEN BELOW 8% EVER SINCE. SO WE ARE GOING TO REMIND HIM 8% WAS HIS BOGEY AND HE DID NOT HIT IT FOR THREE YEARS MAYBE FOUR YEARS WE WILL SEE WHAT HAPPENS. WHAT HE IS TRYING TO GET US USED TO IS THE IDEA OF THE EUROPEAN SCALE OF UNEMPLOYMENT FIGURES, IF YOU ADOPT EUROPEAN POLICIES, IT'S NOT SURPRISING YOU'RE GOING TO HAVE EUROPEAN UNEMPLOYMENT. HE HAS ADOPTED EUROPEAN POLICIES WITH HEALTH CARE, WITH TAXATION, WITH REGULATION, WITH ENERGY POLICIES. WE ARE BECOMING A CARBON COPY OF THE SAD EUROPEAN NATIONS THAT HAVE BEEN STRUGGLING WITH POOR ECONOMIC CONDITIONS. AND THAT'S THE RESULT OF WHAT'S HAPPENING. WE WANT TO GO BACK TO BEING AMERICA WITH THE KIND OF PRINCIPLES THAT MADE US AN ATTRACTIVE PLACE FOR ENTREPRENEURS AND INNOVATORS AND GET THIS PRESIDENT OUT OF THE WAY SO WE CAN GET BACK TO THE KIND OF JOB CREATING MACHINE WE'RE EXPECTING.

ROSS SORKIN: WE'VE HAD A LOT OF EXECUTIVES AROUND THIS TABLE THAT HAVE COME OUT IN SUPPORT OF THE SIMPSON-BOWLES PLAN. AND I’M CURIOUS IF THAT WAS PUT TO YOU TODAY ON AN UP OR DOWN VOTE, IF YOU WERE THE PRESIDENT AND YOU HAD TO SIGN IT, WOULD YOU?

ROMNEY: WELL, I WANT TO MAKE IT REAL CLEAR THAT MY PLAN IS THE PLAN I PREFER. SO I'M NOT GOING TO SIGN UP FOR SOME OTHER PLAN WHEN THE ONE I'VE PROPOSED IN MANY RESPECTS IS BASED UPON THE PHILOSOPHY OF SIMPSON-BOWLES. I MEAN WHAT I’VE DONE IS EXACTLY WHAT THEY DID WHICH IS I'VE LOWERED THE MARGINAL RATES ACROSS THE BOARD AND I CAP AND LIMIT VARIOUS DEDUCTIONS AND EXEMPTIONS. WE CAN CHOOSE WHICH ONES THAT PRIMARILY ARE LIMITED FOR HIGH-INCOME PEOPLE, PEOPLE IN MIDDLE INCOME ARE GOING TO CONTINUE TO HAVE A PREFERENCE FOR HOME MORTGAGE INTEREST DEDUCTION AND CHARITY AND SO FORTH. BUT BY VIRTUE OF THE BOWLES-SIMPSON MODEL WHICH IN MANY RESPECTS IS THE SAME MODEL I HAVE IN MY PLAN, WHY WE'RE ABLE TO CREATE GROWTH AND NOT ADD TO THE DEFICIT. SO THAT'S THE HEART OF OUR PLAN. GET THE GROWTH BUT DON'T ADD TO THE DEFICIT.

STEMBERG: YOU'VE ALSO HAD THE COURAGE TO, LIKE SIMPSON-BOWLES, TACKLE ENTITLEMENT. WHICH TAKES A LOT OF COURAGE TO DO.

ROMNEY: I'VE BEEN REALLY SURPRISED, TOM, THAT YOU HAVE A PRESIDENT WHO'S BEEN IN OFFICE FOR THREE YEARS WHO FROM THE VERY BEGINNING SAID THAT MEDICARE AND SOCIAL SECURITY WERE IN FINANCIAL DISTRESS AND YET HE HAS BEEN UNWILLING TO PROPOSE ANY SERIOUS ALTERNATIVES TO SOLVE THOSE ISSUES. I FIND IT EXTRAORDINARY. I HAVE PUT OUT MY OWN PLANS. I KNOW THAT SOME PEOPLE HAVE TOLD ME, YOU CAN'T TALK ABOUT THESE ISSUES WITHOUT THEM BECOMING DEMAGOGUE AND KILLING YOUR CAMPAIGN. BUT THE TIME'S COME, WE HAVE TO TELL THE AMERICAN PEOPLE THE TRUTH. AND THE PLAN THAT I'VE PUT OUT SAYS THAT FOR PEOPLE WHO ARE IN THEIR 20s, 30s, 40s AND EARLY 50s, IF YOU WILL, THE SENIORS OF TOMORROW, THE RETIREMENT AGE IS PROBABLY GOING TO BE A LITTLE HIGHER. AND HIGHER INCOME BENEFICIARIES ARE GOING TO GET LOWER BENEFITS THAN LOWER INCOME BENEFICIARIES. AND BY VIRTUE OF THOSE TWO ADJUSTMENTS, YOU CAN SAVE MEDICARE AND SOCIAL SECURITY ON A PERMANENT BASIS. AND BY THE WAY, LET'S NOT LET THE PRESIDENT FORGET, THERE’S ONLY ONE PRESIDENT THAT I KNOW OF IN HISTORY THAT CUT MEDICARE BY $500 BILLION AND THAT'S PRESIDENT OBAMA. SO IF HE’S TRIES TO DEMAGOGUE OUR REASONABLE IDEAS TO SAVE THESE PROGRAMS, WE'LL HAVE TO REMIND PEOPLE THAT HIS UNREASONABLE PLAN TO TAKE $500 BILLION OUT OF THE PROGRAM FOR CURRENT SENIORS.

QUICK: GOVERNOR, THE PREMISE BEHIND SIMPSON-BOWLES IS THAT THERE NEEDS TO BE SOMETHING THAT'S DONE ON BOTH SIDES OF THE LEDGER BOOK. THAT WE BRING IN HIGHER REVENUE AND CUT SPENDING FROM THE GOVERNMENT. AND IF YOU TAKE A LOOK AT YOUR TAX PLAN, OBVIOUSLY THERE ARE A LOT OF DIFFERENT WAYS IT IS SCORED BUT H&R BLOCK HAS SOMETHING OUT RIGHT NOW THAT SAYS FOR A FAMILY OF OVER $700,000 – WHO IS MAKING OVER $700,000 IF THEY APPLY YOUR TAX PLAN TO IT, THAT FAMILY WOULD END UP PAYING A LITTLE MORE THAN $50,000 LESS IN TAXES. AND I GUESS MY QUESTION BECOMES DOES YOUR PLAN ASSUME THAT WE CAN GET TO TACKLING THE BUDGET DEFICIT BY CUTTING SOME OF THOSE EXPENDITURES AND BY RAISING GROWTH AND THAT ALONE, OR IS THERE A NEED TO ACTUALLY RAISE MORE TAX REVENUE?

ROMNEY: WHAT I PUT OUT IN MY PLAN IS A SERIES OF PRINCIPLES THAT ALLOW OUR ECONOMY TO GROW AND AT THE SAME TIME MAINTAIN A NEUTRAL BUDGET IMPACT. AND SO I HAVEN’T LAID OUT ALL THE DETAILS OF HOW WE'RE GOING TO DEAL WITH EACH ONE OF THE DEDUCTIONS AND EXEMPTIONS. I THINK IT'S KIND OF INTERESTING FOR THE GROUPS TO TRY AND SCORE IT BECAUSE FRANKLY IT CAN'T BE SCORED BECAUSE THOSE KIND OF DETAILS HAVE TO BE WORKED OUT WITH CONGRESS AND WE HAVE A WIDE ARRAY OF OPTIONS. ONE MORE PRINCIPLE THAT I MENTIONED AND I WANT TO MENTION IT HERE IS THAT IT IS ESSENTIAL TO ME THAT WE NOT PLACE A LARGER SHARE OF THE TAX BURDEN ON MIDDLE INCOME TAXPAYERS. SO THAT MEANS THAT WE'RE NOT GOING TO END UP WITH VERY HIGH INCOME TAXPAYERS TAKING A SMALLER SHARE. WE'RE GOING TO HAVE TO LIMIT THE DEDUCTIONS AND EXEMPTIONS IN SUCH A WAY, AGAIN LIMITING THEM TOWARD MORE HIGH-INCOME FOLKS SO THEY DON'T PAY A SMALLER SHARE OF THE TOTAL. THEY CONTINUE TO PAY THE SAME SHARE THEY'RE PAYING NOW. SAME THINGS WITH MIDDLE INCOME TAX PAYERS. I'M NOT LOOKING FOR A WAY TO CHANGE THE PROGRESSIVITY OF THE CODE. I'M LOOKING FOR A WAY INSTEAD TO LOWER THE MARGINAL RATES WHICH IS THE MOST POWERFUL WAY TO ENCOURAGE THE ECONOMY TO GROW AND TO GET INVESTMENT IN JOBS AGAIN. THAT, OF COURSE, PUTS MORE PEOPLE INTO PAYING TAXES AND HELPS RECOVER THE TAX REVENUES WE SO BADLY NEED.

QUICK: THAT MAKES SENSE BUT I GUESS MY QUESTION IS WHAT'S YOUR DEFINITION OF "WEALTHY" BECAUSE $250,000 GETS THROWN AROUND, $1 MILLION GETS THROWN AROUND. WHAT WOULD YOU PUT THAT CAP AT?

ROMNEY: WHAT I'LL LOOK AT IS THE VARIOUS COHORTS, THE TOP 5%, THE TOP 10%, THE TOP 25% WE’LL LOOK ACROSS THE CODE AT THE VARIOUS CATEGORIES OF TAX PAYERS AND SEE IF THEY'RE CONTINUING TO PAY THE APPROXIMATELY THE SAME SHARE THAT THEY HAVE IN THE PAST AND THE CURRENT SYSTEM. IT'S IMPORTANT TO ME THAT MIDDLE INCOME TAX PAYERS, THE GREAT MAJORITY OF AMERICANS, DON'T SEE AN INCREASE IN THEIR TAX SHARE. I WANT EVERYONE TO HAVE A REDUCTION AT THE TOP RATE. THAT HAS A VERY POWERFUL GROWTH INCENTIVE AND IF YOU WILL HOURS WORKED INCENTIVE. BUT I DON'T WANT TO DO IS TO CHANGE THE ORIENTATION SAYING, OKAY, THIS GROUP OR THAT GROUP IS GOING TO BENEFIT BY THE PLAN. THAT'S WHY WE WANT TO ADJUST THE EXEMPTIONS WITH THAT IN MIND.

KERNEN: WHAT SHOULD WE DO WITH CARRIED INTEREST, GOVERNOR? WOULD BAIN HAVE BEEN LESS SUCCESSFUL IF THERE WEREN'T THOSE INDUCEMENTS OR BENEFITS FROM CARRIED INTEREST? IT'S SUCH AN INFLAMMATORY ISSUE. I JUST WONDER WHETHER IT'S ESSENTIAL TO MAINTAIN THAT BUSINESS, THE PRIVATE EQUITY BUSINESS, IT'S ONE OF OUR BRIGHT SPOTS IN THIS COUNTRY. BUT IS IT NECESSARY TO KEEP CARRIED INTEREST WITH THE OPTICS THAT IT HAS?

ROMNEY: WELL, I THINK YOU HAVE TO LOOK AT EACH DIMENSION OF OUR INCOME STREAMS AND ASK IS THIS A TRUE CAPITAL GAIN OR IS IT ORDINARY INCOME? AND YOU LOOK TO EITHER THE COURTS OR TO THE IRS TO LOOK AT THE VARIOUS STRUCTURES OF INVESTMENT VEHICLES AND SAY, GOSH, IS THIS A TRUE CAPITAL INVESTMENT WITH THE RISK OF LOSS OR IS IT INSTEAD ORDINARY INCOME WITH NO PARTICULAR RISK OF LOSS? IF IT'S ORDINARY INCOME, YOU SHOULD TREAT IT AS ORDINARY INCOME. IF IT'S CAPITAL GAIN, YOU SHOULD TREAT IT AS CAPITAL GAIN. I DON'T BELIEVE THAT IT'S CONGRESS' JOB OR AN ADMINISTRATION'S JOB TO GO THROUGH AND SAY, HEY, THESE PEOPLE HERE ARE MAKING TOO MUCH MONEY. LET'S CHANGE THEIR TAX RATE TO MAKE THEM LESS ABLE TO BE FINANCIALLY SUCCESSFUL. I THINK YOU DO, HOWEVER, HAVE TO APPLY THE CODE IN A CONSISTENT WAY ACROSS THE BOARD. AND THAT'S PROBABLY SOMETHING WE SHOULD TAKE A CLOSER LOOK AT TO SEE, ARE WE TREATING CAPITAL GAINS AS CAPITAL GAINS OR ARE WE TREATING IN SOME CASES CARRIED INTEREST AS CAPITAL GAINS WHEN IT'S MORE LIKE ORDINARY INCOME.

KERNEN: GOVERNOR, THANKS FOR COMING ON "SQUAWK BOX" AFTER THE BIG NIGHT LAST NIGHT. WE APPRECIATE IT.

ROMNEY: THANKS. GOOD TO BE WITH YOU.

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