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CNBC EXCLUSIVE: CNBC TRANSCRIPT: CNBC’S LARRY KUDLOW SPEAKS ONE-ON-ONE WITH REPUBLICAN PRESIDENTIAL CANDIDATE MITT ROMNEY TODAY ON CNBC

When: Today, Tuesday, April 17th

Where: CNBC’s “The Kudlow Report

Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Republican presidential candidate Mitt Romney today, Tuesday, April 17th. The interview will run tonight on CNBC’s “The Kudlow Report” at 7PM ET and will be available on CNBC.com.

Also, following is the link to an accompanying story, Mitt Romney Not ‘Apologizing for Success,’ on CNBC.com: http://www.cnbc.com/id/47077150.

All references must be sourced to CNBC.

Video: Kudlow on Politics: Oil & the 'Buffett Rule'

LARRY KUDLOW

, host: Governor Mitt Romney, welcome back to THE KUDLOW REPORT, sir.

Former Governor MITT ROMNEY: Thank you, Larry. Good to be with you again.

KUDLOW: Yeah. And let me just say, happy tax day. And I want to ask you a whole bunch of tax-related questions, I'm sure you expect that. Listen, the 30 percent millionaires' tax, the Buffett tax was stopped in the Senate last night, you know that. Let me ask you this. President Obama, Vice President Biden and others, they're taking to calling it the Romney Rule. It's not the Buffett tax. It's the Romney Rule because they say that wealthy, successful people like yourself don't pay their fair share in taxes. I want to get your initial response to that, please.

Gov. ROMNEY: Well, you know, these kind of gimmicks that they've talked about, the so-called Buffett Rule, if they want to change the name, that's fine, too, they couldn't get it through their own Democratic Senate. And I think the reason is, people recognize that these gimmicks are not going to get America strong again, they're not going to create jobs. They're going to have the opposite effect of creating jobs. Someone calculated that the revenues that would come from the so-called Buffett tax would pay for government for about 11 hours. So it's not a--it's not a meaningful, thoughtful response to our challenges. What we really need to do is to simplify our tax code, lower our rates, at the same time, eliminate or limit, rather, some deductions or exemptions, particularly for high income folks, and by virtue of doing that, you can keep the progressivity in the code. At the same time, you can make it more likely for small businesses to start. Larry, the number of new business start-ups has dropped by 100,000 a year under President Obama, and that's costing us a lot of jobs.

KUDLOW: What do you say, you've got Senator Chuck Schumer on your case. He's saying you won't release your tax returns. He wants 10 years released because you're hiding stuff. And, in general, Governor, even some conservatives, they're asking this question, are you strong enough, tough enough? Will you defend your great business success against these class warfare attacks?

Gov. ROMNEY: Oh, the answer's, of course. We've got to stop apologizing for success here at home, and we've got to have a president that stops apologizing for America abroad. This is a nation which has always celebrated success and has encouraged people to try and reach for their dreams. And people who are able to achieve their dreams are not making other folks poorer, they're helping lift the entire nation. So I...

KUDLOW: Well, what...

Gov. ROMNEY: Of course, I'm going to stand up for success here at home. But, look, those people among the Democratic Party that want to raise taxes on people have to level with people and say, `As we raise taxes on folks, we'll make it harder to create jobs.' And jobs are what America needs. If people in America want a president that will look around for scapegoats to punish, well, you've got that president now. But that's not who I am.

KUDLOW: Why not release your tax returns? Why not go back 10 years?

Gov. ROMNEY: Well, we've had people run for president before, and they've released two years. John Kerry released two years of taxes, John McCain released two years of taxes. I've released one already, put the estimate out for the next year. We'll have two years of taxes. And, of course, what the Democrats want to do is to try and pick through any part of taxes to try and show that I've been successful. And I'll--and I'll already acknowledge that. Of course I've been successful. That's been released already, people know that. But they want to divert from the fact that the president has been a failure when it comes to creating jobs and turning around this economy. They want to make this election about trying to pick at me or other Republicans, as opposed to saying, how come this economy's not working and how come President Obama has failed? And that's what I'm going to focus on.

KUDLOW: Isn't it really, when you scratch it deep enough, isn't the Buffett tax really a tax increase, a doubling of the capital gains tax, which is like the principal investor tax, the principal stock market tax? Isn't that really what it is?

Gov. ROMNEY: Well, you know, the Buffett Rule really didn't have any much--any significance of note because it affected so few people, and it didn't raise any particular revenue that would make a difference for the government. So it's--it was just a political ploy, and that's why I think it failed in the Senate and why I think it's failed in the court of public opinion. But you know, the president is running a campaign based on dividing Americans and trying to find someone to blame for his failures. And it's absolutely true that his economic policies from day one have made it harder for businesses to grow. Obamacare frightened businesses from going out and hiring, Dodd-Frank made it less likely for small businesses to give out loans, his effort in cap and trade made anybody in the energy-intensive field frightened for making an investment. His labor policies, of course, scare people from hiring. He has made this recession deeper and last longer and the recovery slower, and so he's trying desperately to find some other way to get people to rally around him, even though the thing they care most about, a good job with a rising wage, is something he's failed to deliver.

KUDLOW: With all that, Governor, I mean, you yourself have been an investor. Are you surprised at how well the stock market has done? It's about doubled since early 2009, it's up about 25 percent since last October, early October. Actually today, as we talk, it's up quite substantially. Are you surprised how well stocks have done? What do you think that means? What do you think that's saying?

Gov. ROMNEY: Well, I've never been one that's tried to predict the stock market or even explain what's happening in the stock market. I think investors look at American industry and say that entrepreneurs and managers and inventors in America have continued to defy the odds, that they have made their businesses more productive or that they've been able to achieve higher levels of profitability despite, if you will, declining revenues from the peaks in 2007 and before that. So you have to look at American business people and the American worker and say they're doing a heck of a good job despite the fact that government has made it more difficult to start a business or expand a business. Right now what you're seeing in stock prices is the fact that businesses are profitable. What I want to see is not just profitable businesses, I want to see growing businesses, new businesses, and jobs being created. And that's something which has been terribly disappointing, in part because of this president's policies.

KUDLOW: Are you bullish or bearish on the stock market? You just gave a great riff on the causes of the rally, and I think you're right. Profits are the key. I call them the mother's milk of stocks. Would you be bullish or bearish, sir?

Gov. ROMNEY: I'm not going to predict the direction of the stock market. I--you know, I always like to quote the Yogi Berra line or as close to it as I can, which is that Yogi Berra said, in effect, that he doesn't like making predictions, particularly if the future's involved. So I'm not about to tell you which way the market's going to head.

KUDLOW: All right. Let me ask you another related question to stocks and the economy. Do you think the Federal Reserve should apply more stimulus, more quantitative easing, more money creating in order to speed up the economy? A lot of people on Wall Street do. What do you think?

Gov. ROMNEY: You know, I think, as you look back at the--at QE2, the second round of stimulus, it had very little positive effect. I don't think there's a reason for us to further inflate our money supply. My own view is that this is time for the Fed to pull back a little bit and let the market recover on its own. I just--I just don't think more quantitative easing is what's called for.

KUDLOW: And the president is out today blaming inflated oil prices, energy, gasoline and so forth. He's blaming energy inflation on speculators, I'm sure you've heard this, and I wondered what you think about it. Are speculators to blame for high energy prices?

Gov. ROMNEY: You know, you use the word blame. That's probably the word that could be most applied to the Obama administration, failure and blame. Blame, of course, is what he does. He looks at--any issue that he faces, he tries to find someone to blame other than taking responsibility himself. Now, as you and I know, speculators, which is a word which obviously has all sorts of negative connotations, are people who are investors who are trying to predict what the future price of gasoline will be. And by virtue of being able to make investments based upon their assessment of the future why businesses are able to prepare for the future. So speculators have long--or, if you will, investors in futures or people guessing the future of stock prices or of gasoline prices are playing a role in our market, what are they saying? They're saying that, as they look out, they think the policies of this administration and policies around the world are going to lead to higher prices in gasoline and oil. And as they see those things, the price goes up. The reason they're speculating or they're guessing or they're betting or they're investing the prices will go up is they see this administration having cut back on licenses for drilling for oil on federal lands by half, cutting back on permits by two-thirds, holding off drilling in the continental--outer continental shelf, holding off drilling in the gulf, insinuating themselves into fracking technology, trying to hold that up, not drilling in ANWR. They see an administration which does not like carbon-based energy, and they say, `With this kind of administration, you're not likely to see a reduction in oil prices and, ultimately, gasoline prices.' Their speculation, if you will, their investment is based upon their reasoned analysis that this president doesn't like fossil fuel.

KUDLOW: So there's an odd conundrum on this because one fossil fuel, natural gas, its price has plunged, 2 bucks or even less than 2 bucks, depending on which day you look at it. And looks like the supply there is almost unlimited. Won't this natural gas fracking revolution really change America, change business, make us more competitive, help people with utility bills at home?

Gov. ROMNEY: Yeah, it can be a real godsend. This natural gas can just be an extraordinary source of economic vitality for this country, make us more competitive, particularly in energy-intensive industries than we have been. Be a real blessing to the American homeowner. The natural gas revolution, given the new technology of horizontal drilling, fracking, the 100 years supply of natural gas, this is a huge benefit. But to take advantage of it, you have to have a distribution system that gets the natural gas to the homeowners and also gets it to the transportation network. But, again, this administration has been so focused on betting on solar technology and wind technology, which is far less economic, than they have been focused upon getting natural gas in a productive part of our economy and in the transportation system. Why, natural gas prices are at rock bottom because they're not able to be snapped up and used by the American consumer. Let's change that and get natural gas into the transportation and more broadly based throughout our infrastructure.

KUDLOW: All right. Let me shift gears back to tax day and some related issues. You told a Florida group, I guess it was a fund-raiser, I don't know if you meant to put this out or not, but you talked about some--eliminating income tax deductions for upper-end earners to pay for your 20 percent tax cut. You said second home, second home mortgages, some state and local taxes. What can you tell us about that? It sounds pretty sensible. Are you staying with that?

Gov. ROMNEY: Well, I've put a number of things on the table, and you understand that virtually all of the deductions and exemptions, particularly for high-income taxpayers, are going to be on the table because we're going to have to eliminate the--well, limit, rather, not eliminate, but limit for high-income individuals some of the deductions and exemptions in order to compensate for the reduction in rates. This is, of course, the way Bowles-Simpson laid out their plan. Bring the rates down, the tax rates down, the top marginal rates down so businesses have an incentive to hire again and to grow; and to pay for that, in part, by limiting the deductions and exemptions, particularly on high-income folks, because it is my attempt not to reduce the burden paid by the top earners but instead to maintain it at its current level but to bring the rates down.

KUDLOW: So you're sticking with it, you're not pulling back? There was a story in The New York Times, some of your aides were saying, `Oh, no, no, don't take that seriously.' It sounds like you're staying with it. Some of these deductions are going to have to go. And also, I want to ask you if you're staying with the sharp spending cuts for HUD. You mentioned your father, of course, ran HUD, maybe even eliminating HUD, Department of Education. And I was going to ask you why not get rid of the scandal-ridden GSA while we're at it?

Gov. ROMNEY: Well, I can say this, what I'm standing by is that--and I've said this from the very beginning--we are going to limit deductions and exemptions, particularly for high-income individuals. As to which specifics and how much the limits will be and at what income levels they'll be limited, that's something which time will tell. We'll work out that with Congress. But we're going to have to broaden the tax base and limit some deductions and exemptions if we're going to compensate for the reduction in rates.

And with regards to spending, yeah, a lot of what happens in Washington, I want to either eliminate or send back to the states. And I'm not predicting any particular department being eliminated. But I do believe you're going to see some departments become smaller or become combined because we just don't need as many bureaucrats and as much overhead as exists in Washington if we cut some programs entirely and if we send other programs, for instance, housing vouchers, send them back to the states. It would be a wonderful thing if we could shrink the size of the federal government and let this nation work on a more state-driven basis the way it was intended.

KUDLOW: Would you actually get rid of HUD if it came down to it? And would you abolish a bunch of other agencies? I have a little list of my own, the Labor Department, the Commerce Department, the Energy Department.

Gov. ROMNEY: I'll...

KUDLOW: I just wonder what you're thinking here. Because this is all sort of new, and it's all very interesting to us.

Gov. ROMNEY: Well, I've said that I expect that when I'm in Washington, we'll look at all of the departments and agencies, and we'll combine some. We--we'll--some agencies and departments may find their role much smaller. I don't want to communicate that we won't have policy related to housing or policy related to education. But those agencies or departments could conceivably be consolidated with others. And, again, I'm not--I'm not going to give you a specific department or agency today. I don't have one of those. But for purposes of discussion, a number of agencies can be made smaller or can be combined with others.

KUDLOW: All right, last one. Taxmageddon is what people are calling it, tax Armageddon, January 1st, 2013, I guess a $5.3 trillion tax hike is on the table. The Bush-era cuts would be rolled back, the AMT would be abolished, the payroll tax cuts would be taken back, all of that. If there were a President Romney, and you had to deal with this Taxmageddon, tax cliff that could destroy the economy right after the election, would you roll up your sleeves right then and there, during your transition, and get involved?

Gov. ROMNEY: Oh, the answer is of course. And what I would be looking to do is to reform our tax system entirely and to make it far more broad based with lower rates, very pro growth. Again, I'm not looking to reduce the burden paid by the high income earners. I know the Democrats always want to say Republicans are in favor of tax cuts for the rich. That is simply not true. I'm in favor of more jobs for everyone. But I want the tax--I want the taxes to be down. I want the burden to be reduced on middle income taxpayers. And that's going to be, I think, one of the--one of the advantages of having this tax event, this Taxmageddon as it's been called coming up, is this will focus a lot of attention on the need to reform our tax system, and that's something I intend to do.

KUDLOW: All right, last one. You've appointed your longtime aide, Beth Myers, to run your VP search, and I just wondered if you had one or two key characteristics that you're looking for in a vice presidential candidate.

Gov. ROMNEY: Well, that's part of the process to look at the history of VP individuals and who served as vice presidents and look at the qualities that are most effective and most helpful. But I can tell you that the one quality that comes to mind immediately is that you want someone who, without question, could lead the country as president if that were necessary. I think all of the political considerations pale in comparison with the consideration of who has the capacity to lead America at a critical time. And I hope if I'm the president that eventuality would never occur. But that has to be the key consideration.

KUDLOW: Do you have any reluctance in putting a woman on the ticket?

Gov. ROMNEY: No, of course not. I'd be happy to put a person of--anyone that meets the qualifications, the constitutional qualifications to be--to be a vice president. But I want someone who, without question, could be president. And there are women who meet that requirement, as well as men.

KUDLOW: Any come to mind? Any right now that come to mind?

Gov. ROMNEY: No. We got a long list. Larry, we got--we got a long list of people who are really extraordinary leaders in the Republican Party, and you can think of those names, as I can. It's not going to be an easy process. But I'm glad that Beth is going to be overseeing the vetting process and gathering the resources necessary to carry out a full and complete analysis.

KUDLOW: Governor Mitt Romney, the presumptive Republican presidential nominee, we thank you very much for your time, sir. Appreciate your coming back on THE KUDLOW REPORT.

Gov. ROMNEY: Thanks, Larry. Good to be with you.
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