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CNBC TRANSCRIPT: SENATOR MARCO RUBIO SPEAKS WITH LARRY KUDLOW TONIGHT ON CNBC

When: Today, Wednesday, August 29, 2012 at 7PM ET

Where: CNBC’s “The Kudlow Report

Following is the unofficial transcript of a CNBC interview with Senator Marco Rubio (R-Fla.) tonight, Wednesday, August 29th at 7PM ET on CNBC’s “The Kudlow Report.”

All references must be sourced to CNBC.

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LARRY KUDLOW, host: It's a pleasure to welcome back to THE KUDLOW REPORT Senator Marco Rubio of Florida. Senator Rubio, thank you very much, as always.

This is kind of an odd question. Chris Christie's excellent speech last night, but he talked about the second American century.

Senator MARCO RUBIO: Yeah.

KUDLOW: If I'm not mistaken, in your interviews with me and others, that's really your line, "the second American century." Did he--did he filch it from you? Should he have given you credit for that?

Sen. RUBIO: No, no. Actually, I say the "new American century," so it's similar. But I think it's a concept that all of us share. I mean, the belief that there--you know, this story about America doesn't have to end. In fact, I think we have the opportunity in so many ways to make America better than it's ever been. We're just a handful of important decisions away from that happening. And one of the unique opportunities that we have, not just in this convention but in this campaign, is to reaffirm the things of the free—things about the free enterprise system that make--made us prosperous and different. And I hope that's what we'll get to do here over the next 24 to 48 hours, is remind people that the economy grows when people take their own money and have the confidence to invest it in starting a new business, and that's how the cycle of prosperity begins.

KUDLOW: So, OK, we've got 1.7 percent GDP today, a very slight revision.

Sen. RUBIO: Yeah.

KUDLOW: We're running about 2 percent for this so-called recovery. The Joint Economic Committee has said many times this is the worst recovery in modern times, going back to 1947. Question to you, is the Republican Party, at this convention, on the campaign trail and elsewhere, has it reasserted itself as the party of growth? Two percent is no good, 1 1/2 percent is no good, we need 4 percent growth for employment, 4 percent growth to solve the budget and deficit. Is the GOP the party of growth?

Sen. RUBIO: I think we have reasserted ourselves. I think we can always do better. I mean, there's a lot of attention paid to the debt. The debt's important, but I think the debt's even more important in the context of growth. We have to explain to people why does the debt matter. It's not just because we owe a bunch of money, it's because it scares and discourages people from making the money they have available into our economy. They're—you know, the--why do you invest money? Because you expect a profit in the future.

KUDLOW: You know, can I just say something? There's a debt clock out there now.

Sen. RUBIO: Yeah.

KUDLOW: Where's the growth clock?

Sen. RUBIO: Well, to your point...

KUDLOW: Where's the growth clock that we really need here?

Sen. RUBIO: And that's what--you know, that's what matters to people at the end of the day. Because the number one issue in Washington may be the debt, but the number one issue in America is growth, it's jobs that aren't being created. It's opportunities that are not happening. So I do think we have to do a better job of focusing on that, and I think that Mitt Romney's the perfect messenger for that message because he understands how growth happens.

KUDLOW: Do you think investors and business, and I'm thinking particularly small business, do you think that they are gaining back their confidence in the Republican Party? That's an issue. The polls don't really show that. Small business investors, do they look at the GOP as their friend, as their pro-business, as the growth party?

Sen. RUBIO: I think that's something we have to work on, and it starts with basically pointing out that we're not the party of crony capitalism. We're not the party of crony capitalism. I made this argument yesterday on a couple of programs. I said, look, there's nothing wrong with big corporations, but they're going to be OK with big government. In fact, sometimes they use it to their benefit. The guys who get crushed, the gals who get crushed are the small businesses that can't afford to hire all the lawyers and the accounting firms and can't hire the lobbyists to change the rules if they don't like it. They're the ones that get destroyed by, they're the ones that get crushed by big government. I think we need to do a better job of making that argument because it happens to be true and it happens to be very effective.

KUDLOW: Can we flatten tax rates with a pro-growth tax reform while at the same time cutting spending to grow the economy and lower the deficit and the debt problem? There's a debate about the numbers here. Mitt Romney's got this plan. Chris Christie talked about it last night. In your judgment, can that argument be sold--lower taxes, lower spending, lower deficits?

Sen. RUBIO: Yes, because again, the argument we need to make to people is that when you--when you stabilize the tax rate, you flatten it, you simplify it, the economy grows, it actually generates more revenue. And we've seen that in the past. The problem is, for example, that even though we had historic increases in revenues in the 2000s, we had historic increases in spending that were even more historic. And that's the problem. The growth is great, but if you use the growth to finance more government, then you get into problems. So we have to have the combination. It's the only solution, the only way out, combination of growth and fiscal discipline.

KUDLOW: All right. Will you be the apostle of growth? Will you lead with that? Will you spend time on that?

Sen. RUBIO: I will spend time on it.

KUDLOW: Will you tell this convention that if you want to solve debt, one way to do it is growth?

Sen. RUBIO: Well...

KUDLOW: If you want to solve employment, you want to solve all the hardships--25 million people have evaporated from the labor force--growth, growth, growth, Republicans?

Sen. RUBIO: Well, my job tomorrow is to introduce Mitt Romney, but in the context of doing that, one of the things that makes Mitt Romney the best candidate for president is that he understands what's made our economy exceptional, and that's growth. And I'll describe why he understands it. And I'll describe in personal terms how growth in my life is real. Now, my parents were working class folks. My dad was a bartender, my mom was a hotel maid. Why did they have jobs? Because someone who had money had the confidence to risk it opening up a hotel. Because Americans had enough money left over.

KUDLOW: And they built--they built...

Sen. RUBIO: That's what--they built it, they kept it and they kept it running.

KUDLOW: Right.

Sen. RUBIO: Who else helped build it were the people that would travel there as tourists and leave money there in Miami Beach or Las Vegas. And therefore, my parents, never rich, but had enough money that they spent into the economy, creating jobs for others as well. That's how you create prosperity and growth. We've got to become the movement and the party of that.

KUDLOW: All right. Last one, tough question.

Sen. RUBIO: Yeah.

KUDLOW: Whole immigration question, OK?

Sen. RUBIO: Yeah.

KUDLOW: Republicans still have a very austere, almost punitive message. They're way behind in the polls regarding Latinos and Hispanics. It sounds like they don't want worker permits, it sounds like they don't want a path to citizenship. It's all about border security. But what about the 11 million people who are already here? What about those who were brought here as kids by their parents? How can the GOP win with such a punitive, austere immigration message?

Sen. RUBIO: Well, first of all, every time we talk about immigration, it can't be in the context of illegal immigration, what we're going to do about it. I think we have to start by bragging about the fact that a million people a year immigrate to the United States legally. A million people. No other country comes close. I think we have to follow that up by reminding people that immigration is not just good for America, it's important for our economic future. Ask the high tech companies, ask agriculture and...

KUDLOW: The brainiacs, we need the brainiacs for sure.

Sen. RUBIO: We shouldn't be deporting physicists and the nuclear scientists we're training.

KUDLOW: Right.

Sen. RUBIO: We would never train a general at West Point and send him to China. Why would we send them our best scientists and technology people? That all being said, we do have an illegal immigration problem. We have to have immigration laws, they have to be enforced. We have a broken legal immigration system. That contributes to illegal immigration. And we do have 11, 12, 13 million...

KUDLOW: But what's wrong with worker permits? What's wrong with teaching English?

Sen. RUBIO: Well, there isn't...

KUDLOW: What's wrong with teaching American history? What is wrong, at the end of the day, with a path to citizenship?

Sen. RUBIO: Well, the problem with that is, unfortunately, that it encourages--it rewards illegal immigration and it encourages it in the future. And let me tell you who it's really unfair to. It's unfair to the millions of people that are waiting to come here legally. I get them in my office every day. They come and they say to us, 'Well, we've been waiting seven years. My parents paid the fees, they waited in line.' What do I tell them? Come illegally, it's cheaper and easier? It sends a really bad message. It's not fair to those folks. Now, we have the issue of the young kids who were brought here when they three or four years old.

KUDLOW: Right, right.

Sen. RUBIO: I'd like to find a solution for that that's not amnesty. Beyond that, we have to do something that on the one hand tackles the issue but doesn't do it in a way that encourages or rewards illegal immigration in the future.

KUDLOW: But has immigration ever not been a growth factor? Has it ever not been a growth factor?

Sen. RUBIO: No, look, I think it's critical for our economy.

KUDLOW: Right.

Sen. RUBIO: We have to talk about how we need to have immigration for this country to continue to prosper. And--but it has to be done in a way that's good for America and a respect for the rule of law. And I think we can get there. I really do.

KUDLOW: All right. We're going to leave it there. Senator Marco Rubio, thank you every so much for being here.

Sen. RUBIO: Thank you. Thank you.

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