Blankfein, Simpson, and Bowles Call for Action on Nation's Deficit: Complete CNBC Video and Transcript

This is the complete transcript and video of Steve Liesman's exclusive CNBC interview with Lloyd Blankfein, Goldman Sachs Chairman & CEO, and Erskine Bowles and Alan Simpson, co-chairs of President Obama's National Commission on Fiscal Responsibility and Reform.

The interview aired live on CNBC on Thursday, October 11th at 12:30PM ET.

STEVE LIESMAN : I am here with an all-star— I'm calling it all-star trifecta. We have Senator Alan Simpson, we have Erskine Bowles, and Lloyd Blankfein of Goldman Sachs. We're going to talk deficit. We're going to go inside Washington and inside Wall Street for just about as long as they're willing to stay. Gentlemen, thanks for joining us.

VARIOUS : Pleasure. Thank you.

LIESMAN : Erskine, I want to start with you. You made a comment before we came on that said, "They didn't talk about the fiscal cliff or Social Security in the presidential debate." What does that tell you about the state of discussion about the issue of the deficit and the entitlement problems in this country?

ERSKINE BOWLES : People are never going to understand how critical this particular— particular time in history is. We have $7.7 trillion, trillion dollars worth of economic events that are going to hit America in the gut in December. And in Washington, they're doing nothing about it, nothing about it. We should be asking these guys running for president and every guy running for Congress, "What are you going to do? What kind of steps you're going to take?" You know, if we do nothing, next year you'll have the rate of growth slow to somewhere b— about, like, 3 percent to 5 percent. You'll have unemployment go up another 2 percent to around— above 9 percent. And two million more people will lose their jobs. And we're doing nothing about it. I can't imagine it happening' to Goldman Sachs.

LIESMAN : Lloyd Blankfein, when you look at the— at— at the horizon, what's coming, view of the economy, how serious is the fiscal cliff and how seriously do you hear Washington taking the issue?

LLOYD BLANKFEIN : Well, I think it's very serious. I think— I think the candidates know how serious it is. I think they're trying to avoid it. It may be, in part, because it is so consequential and serious. And maybe that the ideas— that ideas that would have to be put forward will be unattractive to some people. Obviously, we're in a position where new discipline's going to have to be imposed. People are going to be disappointed in the consequence. And so I think they're going to— avoid it. It takes a lot of courage— to take on these issues. And I think— it's up to the media to really enforce this onto the candidates, at this point.

LIESMAN : So you just threw it back at me, basically.

BLANKFEIN : Well, I think it's— and frankly, you could also say for the people who are the most aware of the consequences, namely people like ourselves, who are advisors to company who have to live in the economy, we sure know what the consequence will be. And it will be awful.

LIESMAN : Senator, if you were in a position now to be advising both candidates, what would you have them say now about the deficit, particularly in light there's a vice presidential debate this evening. What would you like to hear from them?

ALAN SIMPSON : Well, I think I'd want to tell them what a trillion bucks is. I know that's a silly exercise. Just say— well, let me tell you something about us— this country. If you spend a— if you spend a buck a second, you wouldn't hit a trillion for 32, 500 years. And if you spend a million a day since the birth of Christ, you wouldn't be at a trillion. And the big bang theory of the universe happened 13 billion 600 million years ago, that ain't even close to a trillion. And we owe 16 of those babies. So start thinking. And then you're going to borrow $3, 600, 000, 000 a day, every day. You're going to do that today, tomorrow. Every buck you spend, you borrow 41 cents. And I would say, "Will one of you— let a peep out of yourself of what you're going to do about that and to restore the solvency of Social Security without letting the AARP. tear your leg off or Grover Norquist on the other side rip the other let.

LIESMAN : I want to stick with you, Senator. Is your criticism equal for both parties? Is one of them worse?

SIMPSON : No, you bet. They're both— they're both in this. They worship the god of reelection. They're figuring all that— and how to duck every hot issue before November 6th. And then Erskine says the whirlpool of $7 trillion bucks going to hit us like— like a rainstorm.

BLANKFEIN : You know, what I'd— I'd say here. The fiscal cliff is obviously an important issue. And if we don't get through this moment, you know, there's going to be just a lot— it— it'd just be horrible and— what else I'm going to say may not— even matter in the long run. But assuming we get through the fiscal cliff, we have to get our budget on a sustainable path, where it's predictable. In other words, we may get through the fiscal cliff by deferring it or by having something where in the long run it's not sustainable. Because our budget deficit will keep growing wider and wider. In which case, the people who have to make decisions won't regard— gard it as a real long-term solution. What we really need to do is fix the economy of the United States on a sustainable basis, so there's some predictability, so people don't stand on the f— sidelines, and so they go and invest, and so jobs get created, and other people—

LIESMAN : Let me stop you right there. You— are you saying, hearing from clients, when you look at what's happening right now in the economy, in the book of business that you guys see every day, are people standing on the sidelines? Is this something that's affecting the economy right now?

BLANKFEIN : Oh, absolutely. The fiscal cliff specifically is one of the major ways in which the slow recovery that we have could be completely derailed. You know, hard landing in China— Euro collapsing, problems in the Middle East, and fiscal cliff is probably paramount in those— in— in that area.

BOWLES : We— we just met with a dozen— of the largest, high-tech company CEOs in the country two days ago. And they said, "Look, not only are they hording cash, but all of their customers, all of their suppliers are, because they are scared to death that we're going to go over this cliff. And it could be a catastrophe afterwards.

LIESMAN : Let me just stick with you— Erskine. The Simpson-Bowles is not in and of itself going to start the fiscal cliff problem. That is not the solution. If they enacted— I mean, they can't enact Simpson-Bowles tomorrow, could they?

BOWLES : Well— well, what— what— let me just tell you what the fiscal cliff is. It's the expiration of the Bush tax cuts. It's the expiration of the payroll tax. It's the expiration of the patch that's been put over the AMT so it wouldn't hit the middle class. And it's these mindless, senseless, across-the-board cuts that were put forth as a part of a sequester which came about because of the failure of the super committee. Every one of those issues is addressed in a long term fashion so it doesn't disrupt a very fragile economic recovery in Simpson-Bowles.

BLANKFEIN : Steve, just take it from a different direction, some people respond to fear and some people respond to opportunity. Take it from the other side. What if we came up with a situation tomorrow? You opened up a newspaper and there was some conciliation, there was some agreement. It may not be everything that one side would want somewhere in the middle, maybe even closer to the extreme that you didn't like. But there was some compromise that was laid out. What kind of a stimulus do you think that would provide?

LIESMAN : Tell me what— what your answer to that question is.

BLANKFEIN : Huge. Think of all the money—

LIESMAN : How much would the market go up on that, Lloyd?

BLANKFEIN : I can't— the market is a separate person. I'd be a buyer of the market. At— Goldman Sachs would inv— you know— you know, we're not only advisors to companies, we're a company ourselves. We would be assuming that our business would grow, that companies would be making more acquisitions, making more investments, that we would be doing more financings. And we would have to get the people on board to make sure that we were able to provide those advices and— those advice and those services.

LIESMAN : Senator, real quick?

SIMPSON : If— if they did a plan— they don't even have to go to our legislation. We've got it in legislative language. If they just did a plan that was signed by Democrats and Republicans alike, it would be what we call "the announcement effect." And it would be tremendous.

LIESMAN : Okay, let's leave it there. We're going to take a quick break and come back. We're just starting to scratch the surface here, with our all-star trifecta, Erskine Bowles and— Senator Simpson and Lloyd Blankfein. A lot more topics to cover. We'll be back in just a little bit.