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CNBC Exclusive: CNBC Transcript: House Majority Leader Eric Cantor Speaks with Larry Kudlow on CNBC's "The Kudlow Report"

WHEN: Tuesday, December 10th

WHERE: CNBC's "The Kudlow Report"

Following is the unofficial transcript of a CNBC EXCLUSIVE interview with House Majority Leader Eric Cantor on CNBC's "The Kudlow Report." Following is a link to the video on

All references must be sourced to CNBC.

LARRY KUDLOW: Now to respond, we have the House Republican leadership, the majority leader, exclusively, House Majority Leader Eric Cantor-- Republican from-- Virginia. Mr. Cantor, thank you very much, as always, coming back on The Kudlow Report.

First take on this. The sequester and budget caps have been broken. They have been listed. Now, I was around here in Washington, D.C., during the Reagan days. We had something called the Gramm/Rudman/Hollings Bill, which was also budget caps. Once they were lifted, they were never restored. I know that some conservatives are saying this evening that, because this sequester and the budget caps are being lifted, we will never have that kind of budget discipline. Your thoughts, sir.

REP. ERIC CANTOR: I think the important piece to this deal (and, yes, it is a modest deal) is we maintain the savings-- of the sequester. Remember, the sequester was in place because a super-committee back two years ago failed to come up with an agreement. What this is-- and it is an agreement on less than 10% of that sequester money, that $1.2 trillion.

So the savings are maintained, and what we've always said was we need the savings in the mandatory, the entitlement, the autopilot spending arena. And the savings that are inside this budget deal really are primarily derived from reforms to the pension benefits for federal employees. This is the federal government finally trying to do what most responsible states are doing and dealing with their unfunded liabilities connected with their pensions--

LARRY KUDLOW: I want to get back to that in just a moment. It's a very important point-- I'll grant you that. But a lot of people are saying, and have for the last, whatever, 24, 48 hours, a lot of people are saying, "You know, the House Republicans really didn't want to lift the budget caps. Really didn't want to lift the sequester. But the defense committee didn't want to take a $20 billion hit." That was the long and short of it. And if you had kept the sequester, it would have lost on the floor of the House. You would have lost 40 to 50 Republican votes, the defense hawks, so to speak. Was that truly the genesis of this-- so-called deal?

REP. ERIC CANTOR: Well, part of the downside of an across-the-board cut like a sequester is cuts take place for the good programs and the bad. Those of us who are strong national defense folks and believe in a strong national security policy don't like the indiscriminate nature of the cuts and how they impact the Pentagon.

But there was a commitment on the part of Republicans to maintain those spending reductions. The reason why these deal allows us even a better path forward it is maintains the savings but places those savings in a area, frankly, that are much smarter. And so that we can go about the business of reassuming our role in setting budget priorities and continuing to ratchet down the wasteful spending here in Washington.

LARRY KUDLOW: Do you have any idea when this will all be published? Will this be put on a website tonight? Whole lot of people want to see--


LARRY KUDLOW: --how the savings are being reallocated.

REP. ERIC CANTOR: Right. This is going to be up on the-- website, posted on the rule-- House Rules--


REP. ERIC CANTOR: --Committee website-- tonight.

LARRY KUDLOW: Transparency.

REP. ERIC CANTOR: Tonight. And we--

LARRY KUDLOW: Transparency

REP. ERIC CANTOR: --have always tried to live by the three-day rule, after what the prior majority had done, so that the American people can realize--

LARRY KUDLOW: health care scandal.

LARRY KUDLOW: We don't have to find out the-- later and we can read about it first, that's what you're saying? (LAUGH) That's the--


LARRY KUDLOW: --key reform right there. Let me ask you another thing. I notice absent from this is the $25 billion extension of unemployment compensation which many Democrats want. I am told, Mr. Majority Leader, that there will be a vote on that unemployment compensation outside the package. I have no idea what that meant. I only worked in OMB for four years. "Outside the package" is new nomenclature. But you, as the House majority leader, are you going to allow a vote on expanding unemployment compensation?

REP. ERIC CANTOR: So far as I know, the President has not come forward-- with a serious plan of unemployment insurance. And meanwhile, we in the House, as you know, Larry, remain focused on how you grow the economy, how you get the unemployed back to work. That should be our focus, that is our focus in the House, trying to afford more opportunity by promoting growth. Because as we know, upward mobility can only come from a growing economy--

REP. ERIC CANTOR: Just a couple other things. Now, I want to get your growth vision, it's very important, the speech you gave to the Virginia-- Republicans just the other day. There are a lot of fees. I used to call them "revenue enhancements" when I worked in government. There are a lot of fees. Some kind of airline passenger fee which supposedly is going to be for safety purposes.

You mentioned the federal employees, their co-pay is supposed to go up. That's a very controversial point, it's been tried for years and hasn't been made. Guarantees for the-- federal pension benefit guarantee corporation, which is-- a bit underwater.

Now, question. Will conservatives go for those fees? Will they call them revenues? I've already read Senator Marco Rubio say he will not sign off on this. I know that's not the biggest priority in the Senate. But the fact is, will conservatives go along with those fees, or will they call them tax hikes and object to this package?

REP. ERIC CANTOR: Well, first of all, there are no tax increases in this package. Larry, if you're asking me would I have-- rather have seen-- a deal without fee increases? Yes. But we're in divided government right now and obviously very frustrating that we can't get everything that we want.

So this deal has in it some fees, but if you look at the largest piece of that, which are the T.S.A. fees, when you go to the airport and go through security, that agency needs to be supported. And in fact, that agency, even with the fees reflected in this deal, is still not self--

LARRY KUDLOW: One of the most--

REP. ERIC CANTOR: --supporting.

LARRY KUDLOW: --hated federal agencies in America.

REP. ERIC CANTOR: I-- I wouldn't-- I--

LARRY KUDLOW: And you're going to give them more money?

REP. ERIC CANTOR: I wouldn't disagree with that. The problem is, the taxpayers are giving them more money. This way, users are-- should be supporting that agency. And even with this fee adjustment, -- it's still not supporting itself. And the taxpayers-- why is it fair for somebody in my district of Richmond, who never flies, to sit here and support T.S.A. for all those who do?

LARRY KUDLOW: Well, user's fees--

REP. ERIC CANTOR: And so this--

LARRY KUDLOW: --important. President--


LARRY KUDLOW: --Reagan believes in user fees.

REP. ERIC CANTOR: Well, that's what this--

LARRY KUDLOW: Used them several times.

REP. ERIC CANTOR: That's what this is and -- on the T.S.A. side, which is the largest piece of the fees-- in the deal.

LARRY KUDLOW: As you were talking and dealing with this with budget Chairman Paul Ryan, okay, did you and Mr. Boehner-- I'm just going to call you two the "leadership," quote/unquote. Did you and Mr. Boehner give Paul Ryan a green light, A) to lift the sequester caps? And, B) to go into the fee and revenue area? Did you say, "Go on ahead. We will support you"? Were you behind him the whole way?

REP. ERIC CANTOR: Well-- first of all, I want to say how proud I am of the hard work that Chairman Ryan put into this, his team, his committee, the budget committee that came to this agreement. Because as we know, having been in divided government now-- since 2010, it's tough. It's tough, because we have a lot of disagreement on taxes, on fees, on health care with this administration, this president, and the Democrats in the Senate.

So I think in working with Chairman Ryan-- what the speaker and I continue to advocate was our position's always been across-the-board, indiscriminate cuts, random, arbitrary cuts assassinated with the sequester were not as good as mandatory permanent cuts if we could-- achieve those. And unfortunately, again, the Democrats, they weren't going to sit down. If we could only get what we want, they wanted what--

LARRY KUDLOW: Did Mr. Obama--

REP. ERIC CANTOR: --they want.

LARRY KUDLOW: --show up at any point in these negotiations? I had not heard that he did.

REP. ERIC CANTOR: (LAUGH) Well, I don't-- I'm not aware of that he did which is, again, part of the problem around here, Larry. We could be working together a lot more, setting aside the differences. Saying no to tax increases, because that's what Chairman Ryan said from the outset. That's what the speaker and I have always felt: You shouldn't be raising taxes.

We got a spending problem here in Washington. And yet, if the president would say, "Okay, Republicans are for pro growth policies, not for taking more people's money. Let's figure out what we can do to grow the economy in that lane"--

LARRY KUDLOW: On that last point-- okay, last but maybe the most important one. You gave a very important speech to the Virginia Republican Party which suffered mightily in the last election. Okay, you said basically Republicans have gotta have a positive agenda and be united in order to win.

Now, last week, President Obama gave a speech where he said the greatest challenge facing America is inequality. Do you agree with that? Is that the positive message you're thinking about for the Republican Party? Or do you have a different, contrasting vision?

REP. ERIC CANTOR: The greatest challenge that this country has is to make sure that everyone has equal opportunity to go and earn success. Upward mobility can only come, first of all, if we're growing this economy. And second of all, at the human level, if people have the tools and the skills that they need to get up on that ladder of success. That is the aspirational optimism that our party is and should be about. And that was--

LARRY KUDLOW: You've lost some of--

REP. ERIC CANTOR: --my message.

LARRY KUDLOW: --that? Have you lost some of that, or can the G.O.P. rally back? Is 2014 going to be the year of hammering Obamacare? Okay, I get that. But to the exclusion of what you've just said, which I'm going to summarize from the great J.F.K. and Reagan line, "A rising tide lifts all boats"? Will the G.O.P. promote the rising tide?

REP. ERIC CANTOR: We're going to be promoting-- solutions to real problems that people are having. Then when you -- when you think about-- an inner-city mom that has to wake up and send her child to a poor-performing school, what does that mom and that child want more than anything? They want an-- just an opportunity to go to a safe place to learn.

I met a child like this in New Orleans couple weeks ago, 11 years old. He actually doesn't know his mother. His father's in jail. His grandmother that's raising him just found out had cancer. But he has a vision: He actually wants to go to college. Now that would never have been the case if it weren't for Governor Jindal's conservative solution that said, "Hey, we should have the ability for kids like Brian to go to school and have a quality education." We're going to be talking about things that can help lift people up to then go about their lives and earning their success and getting ahead.

LARRY KUDLOW: The opportunity agenda. Great stuff. Many-- many thanks. Republican House Majority Leader Eric Cantor. It's a great vision.

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