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CNBC Exclusive: CNBC Transcript: U.S. Treasury Secretary Jacob Lew Speaks with CNBC's Steve Liesman Today on CNBC's "Squawk Box"


WHEN: Today, Wednesday, April 9th

WHERE: CNBC's "Squawk Box"

Following is the unofficial transcript of a CNBC EXCLUSIVE interview with United States Secretary of the Treasury Jacob Lew on "Squawk Box" today, Wednesday, April 9th. Following are links to the interview on,, and

All references must be sourced to CNBC.

STEVE LIESMAN: Andrew, thank you very much. I am here at the treasury secretary's office where we think this is the first live interview. Mr. Secretary thanks for joining us.

JACOB LEW: Great to be with you this morning, Steve.

STEVE LIESMAN: We meet ahead of the meeting of world leaders for the IMF World Bank meeting-- where in Sydney, you pledged to a very ambitious growth program. What is the United States doing to deliver its part of the growth in the world, particularly in a time when it's difficult to get anything at all out of Congress?

JACOB LEW: You know, Steve, if you look at the IMF's world economic outlook that was released yesterday, it shows that amongst the developed countries, the United States is leading the economic recovery. So I think we're doing our part. We took tough decisions-- you know, six years ago. And we stuck with them. We have our economy growing, we reformed our financial system, we have our fiscal house in a much better place.

And we have, you know, growth that is by world standards doing very well. As you know, by our standards, we still have a lot of work to do. As long as there are millions of Americans who want to work full time or want to find jobs who can't, we're not done with our work. But when you look at the world, the U.S. is a strong driver of growth. Our concern is that there are many pockets in the world that could do a bit better if the right policies were made. And I think one of the things we'll be talking about this week, as we did in Sydney, is how to drive that growth agenda.

STEVE LIESMAN: I want to get to the world in a second. But I want to concentrate on the United States for a moment. We keep getting stuck in the twos, 2% growth, 200,000 seems to be a top in jobs. And, yes, relative to the world, it's better. But relative to the size of the decline in the United States, it seems like we cannot get over the top. Where's the boom you might expect relative to the decline we had?

JACOB LEW: You know, Steve, if you look at where we are now compared to where we were just a few years ago—kind of being in the high twos with a debate about whether or not we could cross the line to three is a lot of progress. So we have to remember, we've come a long way. We started out in a very bad place. And we've made a lot of progress.

You ask me where the spots in the economy are-- there are a lot of signs of health in a lot of sectors in our economy. But there are some that have been a little bit behind in terms of recovery. So, for example, in housing and construction.

We've seen housing values return in a fairly decent way. We haven't seen as much progress in new starts and in construction. That's a potential for another boost to the economy. So where we are now is before we've seen a full recovery, and a part of the economy that is normally contributing to a recovery.

So I think there are many parts of the economy that still could do better. And we have to continue to pursue policies to try and make sure that we boost the chances of that happening both in terms of specific policies and in broad policies.

STEVE LIESMAN: I want to come back to those policies. But let's talk about where you started to go which is what the rest of the world can be doing. Europe seems to have bottomed out. However again, no strong growth there. What kind of policies would you like to see Europe enact?

JACOB LEW: Look, I -- we've been very clear in our conversations with our European friends that we think that particularly in surplus countries there is a need to boost demand. You know, there's a demand problem in the world and there's a demand problem in Europe.

STEVE LIESMAN: Let me cut you off. Surplus countries, you mean specifically Germany.

JACOB LEW: Look, I've always been careful not to point a finger, you know, at one or another. There are a number of countries that could do more. You know, Germany obviously is one of the surplus countries in Europe. I think you know, there are-- if you look at Europe as a whole, the growth rate has stayed very modest. The risk of deflation is something that has a lot of people concerned. And, you know, the answers lie in, I think, policy decisions that could be taken. That's actually the good news. There are solutions that would help.

STEVE LIESMAN: Give us one you'd like to see enacted in those surplus countries.

JACOB LEW: Well, look, the policies that we're talking about in the United States-- things like investing in infrastructure, those are the kinds of things that stimulate demand. So it's a good thing in Germany that in their new government they made a commitment to increase spending on infrastructure.

You know, this is a question of not if you take action but how you turn the dial. We think that the risk of low demand and the risk of deflation is something that they need to be very alert to and they need to take a little more, not a little less.

So, you know, we have friendly conversations. You know, I tend to think we need to look in the mirror as well as look at others. You know, we have an agenda for what growth, you know, what would stimulate growth in the United States. And I think it's a pretty good agenda. You know, things like infrastructure, things like skills training.

STEVE LIESMAN: I need to cut you off for a second, because you talk about infrastructure here. And I want to get back to the global thing. But while you're bringing that up former transportation director, Ray LaHood, said he sees very little prospect that the highway bill will be reenacted.

The president has – it will be renewed. That it's going to run out of money in September. The president has proposed several hundreds of billion dollars for infrastructure. It looks like almost no chance of passage. How do we go around to the rest of the world to do X when we can't do that?

JACOB LEW: Look, I have high regard for Ray LaHood. He's a very good friend and he was an outstanding secretary of transportation. I'm a little more optimistic on infrastructure than that. First of all, you know, if you go back to the beginning of this administration, we did quite a lot in infrastructure in the recovery act.

And there-- that's to the benefit not just of our macroeconomic condition, but we have better roads and better facilities around the country. I've worked in this business for over 30 years. I do not believe that support for infrastructure is a Republican or Democratic issue.

I think that there is almost universal support for having better roads, better ports, better airports. The challenge is how to come together to an agreement where you put a program together and a way to finance it. I personally believe that there will be agreement on what to do on the highway bill because I don't believe it's an acceptable outcome for the highway bill to expire.

We have a plan to jump start spending on infrastructure. It would be to combine infrastructure with business tax reform which would be a great thing for the economy and for our business conditions. I haven't given up on that. And I think it's--

STEVE LIESMAN: But it's an election year. There seems almost no prospect of that happening.

JACOB LEW: Steve, not everything gets done in the next six or nine months. I think if you look at the Republican chairman of the ways and means committee's tax plan he kind of recognized that there is a linkage between business tax reform and infrastructure.

This is a long process. I think that if you accept as I believe that infrastructure is something that we need in this country to be competitive in the future. And it's something that has broad bipartisan support. You have to keep working at it and finding a solution and that's what we're committed to doing.

STEVE LIESMAN: Let's keep weaving I guess, domestic, foreign.


STEVE LIESMAN: Let's go back. Recently, some strong statements were made about China and their currency policies. Are you concerned that China is now in a process of devaluing the Yuan competitively to get an advantage against the United States?

JACOB LEW: You know, Steve, from the-- my first day in this role and from before that and really from the beginning of this administration we have been very clear with China that they need to move towards a market-determined exchange rate. And that there needs to be progress on a steady basis.

We saw period of progress. We recognize that. Just a few weeks ago they took an action to double the trading band. And at the time I said that was something that was a positive move because it was potentially a step towards more market-determined interest rates.

They had a concern that the RMB was only going up and that it was becoming a magnet for you know, for the carry trade because of the higher interest rates. And they needed to demonstrate that it could go down as well as up in order to reserve stability in their system. I think they've demonstrated that quite clearly.

STEVE LIESMAN: It went down.

JACOB LEW: It went down. They need to get back on the path of demonstrating that they're committed to moving towards a market-determined exchange rate. It is-- if they want the RMB to be a world currency someday, if they want it to be a reserve currency someday they need to demonstrate that.

And from our perspective it's something that is very important in preserving a level playing field for trade in the world. So this is something I have raised many occasions with the highest levels of China's leadership. I will continue to do so. And it's something that we need to be seeing signs of progress.

STEVE LIESMAN: Did you recently talk to them about this issue?

JACOB LEW: Yes, I've recently talked --

STEVE LIESMAN: About this specific intervention that they made?

JACOB LEW: Well, I talked-- whenever I engage with my counterparts and people who are in the even more senior leadership, you know, I've met with the president twice, I've met with the premier, I've met with the vice premier a number of times. I've met with the head of their central bank.

I don't have a meeting where I don't raise this issue and show a very deep understanding of where we are. Now one thing they could do that I think would help would be to be more transparent. Because it's not always easy to see what they're doing. And they can hide behind the fact that they say they're not doing what it looks like they're doing. So they could be more transparent. That would be an important step right away.

STEVE LIESMAN: Mr. Secretary, across the seat to Japan, how much concern do you have with the recent consumption tax increase there? Do you think that could derail the gains that happened last year as a result of the stimulus?

JACOB LEW: You know, Steve, I think you have to take a step back and remember where Japan has been for the last two decades and where-- what the progress they've made over the last year. They had, you know, 15 plus years of economic stagnation, deflation.

And we, along with the rest of the world, were saying, "You need to do something about this. You cannot allow Japan's economy just to spiral down and stay there." You know, the Abenomics put in place the first two arrows rather quickly using monetary policy and some pump priming to get their economy moving.

So they have a growth rate, you know, that is positive and they have turned the tide on deflation. Now the question is where are they going? They also had a fiscal problem. They needed to get their fiscal house in order. There's a balance between getting your fiscal house in order and keeping your short-term economic position where it needs to be. The value-added tax is something that obviously has the potential to slow the economy. We have encouraged Japan on many occasions to look at offsetting policies that they could use to make sure that it doesn't turn the progress they've made around.

They need to stay vigilant in that and respond if they see signs of it. But I want to make one more point which is there is a third arrow to Abenomics and that is the long-term structural reforms. I personally believe that the history of this program is going to be in how effective they are at putting in place the kinds of long-term reforms that create a more efficient Japanese economy and create more sustainable demand in Japan. And that's something where the jury is still out. They've yet to take the actions. There's been a lot of discussion of it. That's something that, I think, we all need to hope that they make the right decisions.

STEVE LIESMAN: Mr. Secretary, back to domestic concerns. There are several large hedge funds and several lobbying groups right now that are trying to get the U.S. government essentially to pay some of the dividends from Fannie Mae and Freddie Mac. Do you have a position on that? And what is the prospect for them to get any value out of the shares they currently own?

JACOB LEW: Look, our position has been very clear. You know, when the GSEs went into conservatorship, it was at a time when there was an enormous tax payer exposure to those companies. And not just the direct exposure but the economic crisis, the financial crisis caused by the practices in those companies.

I think that we need to continue to work on GSE reform. We need to continue to look to a future where there's a different kind of playing field for housing finance. And I think that if you go to main street America and ask people whether they've been made whole from the financial crisis, I doubt a lot of people would tell you that they feel they've been made whole.

STEVE LIESMAN: Final question, foreign, back to the foreign, has there been an effect that you could measure on the sanctions that we've levied against Russia? And what more is in the U.S. toolbox if Russia were to go further?

JACOB LEW: I think that our sanctions program has been effective and it's continuing to be effective. The president made very clear that Russia's violation of Ukraine sovereignty and its borders is unacceptable. Took tough action against individuals who are central to the decision making and close to the leadership.

Has taken action against a bank that is the bank that many of those people have their assets in. And I think that the message that there will be consequences to these kinds of actions is very clear. You know, the president signed an executive order that laid out options delegating authority to me to do some pretty tough things.

The reason for that was not because we want to do that. We don't want to be sanctioning Russia. We want Russia to look for a way to take decisions that will reverse what it's done and not make further incursions into Ukraine. I think the message of the sanctions is clear and I think frankly the record of this administration on implementing sanction has been clear in many, many fronts.

STEVE LIESMAN: But is there more the U.S.--

JACOB LEW: Yes. The executive order that the president signed puts in place authorities that have not yet been acted on. So there is more we could do. And what I'm saying, Steve, is the best thing for Russia and the best thing for the world is for Russia not to take the steps that cause further sanctions to be necessary. But there should be no illusion that we've done everything we can do. We've put in place a blueprint that makes clear that there's quite a bit more we could do.

STEVE LIESMAN: Mr. Secretary, thanks for joining us, inviting us into your office to come and see. And on behalf of Joe, Becky and Andrew, inviting you to our office up in Englewood Cliffs sometime.

JACOB LEW: Well, it's good to be with you, Steve. And welcome, I look forward to seeing you again.

STEVE LIESMAN: Joe, back to you.

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