×

CNBC Digital Video Exclusive: Rand Paul Sits Down with CNBC’s Chief Washington Correspondent John Harwood

WHEN: Today, Monday, October 19

WHERE: CNBC.com's Speakeasy with John Harwood

Just like Jeb Bush, Sen. Rand Paul of Kentucky is a legacy candidate for president. He has hoped to hold the libertarian political base of his father, former Rep. Ron Paul of Texas, and expand its appeal within the Republican Party and with the broader electorate. In the wake of Mitt Romney's 2012 defeat, Paul initially garnered considerable attention in the Senate. In the name of privacy, he battled the Obama administration over national security surveillance practices. In the name of fairness, he reached out to African-Americans and criticized "big government" police practices in poor communities. Yet Paul has struggled for traction on the 2016 campaign trail. He has drawn fire from some libertarians for seeming to grow more hawkish as the threat from the Islamic State group in the Middle East loomed larger. While he vows to shake up Washington and junk the IRS code in favor of a 14.5 percent flat tax, he has watched iconoclastic candidates Donald Trump and Ben Carson, neither of whom has held elective office, seize headlines and top positions in Republican polls. Paul sat down to discuss the campaign at a Washington restaurant.

A partial transcript from Speakeasy with John Harwood featuring Rand Paul as well as web extras are below. All references must be sourced to CNBC.com:

John Harwood: Do you not think that the Libertarian movement needs to rethink the breadth of its appeal, that it hasn't discovered that—

Rand Paul: No, not at all.

John Harwood: — it's too narrow a movement?

Rand Paul: No, in fact, I think, really, what's happened, I remember in the 1980s, you know, when my dad ran as the Libertarian candidate, the word Libertarian was scary to people. Now I think it's the opposite. I meet people all the time who are liberals, but they'll come up and say, "You know what, I'm a little Libertarian on this issue and that issue." Or I meet conservatives who say, "You know, I'm a little Libertarian." And so it's actually, I think, it's seen as a badge of honor now, and actually, as a term that people don't want to run away from.

John Harwood: What is the meaning, in your view, of the rise of Donald Trump this year? What does that tell us about the Republican Party?

Rand Paul: Well, I think it shows you that we do live in a celebrity culture. And when a celebrity decides to run for office, there's somewhat, I would call, self-reinforcing news cycle. Everywhere you look, all day long he's on TV. I don't think having a reality TV star probably is going to be best for the country. I also think the debate—

John Harwood: Do you see him as capable of serving as president?

Rand Paul: I worry very much. I think I worry about someone who is so self-absorbed with their own importance and their own ability to figure out problems, that it's sort of like, "Give me power." You know, if you give me power, I am so smart and I am so rich that I will fix all of America's problems.

John Harwood: Talk about tax policy for a second. You're for a flat tax. Simple. Critics say regressive would add to the deficit.

Rand Paul: That would only be if you're unwilling to cut spending.

John Harwood: Trump, Jeb both say their plans, which would take the top rate down to either 25 or 28, Marco goes to 35 – would dynamically jumpstart the economy.

Rand Paul: Compare that to 14.5. I do everything at 14.5, business and individual. You'd fill out your tax return on one postcard. And I think there'd be a boom in this country like you've not seen before. But I'll tell you what's different about my flat tax than the others. Mine is actually different in the sense that I get rid of the payroll tax. So if you make $40,000 a year, you pay about $2,000 in FICA, your Social Security tax. I put that under the business tax. So people making $40,000 a year under my plan will get $2,000 more in their paycheck. And I think that would change my plan to make it more appealing to the working class. But my plan's not going through this Congress. Heck, Republicans don't even support a flat tax up here.

John Harwood: But why – isn't that a signal that it's simply not realistic to talk about?

Rand Paul: No, it's a signal we need to swap out the people up here. My goodness. People up here are for nothing.

John Harwood: John Boehner, Kevin McCarty, you need those people out of there, and a whole new group.

Rand Paul: I think that turnover's a good idea. I think what's happened is that people get beaten down by the system. And the longer people are here, the less likely they will be involved in change.

John Harwood: The Libertarian Party platform reaffirmed last year calls for phasing out Social Security. I know you don't call for that. But if a movement is identified with that goal, that's on the wrong side of the public, isn't it?

Rand Paul: Not every Libertarian is the same. On Social Security, ideally, there would be a private system. But we now have a government system and have had it for 60 or 70 years. And I think the public is not ready to just wipe out Social Security. But I think the public would be ready to say, "Could we have an additional thing, a private account, where you could save some privately?"

John Harwood: Tell me what you've learned in the race so far about yourself, the Republican Party and the strength of the Libertarian movement.

Rand Paul: I think, as I've gone around the country, what I've discovered is that we are a party that needs to become more diverse. We need more working class folks. We need more folks from all sort of walks of life. And I've often said that when our party looks like the rest of America, we'll win again. Our hope is that people see that there's a little more to campaigning. You know, we've raised and spent about $16 million. So I think we have significant organizational strength –

John Harwood: You think you're still very much in this.

Rand Paul: Absolutely. I think, eventually, people will reconsider the race. And my prediction is by the end of January, when we get to the first closed voting, I think you'll see it reevaluate, and almost everybody will be the same. The leader will be 15%. There'll be many people in the low double digits, and many people in the high single digits.

John Harwood: Senator, thanks so much for doing this.

Rand Paul: Thank you.

WEB EXTRAS FROM RAND PAUL'S SPEAKEASY WITH JOHN HARWOOD:

PAUL ON BEING FIT FOR POLITICAL CAMPAIGNING:

John Harwood: Everybody has got a different personality. I think of Bill Clinton as, like, perfectly suited to politics. Do you think your personality is a good fit for political campaigning?

Rand Paul: Well, I think it depends on what people want. I mean, if you want a glad hander, and you want unctuousness and falseness, Bill Clinton's perfect for you. We have this discussion, we have people say, "Well, Bill Clinton was such a great communicator." But the second I see him, I see falseness. And I see it just exuding. He's the guy that can cry on cue and stop it on cue. That, to me, is a real false nature. And I'm sort of human with warts and messy hair and sometimes messy clothes. I just am who I am. But I'm kind of happy who I am. I've been 52 years being this. I'm a physician. I like—

John Harwood: Can you connect emotionally with people?

Rand Paul: I don't know. That's for them to decide. I won an election with 56% of the vote. I won my primary with 64% of the vote. So there must be some connection there. And I think it's also maybe a mistake to classify people as introvert, extrovert, people's person, non-people's person, people don't like you, kind of stuff. I'm a physician. I am somebody who looks at problems analytically and thinks we could solve them. I'm also someone who's not so wedded to party that I can't talk to the other side. Some of my most exciting advances, I think, up here, is working with the other side on criminal justice reform. I'm willing to go to the White House. I'm willing to say the president's doing some good things on criminal justice reform. And I'm not afraid that Republicans will hate me because I've said something nice about the president, although I do disagree with him on about 99% of issues.

PAUL ON BEN BERNANKE:

John Harwood: Bernanke has said that he was a Republican, of course, appointed by George W. Bush. But he no longer is, because Republicans have been taken over, or have given into know-nothingism. And he was talking about people who, like you, who want to audit the Fed.

Rand Paul: Well, he should also self-examine and look back at how he's been part of the problem. And he should make the answer, "How is it a good thing to have price controls over the price of money?" See, and this is the real contradiction that they don't quite get and they're unwilling to get. If you ask Ben Bernanke or any of the other so called free market economists whether or not they're for price controls of eggs or potatoes or bacon, they'll say, "Oh no, price controls cause a distortion. They lead to shortages or abundance or food rotting on the shelves." And but then you ask them about money. And they're like, "Oh no, yeah, we should control the price of money." But it's a fallacy in their argument. And if price controls are bad for the market, they're also bad for the money, as well.

John Harwood: You reject the charge of know-nothingism.

Rand Paul: Well, let's have the debate. You know, Ben Bernanke, come on. Let's have a debate about what's best for the economy, and whether fixing the price of money and fixing it below the market price is a good idea. He's going to have to defend the policy that led to the expansion of the homes, the home building, and then led to a precipitous crash. These are all the same people, too. Look at all of their interviews leading up to 2007. And they'll say, "Oh, there's no way home pricing could go down." They're all over all of the financial networks, saying, "Home prices have always gone up. They always go up. They'll go up 10% again next year. And don't you fret, they'll always go up." They were wrong. They've been wrong about everything. And so, no, they need to answer that. And I think it should be illegal for them to lobby against my auditing bill. Why would we let a monopoly, that we've granted monopoly, come back to Congress and lobby us against looking at their books?

PAUL ON MARCO RUBIO AND SYRIA:

John Harwood: I interviewed Marco Rubio the other day. He said that, on Syria, he supports a no fly zone and said—

Rand Paul: Terrible idea.

John Harwood: — he was willing to use force against Russian airplanes, if necessary, to enforce that.

Rand Paul: Terrible idea. Man, are we—

John Harwood: What do you think about that?

Rand Paul: We are really lucky he was never president during the Cold War. I mean, Reagan avoided a Cold War by, one, not setting red lines like that. Continuing to have open communication with the Russians, having a strong enough defense to repel attack, and to worry the Russians. But we did not try to get involved with an altercation with them —

John Harwood: You would not be willing to shoot down a Russian airplane to keep it out of Syrian airspace.

Rand Paul: You know who invited them there. Syria's invited them there, and so has Iraq. And here's the thing. And this is where the Rubios and the McCains of this world need to reexamine history. When you look at what happened, Iraq, we spent a trillion dollars, we toppled Saddam Hussein. Who is their number one ally now? Iran. Who is Iran and Iraq allied with? Russia. Who gave Russia permission to fly over them to bring the equipment in? Iraq. Just this week, Iraq has said that they welcome Russia there and they want Russia to be bombing targets in their country. And so what are we going to do? We're going to declare war against Russia and put them out? It's – but setting up a no fly zone is a recipe for disaster. It's a recipe for confrontation. And people will say, "Well, we've got to choose sides." Why? Assad's a bad person and so is ISIS, but we shouldn't be involved in the civil war over there.

About CNBC:

With CNBC in the U.S., CNBC in Asia Pacific, CNBC in Europe, Middle East and Africa, CNBC World and CNBC HD , CNBC is the recognized world leader in business news and provides real-time financial market coverage and business information to approximately 371 million homes worldwide, including more than 100 million households in the United States and Canada. CNBC also provides daily business updates to 400 million households across China. The network's 15 live hours a day of business programming in North America (weekdays from 4:00 a.m. - 7:00 p.m. ET) is produced at CNBC's global headquarters in Englewood Cliffs, N.J., and includes reports from CNBC News bureaus worldwide. CNBC at night features a mix of new reality programming, CNBC's highly successful series produced exclusively for CNBC and a number of distinctive in-house documentaries.

CNBC also has a vast portfolio of digital products which deliver real-time financial market news and information across a variety of platforms. These include CNBC.com, the online destination for global business; CNBC PRO, the premium, integrated desktop/mobile service that provides real-time global market data and live access to CNBC global programming; and a suite of CNBC Mobile products including the CNBC Real-Time iPhone and iPad Apps.

Members of the media can receive more information about CNBC and its programming on the NBC Universal Media Village Web site at http://www.nbcumv.com/mediavillage/networks/cnbc/.