WHEN: Friday, February 16th

WHERE: CNBC.com's Speakeasy with John Harwood

When he announced his retirement from the Senate last fall, Jeff Flake of Arizona become one of the strongest Republican critics of President Donald Trump. "I rise today to say, 'Enough,' he told his colleagues, ripping the president of his party for policies and behavior he called "dangerous to a democracy." Last month, Flake delivered a second Senate floor speech likening Trump's words to those of 20th century Russian dictator Josef Stalin. As he leaves his Senate seat, he has pointedly declined to rule out challenging Trump by running for president himself. Yet he has not waged an all-out assault on the president's agenda. He joined fellow Republicans in delivering Trump's greatest victory so far, backing the $1.5 trillion tax cut despite his own expressed concerns about budget deficits. He sat down to discuss his approach to challenging this White House, and his future plans, in the Senate office that doubles as his living quarters when he's in Washington. A partial transcript from Speakeasy with John Harwood featuring Senator Jeff Flake follows.

All references must be sourced to CNBC.com.

JOHN HARWOOD: You going to have a hard time giving up this bedroom, home sweet home?

SEN. JEFF FLAKE: That I won't miss it.

HARWOOD: Have you done that the whole time you've been in Congress?

FLAKE: Yeah.


FLAKE: I'm cheap and poor. And even if I wasn't I'd do it anyway. It's just easier.

HARWOOD: You are the former head of the Goldwater Institute.

FLAKE: Right.

HARWOOD: I saw a copy of "Conscience of a Conservative" over there. And I think you've always had a reputation as a person of principle in the Congress. There are lots of different kinds of principles. What are the most important ones to you, at this moment?

FLAKE: Fiscal discipline, limited government. Being a conservative, I've always felt as believing in limited government, economic freedom, and individual responsibility.

HARWOOD: But there are ideological principles, there are principles of character, there are principles of national security. You've talked about threats to constitutional democracy and echoes of Josef Stalin. How important is that in your hierarchy right now?

FLAKE: Being a conservative is not just believing in limited government and economic freedom. It's being conservative in comportment and demeanor. You want to be consistent.

HARWOOD: That sounds more like manners than about national protection.

FLAKE: Well, I think it goes together.

HARWOOD: How big a threat do you perceive to the country from the political moment that we're in right now?

FLAKE: I think it's a big threat. Those are character traits, I guess, to be temperate and measured, I guess. But that's important for our allies to know that we're going to be there, going to be reliable – for trade partners to know. And for our adversaries to know where we are. Instead we seem a little unreliable, or a lot unreliable in terms of trade agreements or security alliances. And then when we have the president using language that really is not becoming of the United States president – calling the press the enemy of the people, to see his term "fake news" used by authoritarians everywhere to justify cracking down on dissent. Those character traits that are conservative, that are really absent now really, I think, put us in danger.

HARWOOD: Let me ask it differently. Do you think an authoritarian power overseas has managed to compromise the U.S. government?

FLAKE: No, I'm not saying that. I'm not one of those who run around calling for our president to be impeached. He's done nothing in my view that would warrant that.

HARWOOD: What you have concluded about what Russia did, what the president did or didn't do with respect to that, and what danger that poses as a matter of national security?

FLAKE: Well, I can tell you. Russia did interfere in our elections. It seems as if they did it to benefit one of the candidates. I'm not saying that that was dispositive, that's what made the difference. But that did occur. And what troubles me greatly is, I'm not aware of any Cabinet-level kind of meeting, or any high-level attempt to actually get a handle on this, and to figure out how we're going to respond.

HARWOOD: What do you conclude from anything that you have learned about Russia about whether the president or people close to him had anything to do with it?

FLAKE: Well, I'm not among those who think that the president is compromised, or that they colluded in a way.

HARWOOD: You're not?

FLAKE: No. Really, no. I don't think that the campaign colluded in some meaningful way. I don't think that they were organized enough, or competent enough as a campaign to do that. But it is troubling that they won't accept that that kind of intervention was happening on the part of the Russians and won't look to combat it. But I think it's more out of a sense of trying to protect his status of somebody who won the election. I don't think it's, I'm beholden to them somehow, or worried that they have compromising material. That is not my view.

HARWOOD: So when people would say – people like you, who have criticized the president, have not taken action commensurate with the threat that you identify, threat to constitutional democracy. Your answer is, you think that this is mostly something that happened that the president did not help make happen, and therefore it's somewhat less grave.

FLAKE: Some people think, well, if you disapprove of some of the president's actions, or his behavior, then you ought to vote against everything that he supports.

HARWOOD: You may have seen the piece that Ben Wittes and Jon Rauch did in The Atlantic recently where they said that Trumpism is a threat to the institutions of the United States, Republicans have become the party of Trumpism, therefore everything he is trying to do needs to be stopped in the higher interest of protecting those institutions.

FLAKE: I understand that impulse. That impulse was there as soon as Barack Obama was elected. Now, you know, the tables have turned – kind of the same argument on the other side. There may come a point at which you say, hey, this is a grave threat, and you can't agree with anything the president does. We're not there.

HARWOOD: Do you consider Obama and Trump comparably benign in terms of the danger to the country?

FLAKE: There are a lot of things I disagreed with President Obama on with regard to foreign policy and domestic policy. It's not as if I think the president is intentionally trying to undermine our behavior. He has a different philosophy and is, I think, a bit careless sometimes.

HARWOOD: When you wrote a check to Doug Jones, the Senate candidate in Alabama, Democrat, you wrote, "Country over party."

FLAKE: Right.

HARWOOD: I just want to ask you about that in light of two votes you made recently: one for a partisan tax bill that increased the deficit, the other against a bipartisan spending deal that also increased the deficit. Were you picking party and ideology over consensus view – country, if you will in those circumstances?

FLAKE: No. I would've written the tax bill much differently. I would've done the corporate tax reform, which we desperately needed – both sides of the aisle, really, knew that we needed corporate tax reform. I would have left the individual rates as they are. That's what set back –

HARWOOD: But you accept that it will increase the deficit and you are ok with that.

FLAKE: In the short term, yes. But in the long term, I'm enough of a supply-sider that I see the benefits there. With regard to the budget deal, oh my goodness, I don't know how in the world you can justify that.

HARWOOD: On the tax bill vote, one of the things you secured before voting the bill was a promise to do something about the Dreamers. Given where we are now, and given the prospects for actually getting legislated solution, you could argue that you on DACA, just like Sen. Collins on marketplace fixes for health care, simply got taken.

FLAKE: No, I don't think so. You can't ever say, "I demand, for this vote, passage of my version of DACA." You can't do that. All you can say is, "I want a vote."

HARWOOD: Going back to country over party and the question of potential threat to the country, do you think that to check and curb that threat, the country needs divided government right now?

FLAKE: I've said it many times before, the best formula for fiscal restraint is divided government.

HARWOOD: This fall, do you want to see more Doug Joneses elected to the House and Senate?

FLAKE: There are advantages for Republicans to control.

HARWOOD: Have you contemplated post-Senate life? Bob Corker seems to have contemplated it, and decided it doesn't look so good. He's changing his mind.

FLAKE: I haven't changed my mind, no.

HARWOOD: What are you going to do?

FLAKE: I don't know. I'm not swearing off public office. It's just, it's tough for somebody like me in a party like this right now.

HARWOOD: So does that mean we should take seriously the possibility that you might actually run for president?

FLAKE: No, I'm not saying that. I have no plans to run for another office. But I'm not swearing it off. I'll see what comes.

HARWOOD: Is part of your thinking to preserve your viability politically going forward?

FLAKE: I want to be effective in my final year here. I think that's the – somebody – and part of my calculation of leaving, or announcing I was going to leave, is I think somebody needs to speak out during this last year who is a sitting senator, who has a forum and a platform to do so. But like I said, I'm not going to oppose the president out of spite.




JOHN HARWOOD: The president's laid out conditions that include reductions in legal immigration, that I think go against what you think makes sense.

SEN. JEFF FLAKE: Yeah. Virtual –

HARWOOD: Cutting legal immigration is directly harmful to the U.S. economy, is that not the case?

FLAKE: Yes. I think somebody wrote – I think Fred Hiatt, in The Washington Post the other day – you can be pro-growth and anti-immigration, you just can't be both. And that's very true. We're going to need increased immigration in the out years. So that's why I can't vote for the Grassley bill unless it includes that.

HARWOOD: Whatever happens on DACA, do you believe that this Congress will pass reductions in legal immigration?

FLAKE: No, I don't. You know, anything that does that would have to pass 60 votes in the Senate. And there aren't those 60 votes. In fact, I don't think there's a majority of Republicans who would go for that. In fact, I know they are not.



JOHN HARWOOD: When you talked about competence a minute ago, what do you conclude from the Rob Porter situation about the competence and character of this White House?

SEN. JEFF FLAKE: Well, I think it was handled extremely poorly. Some of them have admitted that I guess. Others, not so much. But it was handled poorly. And there's a problem long term if we have dozens of people acting on interim security clearances, viewing classified material, handling classified material, and getting those briefings. It's not a good situation. I've already written to the administration, asking for answers on a few things.

HARWOOD: Do you think the president needs a new chief of staff?

FLAKE: That's his choice to make.

HARWOOD: But what's your view?

FLAKE: I don't think he was well served on this issue. On other issues, he's been better served. I've had disagreements with the chief of staff.

HARWOOD: So do you think this is something he could get past and be effective?

FLAKE: I don't know. We'll see, but probably. I mean, this is a tough job. Anybody who has a chief of staff job in this White House has got his work cut out for him, or her work cut out for her.



JOHN HARWOOD: How is John McCain, and do you expect him to be back in the Senate or not?

SEN. JEFF FLAKE: I visited him for about two and a half hours on Saturday. Part of the time it was several of us there, and then the last hour just me and John. Mentally, he's certainly all there. He was reading The Wall Street Journal and had a briefing paper on the budget on his lap when I walked in.

HARWOOD: How is he physically?

FLAKE: So, physically, you know, it's been tough recovering from the treatments. They had pretty tough treatments in December. It was really rough. He's recovered quite a bit since then. And as I've talked to him over the weeks, he sounded better and better.

HARWOOD: Do you expect to see him back here?

FLAKE: I do think he will. That's the goal. And he's working toward it. Working hard at it.

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