WHEN: Today, Wednesday, July 25th
WHERE: CNBC's Capital Exchange event in Washington D.C.
Following is the unofficial transcript of CNBC’s John Harwood’s sit down interview with Mick Mulvaney, Director, Office of Management and Budget and Acting Director, Consumer Financial Protection Bureau, today at CNBC’s Capital Exchange event in Washington D.C.
All references must be sourced to CNBC’s Capital Exchange.
JOHN HARWOOD: --it's good to see you. Good morning. So, do you like being called-- Mr. Director or Congressman? Which is the higher title?
MICK MULVANEY: That's not even close. It's-- Director is much better than Congressman. So-- looking-- I'm looking at Jeb and Maxine when I say that. So-- I don't have to do fundraisers anymore. So--
JOHN HARWOOD: The-- well, that's interesting you say that because you said something a few months ago that attracted a lot attention. And I wanted to see if you—
MICK MULVANEY: Oh, goodness gracious, sure.
JOHN HARWOOD: --have an opportunity to explain it, which is the comment about-- if somebody had given money to your campaign, you would talk to them or not. Or if they hadn't, you wouldn't. Elizabeth Warren, who I-- interviewed over the weekend, said that that was another example--
MICK MULVANEY: Did-- did she mention me? Probably?
JOHN HARWOOD: She-- actually, she didn't on this occasion, but previously she said that was an example of the most corrupt administration in history.
MICK MULVANEY: Yeah.
JOHN HARWOOD: Can you address what you were--
MICK MULVANEY: Yeah, and she wrote me a letter about it. But-- what I said, by the way, for those of you who aren't familiar with it, was I was giving a speech to a large group of-- I can't even remember who they were, community bankers, I think. And they were in town-- for their annual march on the hill. A lot of organizations will do this. They were there to go meet their-- their delegates or their-- their representation in Congress. And I was trying to encourage them, so what I said was exaggerating to-- to prove a point, which is like, "Look, if you were-- a lobbyist who gave me money, maybe I would meet with you. If you're a lobbyist who didn't give me any money, I wouldn't meet with you. But if you came from back home, I always took time to meet with you." And I was encouraging them to stay engaged in the process, that-- that money does not really buy access like it does in Washington D.C. It's important for people from back home to come up and get involved. And of course, folks who were not at the speech-- took the text out of context and said a bunch of things that I had said, that I was selling access and so forth, which is completely false. Elizabeth and a bunch of other folks-- sent me-- sent a letter. There was a very brief investigation and I think the-- Office of Special Counsel sent a letter, which I sent back to Senator Warren, and of course we never heard anything back from her after this. It said—not only did Mulvaney not say what you say that he said, but anybody who read it in context said he was actually encouraging people to stay involved in the-- in the democratic process. So, I think it's pretty much gone-- gone away after that.
JOHN HARWOOD: So, it was-- you meant the opposite of what-- what--
MICK MULVANEY: Yeah, I was encouraging those folks to stay involved, not hire lobbyists. Don't rely on other people to make your case for you, especially if you're grassroots folks from back home. Come up and then-- I said I-- actually I think I said that is a fundamental principle of our representative democracy. And I still think that it is. And I still encourage people. It's-- it's-- you know, you want to write a check to-- to a national organization, that's great. But taking the time to actually come to Washington D.C., to talk about things that are important to you, is what we need. Keep in mind the number of things that-- that Maxine and Jeb and I will deal with, or I used to deal with when I was on the Hill, in any particular day could be lit-- literally infinite. The number of things that a member of Congress has to be-- conversant on is almost-- almost unlimited. And we really-- sometimes do not know what's important to you until you actually take time to tell us. And I still think that's a message that needs to-- needs to be said.
JOHN HARWOOD: Well, I-- I mean, I would say I-- I think a lot of members of Congress-- do-- pay attention to who gives and not gives when they sit down with them. So, it's not as if that behavior doesn't exist--
MICK MULVANEY: Yeah.
JOHN HARWOOD: --but it's also the-- the definition of the swamp.
MICK MULVANEY: Still nothing counts more than real people coming up to get involved. It really does. You-- if you get-- let-- we all get these from time to time. You'll get a form email-- and the form emails, you-- you pretty much know that-- I-- I got one the other day over at the Bureau. I got a hundred of-- no, it was actually during the reorganization. We had talked about trying to-- to unite-- food safety with U.S.D.A.-- instead of splitting it now between the U.S.D.A. and the F.D.A. It's the example I gave about how-- a chicken is regulated by the U.S.D.A. It lays an egg, that's regulated by the F.D.A. You break the egg to make an omelet, it's regulated again by the U.S.D.A. That's just-- that's-- it's true, by the way. It's-- and it's just crazy. And I-- I gave that example at a cabinet meeting that got-- got some press.
JOHN HARWOOD: Good eggs this morning, by the way.
MICK MULVANEY: Yeah, they really-- I-- I did not—Hensarling’s eating my eggs. I didn't get a chance to eat them.
HENSARLING: They are good.
MICK MULVANEY: And-- and then I got-- like, 150 emails the next day saying, you know, supplements are not food, which is great. And I think that's fantastic, but it was the exact same email, so I know that someplace, somebody-- somebody had put out a thing saying, "Send this to Mulvaney." They published my email address. I-- I-- I read the first two and then threw the rest of them away. But if you take time, sir, to actually write me a letter that said, "Mick, I saw you speak at this thing. I wanted you to know this, this, this, and this," I actually write that. Real people can still have an impact on the outcome in Washington D.C. They just have to take the time to do it. And it's not easy. We still actually like hearing from ordinary folks, from rank-and-file people. We don't like dealing-- all the time with-- with lobbyists and with national-- organizations. There's value to doing this.
JOHN HARWOOD: Okay. Let's talk about where we are at this moment. You're the Budget Director. You're looking at a $1 trillion deficit--
MICK MULVANEY: Yes, I am. Yeah.
JOHN HARWOOD: --next year. That's not what-- the president-- campaigned on, returning to the trillion-dollar deficits. He has imposed tariffs on-- goods coming into the United States, which raises prices for consumers. Foreign-- countries have retaliated, which hurts our exporters. And now, you're gonna write a $12 billion check to bail out some of the people hurt. Does that make sense?
MICK MULVANEY: Which-- which one do you want me to start with?
JOHN HARWOOD: All-- all of 'em. Because it-- it seems--
MICK MULVANEY: There's-- there's-- there's--
JOHN HARWOOD: It-- it-- it-- you're a small-government conservative and it seems—
MICK MULVANEY: Yeah.
JOHN HARWOOD: --that all of this is diametrically opposed to what you believe in.
MICK MULVANEY: Okay, I'll-- I'll-- okay, that's-- that's-- that's the larger question, right, is-- is-- is-- is how does a-- a small-government fiscal conservative sort of reconcile this. And this is-- this is what I tell people. I've told people this from the very first budget that I wrote-- which is that I don't make the final decisions. I don't. I'm not the President of the United States. The-- the boss makes those decisions. I satisfy myself by knowing that on each of the issues that you just raised, from deficits, to trade policy, to this-- to the agricultural program that we announced yesterday-- that at least I'm in there, and I am in there, in the Oval Office, making these cases. And I'm not the only one, by the way. Rest assured that on the Ag policy, the president heard every single side of the argument. On trade policy, he continues to hear every single side of the argument. I'm on one side of the argument, along with probably guys like Larry Kudlow-- and then you've got folks like Peter Navarro and Wilbur Ross on the other side of the argument. The president hears all of the arguments and then he makes the final decision. That's how it has to be, okay. And I'm satisfied with that. If I'm not there, I-- I not comfortable that those arguments are being made, but I know that they are. And the president makes those final decisions.
JOHN HARWOOD: Are you frustrated by the direction of policy right now?
MICK MULVANEY: I'm-- I-- you know, I-- would-- again, would it be what I would do if I was the president? No, but I'm not the president. I'm-- I'm not frustrated in that for the first time here, and-- and-- and-- and-- I'll speak to this 'cause Jeb and I went through this together as-- as some of the more conservative members of the House. Sometimes one of our major frustrations, to use your word, and it is the right word-- was that we simply weren't being considered. We weren't being heard. That the-- there was no-- no-- no room for the conservative-- for the fiscal conservative discussion within the House Republican Conference, and that the conservatives were completely shut out. In fact-- a friend of mine from the Freedom Caucus-- I was a founding member of that group, called me after one of the first budgets came out and said, "Mulvaney, it sounds like you're losing a lot." And I said, "Yeah, but at least I'm losing at the very highest levels. I used to lose in the basement of the-- of the-- of the tortilla Mexican restaurant."
JOHN HARWOOD: Now you're losing in the World Series.
MICK MULVANEY: Yeah, that's exactly right. So-- am I-- am I frustrated? Frustrated not the right word. I-- am I disappointed that maybe I'm not advocating better to change an outcome? Yes, but I'm 100% comfortable coming in and defending these policies because I know, in part, that the president has heard all-- all-- all different sides of the argument. He gets to make the final decision.
JOHN HARWOOD: Is there a point at which you say, "I can't be part of this anymore"?
MICK MULVANEY: No. Well, I mean, at some point, yeah, you don't do this forever, right. But no, the-- not—
JOHN HARWOOD: No, but I-- I-- I-- I don't mean on time basis. I-- I mean on the basis of “this is going away from what I think is best.”
MICK MULVANEY: If-- if I thought that the president did not give due consideration to what I-- if-- if I wasn't adding value to the conversation, then yeah, you throw your hands up and say, "Look, some-- maybe somebody else can do this better." But I'm absolutely co-- 'cause I know-- I know it for a fact, 'cause I-- I talk to him almost every day, that he does consider these things. Look at how he handled the-- the-- the omnibus-- you know, when he-- when he signed it, and he almost didn't sign it. Part of-- part of, I think, his-- his calculation in that was, wait a second, maybe we are spending too much money. Maybe we did give away too much in non-defense discretionary in order to get the defense money that we need. And maybe we're not gonna do that again. In fact, I think he said exactly that, "We're not gonna do that again." So, that's one of those examples where, you know, maybe over the course of time-- things are sort of moving in a more fiscally conservative way. Another example-- when the president first came in, in the very first budget-- we talked about entitlement reform, Medicare and Social Security. He looked at me and said, "Now, wait a second. I ran for office telling people I wasn't gonna change those two things. I'm not gonna be one of these politicians who runs on one thing and then does another after I get elected. So, no, you can't touch those things. I'm not gonna let you." And over the course of the next year-- we're able to to talk about Medicare-- and come to an understanding that some pieces of Medicare are not what you folks think it is, and it's certainly not what the president thought that it was. Did you know, for example, that your Medicare taxes go to pay for graduate medical school tuition? Did you know that your Medicare taxes go to pay for bad debts from non-Medicare patients at hospitals? My guess is you didn't. I didn't. The president didn't. But we did get a commitment from him to try and reform those pieces of Medicare, and I think that's moving things in the right direction from a fiscal conservative standpoint.
JOHN HARWOOD: Take us inside the room, reconstruct-- as an example, the exchange when you, Larry Kudlow, others, make that case, “No, we are-- we should be a market-oriented administration that does not throw up barriers, does not pass out subsidies to people affected by the barriers.” What does he say to you?
MICK MULVANEY: A couple of different things. We-- we are a-- a market-oriented economy. We are a market-oriented administration. This is the one thing I don't think-- and this is-- not gonna speak exactly to your question, I'll come back to that in a second. On trade-- everything the president has done-- I say this to business groups all over the country and it-- it-- it still surprises me that they're-- they-- that they-- we get the reaction to trade that we get. Everything the administration has done up to now, from an economic policy, we call it maganomics at O.M.B. It's the Make America Great Again economics. Everything from regulatory policy, to tax policy, to energy policy, to you name it, has been aimed at one thing, and that is getting the American economy back on track, getting to 3% growth, maybe 4% growth, maybe above 4% growth. Everything we've done has been pointed to-- in that same direction. So, why are we all of a sudden now being accused of doing the exact opposite on trade? And I would suggest to you instead that what we're doing on trade is also pointed in the same direction, it's just a lot harder to do. Regulation, we can do by ourselves, okay, for the most part. Tax policy-- we have to work with the Congress, and we did on that. On trade policy, we-- we-- by the way, and getting Congress to do what you want them to do is really, really hard.
JOHN HARWOOD: You didn't work with Maxine Waters on that tax policy.
MICK MULVANEY: I-- I-- I worked with Maxine Waters on other stuff. So-- and I enjoy working with Maxine. She's-- she's a friend. Trade policy is even harder 'cause you have to get the-- the Chinese and-- and-- and-- and-- and other countries to do what you want them to do. You have to change their-- their behavior, and that's really, really hard. So, is it gonna be messier than regulatory reform was or tax reform was? Yes. Is it aimed in the same direction? Absolutely. So, I-- I-- I-- I disagree with the premise that we're not a market-based economy, that we're taking that away, that we're not a market-based administration. I think you saw this morning-- something the president-- reiterated this morning that he said at the G-7. I hope it gets the attention it deserves. He tweeted out something he said at the G-7 that I-- I don't think-- everybody picked up on, which is-- "The Europeans are coming in town today. Happy to talk to them about-- about our-- our-- our trade policies. Here's what it is. Zero tariffs, zero tariff barriers, zero subsidies. Who wants in on that?" Is-- is that-- is that a-- is that a non-market-based system? That-- is-- is-- is that a protectionist system? That's true free trade, and that's what we're trying to get to. That's what we're-- we're trying to get to someplace where we can-- grow the economy, and I hope he gets credit for that.
JOHN HARWOOD: Let me go back to tax policy-- because we were talking about deficits before. And we have-- through this tax bill, raised the trajectory of budget deficits.
MICK MULVANEY: Uh-huh.
JOHN HARWOOD: But we've also, if you look at all the major forecasters, Goldman Sachs, Tax Foundation, Penn Wharton, Federal Reserve, none of them say that we've raised the growth tr-- trajectory beyond the approximate 2% mark that we were before.
MICK MULVANEY: Yeah.
JOHN HARWOOD: Why is that? And is that not a-- an illustration of the fact that the-- the promises that you guys made about the effect of the tax cuts were simply wrong?
MICK MULVANEY: Those are the same folks that-- those-- that-- that-- that list that you just ran down, and you could add to that list, are-- are folks who said we'd never get to 3% anyway. I mean, I remember when I first rolled out our first budget in March of 2017, and we had projected at that time, as part of our-- you know, you do the-- when you do a budget, you sort of look in a ten-year window. And we had projected that we'd go from, I think at that point, about 2.1%, 2.2% growth-- that we'd go from 2.3% to 2.5%, to 2.7%, and maybe three or four years out with our policies, we might get to 3%. Then all of those folks that you just said, said we were nuts. In fact, I--
JOHN HARWOOD: And they still say you're nuts.
MICK MULVANEY: They still say we're nuts. They said we could never do that. We could never get to any of that. We've gotten faster than they ex-- by the way-- who was it? Oh, it was Krugman-- who says-- one of my favorite lines. He said, "You could make me the-- a total dictator of the world and I could never get you more than a couple of tenths of a percentage point." Okay, thankfully we did not make Paul Krugman the-- the-- the dictator. We made Donald Trump president. Everybody said we couldn't get there. They're heavily invested in saying we can't get there. Face it, if you've-- if you've been selling for the last two to three generations the idea that higher taxes, more regulation, and more government-- more government intervention in the markets is the way to growth, and it hadn't worked for eight years under the Obama Administration, and along comes this new administration and says, "We are gonna cut regulation, we're gonna cut taxes, and you'll get growth from that," you have to see us fail, all right. So, when we first started, they said, "It's never going to work." Now, it seems to be working and what they're saying is, "Yeah, well, it's working, but it's only gonna work for a short period. Long-term, it's gonna-- it's not-- it's-- it's not gonna pay off." What else are they gonna say? 'Cause if they say it's gonna work, then they have nothing to sell from their economic perspective.
JOHN HARWOOD: So, you continue to believe that they're all wrong and that-- in the fullness of time, we are going to get to 3% or 4% growth?
MICK MULVANEY: How-- how about this? I believe they're as right now as they were a year ago. How about that? I do believe that 3% growth is sustainable. I absolutely believe it. And I believe that because--
JOHN HARWOOD: 'Cause nobody-- nobody said you couldn't get 3% for a quarter. I mean, Obama got 5% for a quarter. The question is can you sustain it, and none of them say you can.
MICK MULVANEY: Well, we're-- I mean, we're-- I don't know when the numbers come out. I think the numbers come out Friday? Is that what-- Friday? And-- and if the numbers are where all of those same folks say it's going to be, we will be at 3% sustained for a whole year now. That never happened under the Obama Administration. The first administration ever. That's one of the reasons that I-- I-- I-- I-- I don't know why saying 3% growth is so outrageous. We've done it forever. I mean, it-- you go back to-- pick any long period of time, from the-- the-- World War II to now, from the Great Depression until now, from the Civil War till now, and 3% growth is what we do as a nation. And I don't know when it became orthodoxy that says we can never, ever, ever do that again, and anybody who says we can is crazy. Do we face challenges in that? Yes. Do we have an aging population? Yes. Do we have-- productivity challenges? Absolutely. But we've always been able to overcome that. One of the reasons I was so excited about what we did in the tax bill-- and I-- I-- it's one of those things that I don't think gets-- enough attention, is the way that we changed-- the depre-- depreciation on capital investment. That's one of the biggest pieces, I think, of the tax bill, the way that we're going to change the way you invest in your business, because we need that capital investment in order to drive the productivity, in order to drive that economic growth. Economic growth is a function basically of two things, the number of people working and their productivity. The more capital investment, the more productivity they have. So, we-- we do think that by changing that tax code, we get the permanent long-term sustainable growth we're talking about.
JOHN HARWOOD: Two things quickly before I let you go. Financial regulation. Of course, your other hat right now is--
MICK MULVANEY: I've heard of it, yes.
JOHN HARWOOD: --you're the acting-- head of the C.F.P.B.-- at least until Kathy Kraninger gets-- confirmed.
MICK MULVANEY: We call it the B.C.F.B., but yeah, okay, that's fine.
JOHN HARWOOD: We are ten years from-- removed from the financial crisis.
MICK MULVANEY: Yeah.
JOHN HARWOOD: Would you say that right now the U.S. financial system is-- safe, adequately protected, needs no more regulation, in fact needs less regulation than it now has?
MICK MULVANEY: I-- I-- I think we need better regulation than we have now. The Dodd-Frank statute is actually-- I mean, you go and you take a look at it and there's all sorts of parts that I don't like about it. And if y'all wanted to repeal it, that would be great. So, knock yourselves out. If that-- if that doesn't happen, it's a statute you can live with. Because it's-- it-- it-- it's-- it's probably a lot more detailed than people realize. The Dodd-Frank st-- I'm sorry, as it pertains to my bureau, the Bureau of Consumer Financial Protection. It actually requires us to do five things-- among which are protect consumers, which is the part that everybody knows about and the part that got all the attention under the previous-- previous leadership. But in the same section of the statute, it says that we are supposed to look for unduly and burdensome regulations and get rid of them. That we are sort of-- supposed to promote innovation. We are supposed to promote efficiencies of market and access to capital. Those are not bad things. The law is not what's broken, in that particular circumstance. What's broken is the way that we have chosen to prioritize and to administer that law. And I think if we can get smart regulation of what's on the books, we could do better. You're talking to a Republican. Do I think there are regs we could get rid of? Absolutely. Do I think we can have a lighter hand when it comes to regulating our economy? Yes. Do I think that when you do that the economy responds in the way that it has? Yes. In fact, I-- I-- I think I can make the argument that most of the economic develop-- economic growth that you've seen in the first 18 months of this administration have more to-- have-- has more to do with the deregulatory policies than it has the tax policies, 'cause the tax policy has not really fil-- sort of filtered through the economy yet. But this idea that less regulation coming from the government, a lighter hand of regulation, does result in a better, healthier economy, better wages, better opportunities-- I think I can make that case-- because I think it's actually working.
JOHN HARWOOD: Okay. Last question.
MICK MULVANEY: Yes, sir.
JOHN HARWOOD: You--
MICK MULVANEY: And I used to be a southerner, by the way, which means I-- I talked a lot slower. But they yelled at me that I-- I didn't get enough questions answered--
JOHN HARWOOD: You have no accent. I don't believe that.
MICK MULVANEY: I am born and raised in the south. So--
JOHN HARWOOD: We just had a summit in Helsinki last week in which the president met-- privately with Vladimir Putin for a couple of hours. Nobody really knows what happened in that meeting. National security officials don't seem to know. The president came out, expressed confidence in-- in-- the Russian president-- raised doubts about the U.S. Intelligence Agency. Is there any part of you, late at night when you're by yourself, that says, "Maybe there's something going on here that's bad"?
MICK MULVANEY: No. Those meetings are always private, aren't they? I mean, when-- when Reagan went in with Gorbachev, did he come out and say-- he had a private meeting with Gorbachev, walk out and say “By the way, Tom--
JOHN HARWOOD: I'm talking about--
MICK MULVANEY: --here's everything that we just talked about?” That's not-- that's not how these work.
JOHN HARWOOD: But you know what I'm asking. I-- I-- I'm talking about in the relationship between this president, Russia, the Russian president--
MICK MULVANEY: You asked me a straight question, I'll give you a straight answer. No. I don't worry about that at all.
JOHN HARWOOD: Mick Mulvaney, thanks for being with us.
MICK MULVANEY: Thanks very much. Thanks, y'all.
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