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CNBC Exclusive: CNBC Transcript: Senate Minority Leader Senator Mitch McConnell Speaks with CNBC’s “Squawk on the Street” Today

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WHEN: Today, Thursday, May 27th     

WHERE: CNBC's "Squawk on the Street"

Following is the unofficial transcript of a CNBC exclusive interview with Senate Minority Leader Senator Mitch McConnell on CNBC's "Squawk on the Street" (M-F 9AM – 11AM ET) today, Thursday, May 27th. Following are links to video on CNBC.com: https://www.cnbc.com/video/2021/05/27/mitch-mcconnell-on-gop-counteroffer-we-want-bipartisan-agreement-on-traditional-infrastructure.html

https://www.cnbc.com/video/2021/05/27/mitch-mcconnell-on-infrastructure-proposals-were-going-to-keep-talking.html.

All references must be sourced to CNBC.

CARL QUINTANILLA: Let's bring in exclusively the Republican response to the infrastructure proposal from the White House and talk about the broader economic agenda. Senate Minority Leader Senator Mitch McConnell. Leader, it's always good to have you. We appreciate your time, good morning.

SEN. MITCH MCCONNELL: Good morning. Glad to be with you.

QUINTANILLA: It's been a bit of a running joke in Washington what exactly infrastructure is but it's pretty clear from your counteroffer what you believe it is.

MCCONNELL: Yeah, I think you had Shelley Moore Capito on your program earlier today, she's our leader on the infrastructure bipartisan negotiation out of her committee, okay, in a traditional infrastructure package just this week. We also are engaged with the administration trying to reach an agreement. Part of the problem as you suggest is, what is the definition of infrastructure. We pretty much understand it's roads, bridges, ports, broadband, traditional infrastructure. The Democrats would like to spend a lot more speaking of their spending habits. So far, this administration is recommended, recommended we spend 7 trillion additional dollars this year. That would be more than we spent in adjusted inflation dollars to when World War II. So, they have huge spending desire and as your introduction suggested a great desire to add in $3.6 trillion in additional taxes on top of it.

QUINTANILLA: So, the question for some this morning is how much new spending is involved in this proposal, Senator Toomey suggested earlier this morning that there's enough unspent funds in COVID relief that could be directed toward this. Do we have a new spending number?

MCCONNELL: Well look, Senator Toomey's point is well made, but let me quote Larry Summers, who was Bill Clinton's Secretary of Treasury and Barack Obama's head of the Council of Economic Advisers, he said at the beginning of the year that the previous package, the so-called rescue package, would create a wave of inflation and only this week, he reiterated that happened just as he predicted but it also included this extra bonus on top of state unemployment insurance that's keeping people from going back to work. So that's what they've already done and now they seem to want to double down and do more. What we'd like to see done is a bipartisan agreement on traditional infrastructure and much of it could be paid for by this additional money that's already been sent down to states and localities, many of which are in great shape financially and have just received an incredible bonus of borrowed money from us.

DAVID FABER: Senator, you know you can't blame Americans who might even be listening to you right now and want infrastructure of some kind to be passed for being somewhat cynical on the possibility of it. I mean, in your long career as both majority and minority leader under both Democratic and Republican administrations, tell me when was the last time that there was a major an important piece of legislation passed in a bipartisan manner by Congress?

MCCONNELL: We're going to do one this week. The Endless Frontiers Act, the lead on our side is Senator Todd Young from Indiana. The majority leader is the leader on the Democratic side, a bipartisan effort to do a better job of competing with China on the technologies of the future, for example, artificial intelligence. We've already passed four major bipartisan bills this year. We do bipartisan work on important things all the time. I don't criticize you, but that's a democratic talking point that somehow, we never do anything together. We do it frequently almost on a weekly basis.

FABER: Yeah I guess when it comes to some of the larger issues though facing our country, you know, you remember the failures to do so more perhaps than some of the successes that you cite there.

MCCONNELL: Yeah, but there are different points of view about what ought to be done on some of these major issues and I think it's important to remind everybody, we have a 50/50 Senate. We have a House Democratic majority of just a handful of seats. They don't have a mandate from the American people to add $7 trillion in spending over the next year. So, we have a difference of opinion and we own big issues, yes, we frequently don't go forward if we get reach an agreement.

LESLIE PICKER: Well with this agreement in particular, Senator, do you believe that there is still more room to maneuver here I know that you just put forth a counter offer, is this your final offer?

MCCONNELL: No, we're gonna keep talking and I understand the President is willing to keep talking and we think through the President's going to be more reasonable than some of the people surrounding him. We'd like to get an outcome on a significant infrastructure package and what we've already recommended on a bipartisan basis out of one of the senate committees just this week is more than we've ever done over a multiyear infrastructure bill so we're open to spending some more. What we're not open to is going back and reopening the 2017 tax bill. Remember in February of 2020 we had the best economy we've had in half a century. Principle reason, the 2017 tax bill, we're not willing to reopen that but there are other ways to pay for a significant infrastructure package and we hope to reach an agreement with the Democrats to do just that.

PICKER: What other ways are there without reopening that 2017 tax bill, would you be open to additional financing? You mentioned kind of redirecting that COVID relief but what other ways are you thinking of?

MCCONNELL: Well, the best way to do it is reopening the COVID relief package and repurposing the massive amount of money. States are getting so much money they honestly don't know what to do with it and they like infrastructure, all the states like infrastructure. It ought to be a way that we can pay for a significant portion of what we spend beyond the traditional amount of money that comes in from the gas tax. The gap between that and what we can agree to could easily be paid for by the massive amount of money we sent down to states and localities.

QUINTANILLA: Leader, watching your statements and tweets the last couple of days, you've expressed a real interest in inflation, rising prices for gasoline and steel and commodities which we talk about all the time. I wonder if you're worried that the inflation we are seeing will be durable and long lasting and how you separate it from opening economy, from opening an economy the way we have in the last 6, 12 months.

MCCONNELL: Well, the new administration inherited three incredibly effective vaccines. The country was turning the corner, beginning to come back, and then they poured all this money on top of it and rather than taking it from me, let me quote former Secretary of the Treasury Larry Summers who predicted exactly what's happened, if we pass the bill that we've already passed which was almost $2 trillion on top of the $5 trillion we did last year in the middle of pandemic, which by the way we did on a bipartisan basis of an earlier question about whether we ever do anything on a bipartisan basis, everything we did last year to tackle the pandemic were done on a bipartisan basis I was the majority leader at the time. We did it the old-fashioned way by working together, but conditions had changed by the beginning of this year. Our dear friends on the other side act as if nothing has gotten, nothing has changed. Well, this is not April of 2020. This is the spring of 2021, things are opening up. Things are considerably better and we ought to pass legislation crafted to the condition we found ourselves in now, not 12 months ago.

QUINTANILLA: Shortly after the president's election was made official, Politico did a piece about your relationship with the President. They argue that had been forged over many years as Senate colleagues that you were the only Senate Republican to attend Beau Biden's funeral in 2015. I wonder how important, if at all that, that personal dynamic has been to you in trying to get compromise around these various policies.

MCCONNELL: Well, look, we have an excellent personal relationship. We did the three biggest deals during the Obama years when the President was the Vice President, I was the Senate Leader on the Republican side. We have an excellent personal relationship and hopefully at some point here, this administration will in a sort, in a sense kind of sober up and realize they don't have a massive mandate in Congress to do all of the things they're trying to do. At that point, it seems to me we have a good opportunity to meet in the middle and continue to tackle some of the big problems we have in this country that need attention and the Endless Frontiers Bill that's on the floor of the Senate right now is a good example of that.

QUINTANILLA: Finally Leader, I know we're here to talk about the economy. I do have to ask you about this statement from Joe Manchin about 30 minutes ago about the January 6th commission, he says there's no excuse for any Republican to vote against the commission, Democrats have agreed to everything they asked for. Mitch McConnell has made this his political position thinking it will help his 2022 elections. Is there any room to maneuver on a commission?

MCCONNELL: Yeah, look, let's just take a look at the situation. On January 6th incident, we all saw what happened, we were witnesses, we were under assault by the insurrection. So, we know what happened. What's being done about it. Well, you have the FBI pursuing the Department of Justice, pursuing everybody who encroached on the Capitol, there have been massive numbers of arrest already, already massive numbers of arrests. We have two Senate committees that are going to come out shortly with a recommendation about exactly what kind of security adjustments we need to make here at the Capitol to prevent that from happening again. That is the answer to the problem. If we set up this commission, I think the basic goal of our Democratic friends is to keep relitigating in public what happened back on January 6th rather than get into a quick solution through arrest of those who did it, and security adjustments to make sure it never happens again.

QUINTANILLA: Leader, we appreciate your time as always. And we will continue to discuss infrastructure in light of this new counter. Thanks for your time as always.

MCCONNELL: Okay, thank you.

QUINTANILLA: Mitch McConnell.