The following is the unofficial transcript of an interview with Vice President Dick Cheney on "Kudlow & Company."
In the interview Vice President Cheney discusses the state of the economy, oil prices, and the GOP prospects in the 2008 election, among other topics:
LARRY KUDLOW, host: Mr. Vice President, welcome back to "Kudlow & Company", sir.
Vice President DICK CHENEY: It's good to be back, Larry.
KUDLOW: Let me begin with the latest, the administration really turned the heat up on Iran, freezing all the banking assets for the Revolutionary Guard and the Kudz@. At the same time, as you know, oil prices have jumped to $92 a barrel. Let me just ask you this, what is the issue here regarding oil? Would you use the strategic petroleum reserve, knowing that there may be additional actions in the Middle East?
Mr. CHENEY: Well, the strategic petroleum reserve there is primarily, obviously, to deal with an interruption of supply. Lots of times there have been discussion. In fact, back in the Clinton administration, it was used to try to manage prices. That's not what it's for and we recommended expanding the petroleum reserve, strategic petroleum reserve. I think it's important to do that, but it's a classic case that we're faced with right now, to the extent that you do get unrest and potential problems in the Middle East. Our reliance on foreign sources of energy creates a certain vulnerability. The best short-term response we have to do is the strategic petroleum reserve.
KUDLOW: Would these financial sanctions wind up, in some sense, preventing Iran from exporting oil? I think they're still selling like three million barrels a day there.
Mr. CHENEY: Yeah.
KUDLOW: Would they apply there at some point?
Mr. CHENEY: I don't want to forecast that now. What we did yesterday, obviously, was focused on the IRGC, the Iranian Revolutionary Guard Corps and the Kudz force, which is part of that. And the emphasis is upon their activities with respect to proliferation and ballistic missile technology, as well as the support for terror that the Kudz force provides in many places in the Middle East, Hezbollah, Hamas, their activities in Iraq and Afghanistan as well, too. Now, clearly the Iranians want to sell oil. They do sell oil into the international market. It's an important consideration, but from our perspective, it's very important that if you're going to do business with Iran, you're going to have problems doing business in the United States. Iran is a threat on many fronts in that part of the world. In Lebanon and they've been actively working through the Syrians to try to topple the...(unintelligible)...of Lebanon. They are making significant problems for us in Iraq and in Afghanistan by providing explosively formed penetrators, training and so forth, to help the Taliban in Afghanistan and some of the Shiia insurgents inside Iraq. Plus, obviously, the big issue is the fact that they are working aggressively to develop a capacity to enrich uranium. At the end of the process will be the development of nuclear weapons.
KUDLOW: Let me just take this oil issue a little further out. Years ago, in late 2000, early 2001, when you were first elected, you said the US economy was on the front end of a recession. You were way ahead of the whole economics fraternity who called that recession. I gave you the forecast of the year award, as I recall, back in 2001.
Mr. CHENEY: I remember that.
KUDLOW: Yes. It was quite a distinction. And I want to ask you, is there a sense in your mind or the president's mind, at what point the rise in oil price really pushes us over the edge into a recession? Economists have failed to predict this. They said, you know, 50, 60, 70.
Mr. CHENEY: Right.
KUDLOW: Now we're approaching 100. Is there a break even point?
Mr. CHENEY: I couldn't forecast the break even point on that, Larry. I think a couple of points I'd make. Number one is I think our economy has been amazingly resilient to what's happened to oil prices over the last couple of years. Certainly there's been a major increase in oil prices and the economy has adapted to it and adjusted very well. I think part of that is the fact that we're twice as efficient now as we were 10 or 12 years ago with respect to how we use energy. That is, we give much more by way of economic output per unit of energy input than we ever have before. We just get better and better and more efficient all the time. So it hasn't had the impact that it might have had, say 20 or 30 years ago, as it did back in the '70s, for example, when we all remember what happened at that time. So I'm not here today to forecast that we're going to have an oil-driven recession. I wouldn't say that. I don't see that, but I'm not an economist. I go to the same people you go to looking for forecasts.