When: Thursday, November 29 at 6:00 PM ET
Where: CNBC's "Mad Money w/Jim Cramer"
The following is the unofficial transcript of a CNBC interview with Presidential Candidate Rudolph Giuliani on CNBC's "Mad Money w/Jim Cramer" today. All references must be sourced to CNBC.
In an interview with CNBC's Jim Cramer, Giuliani discusses tariffs, the mortgage crisis, Bernie Kerik, and the corporate tax, among other topics.
JIM CRAMER, host: MAD MONEY, take you on the road to the White House. Why? Politics decide where and how the money gets spent. Volatile market calls for a president who understands how to handle the economy, keep it strong, which is why I've been chatting with the candidates. I've already talked to Governor Mitt Romney, I've talked to Senator Chris Dodd. And tonight, from Times Square, in the heart of the world's financial capital, with Mayor Rudy Giuliani.
How, before we start, I've got to say something. I want to thank you, Mayor, because 23 years ago, fresh out of Harvard Law School, when all my hopes and dreams were to be a federal prosecutor, I applied to get a job with you. You flat out rejected me! Didn't have the grades. So I went to Goldman Sachs, and in a way, your utter rejection set me on the path to wherever I am now, but it was a terrific, terrific course, and things worked out best for the both of us.
Mr. RUDY GIULIANI: I told you if I had interviewed you, I'd have hired you, because you've got the personality of a trial lawyer, and that's what I was looking for. Who know where you'd be now.
CRAMER: How knows, but I've got to tell you...
Mr. GIULIANI: Wait a minute. You might be struggling somewhere.
CRAMER: I don't know if people--if people understand the honor of that position...
Mr. GIULIANI: It's a great...
CRAMER: ...that of the Southern District of New York.
Mr. GIULIANI: It's where I grew up. So being US attorney to me was like a dream come true. I've often told me, that was the government job I wanted, and probably if you'd asked me earlier in my career, can only have one, I would have said United States attorney of the Southern District of New York.
CRAMER: Absolutely. Well, that's why I wanted in.
Mr. GIULIANI: That's where I...
CRAMER: That's why I wanted in.
Mr. GIULIANI: That's where I learned how to be a lawyer.
CRAMER: Right. I've known you for a long time. You are a big thinker. I understand you've got some pretty good--your commitment to move toward energy independence. But I know you as bigger than that.
Mr. GIULIANI: Right.
CRAMER: Why not a Manhattan Project to best OPEC? Tell me about being able to do that.
Mr. GIULIANI: Absolutely. We should have a Manhattan Project, a project like putting a man on the moon. President has to be in charge of it, president has to be the leader of it. Doesn't mean you run all of it, it means you're kind of the focus of it. So you support everything possible that will make us energy independent.
CRAMER: Now, we...
Mr. GIULIANI: Everything possible. That means--that means clean coal, carbon sequestration, that means nuclear power, it means hybrid vehicles, it means wind, solar and hydroelectric. It means more refineries, it means more domestic oil, it means ANWR, it means natural gas, liquid natural gas.
CRAMER: But are we up to, also, the conservation side, to actually make rules? You are anti-regulation. That's been one of your great causes.
Mr. GIULIANI: Right.
CRAMER: To go into the auto companies and say, `Listen, we need higher standards.' To tell the American people, you've got to switch fuels or use less.
Mr. GIULIANI: We do if we're doing it honestly. If you do what I'm saying, you support these technologies, you allow them to grow, then you can have standards that people can live by. But just to go in and to have these standards and say, `You must be this efficient, you must be that efficient,' and the technologies aren't out there to do it, it's kind of a phony government exercise.
CRAMER: Where will we get the money to do it?
Mr. GIULIANI: At...
CRAMER: Would you ever put a tariff on--would you ever put a tariff on gasoline, tariff on oil?
Mr. GIULIANI: I don't really--I don't like tariffs. I don't like tariffs at all. You know, maybe it's the history of the Depression, Smoot-Hawley tariffs and I think tariffs are only temporary if you're trying to straighten out a problem with a particular country that's really taking advantage of you.
CRAMER: All right. Well, let's talk about that.
Mr. GIULIANI: Only that.
CRAMER: If there's one country that is taking advantage of us. In the 1990s--in the late '80s, early '90s, Japan took advantage of us. And you know what we did? We said, `Listen, you want to sell in our country, you make things in our country.' Would you go to China and said, `Look, you have all our dollars, start building factories in our country'?
Mr. GIULIANI: I would--I would encourage them to do that. I wouldn't put tariffs on. And when I said putting tariffs on, it's more like ones we're going to remove in exchange for their doing things. I just think tariffs close us off from the rest of the world. I think we should be thinking more on the selling side. What can we sell them? How can we balance the imbalance of trade, if there is one, and to the extent that there is one in a particular country, by selling them more? These free trade agreements that were blocked in the Congress, some of which are still blocked...
Mr. GIULIANI: ...are basically net export agreements. They're agreement that are going to allow us to export more. I have no idea why the Congress is holding them up. To Panama, Peru...
CRAMER: To Colombia.
Mr. GIULIANI: ...to Colombia.
CRAMER: Our friends.
Mr. GIULIANI: Yes. This will actually allow us to export more. They are listing tariffs. We already don't have tariffs on them. So this is like economics 101 F, you know.
CRAMER: But hold it. Poison toys, stealing our intellectual property...
Mr. GIULIANI: OK.
CRAMER: ...building whole factories of Coach handbags that aren't Coach.
Mr. GIULIANI: Right. Well, you don't--you deal with that with safety regulations. I mean, safety enforcement. You make sure that they are subjected to the same kind of scrutiny that products that are made in this country are subjected to. Safety and security is a different matter than economics. And in China--and with China, that's a legitimate concern. It's a legitimate concern to make sure that what they're sending us as safe and as secure as the kind of things that we manufacture here. Tariffs are a different matter. Tariffs are just pure economics and I think we're much better off there. Like we mentioned energy independence?
Mr. GIULIANI: What better thing could we sell to China than energy independence?
Mr. GIULIANI: If we knew it. If we had it.
CRAMER: I wish that...
Mr. GIULIANI: If we owned it.
CRAMER: But they have a predilection to build nuclear. I know you favor nuclear. It's seven years from application to starting one up.
Mr. GIULIANI: Right.
CRAMER: But there's only been two--there've only been two applied for. What are you going to do to make it so that people are going to build them now?
Mr. GIULIANI: You're going to have to--you're going to have to streamline those procedures, you're going to have to demonstrate to the American people we know how to do it safely. We should be building the 40 nuclear power plants in China. That would help with the balance in trade.
Mr. GIULIANI: And we should be doing the security for them. Nobody does security for nuclear facilities better than America. We've had nuclear power for 40 years. We've not had a casualty. We had Three Mile Island. I was just right near there a couple of days ago. We had Three Mile Island back in the '70s. No one died as a result of Three Mile Island. That was our worst one. So we know something about--we know something about nuclear security that we can sell to China, we can sell to India. There's a breakthrough deal with India that I hope gets approved by the Indian government that's going to allow us to deal with them and have them expand nuclear power. We should be making money on that.
CRAMER: Now, they like our coal. We do not have a consensus in this country about levels to be able to make it so coal can be used as a fuel, even though we are totally self-sufficient with coal.
Mr. GIULIANI: Right.
CRAMER: What could you do with...
Mr. GIULIANI: Got to...
CRAMER: No, Congress, intransigent now.
Mr. GIULIANI: Well, we've got to push them. And this is an area in which government has to do subsidizing from tax credits and some help to make it more cost-effective. This is an area in which it's worth doing, because this is in our national interests. You're absolutely right. We have more coal reserves than Saudi Arabia has oil reserves. The more we can move over to those coal reserves, the better off we're going to be. And people say, `Well, gee, it's not going to affect transportation.' It will affect transportation if you also do hybrid vehicles at the same time. And you take advantage of our electrical supply to drive vehicles as much as possible.
CRAMER: All right. Let's talk about an issue that's--I know you're focused on, and I need to get your views. We do have a mortgage crisis in this country. You were known as a great prosecutor. Some people feel that the issue were the mortgage issuers. Other people feel, forget the blame, that everybody's to blame, where you out to set up a resolution trust like President Bush, the previous President Bush. What's your way out of this morass?
Mr. GIULIANI: First of all, the thing the president has to do, generally, we shouldn't do specific bailouts. All specific bailouts do is create the possibility that people are going to repeat that kind of conduct later. If you don't do the general bailout, people learn lessons from it. Now, for people who were really cheated, people who weren't given the right information, the government should help there. People who didn't understand that they were--what the implications were. But by and large, the whole market here understood what was going on. It doesn't need a bailout, it needs--it needs the American president securing the rest of our economy. Lower taxes, less government spending, fewer regulations in the areas where it's inhibiting business. Let's shore up the rest of our economy and let the mortgage markets kind of work it out themselves.
CRAMER: Now, the Arabs, Abu Dhabi, has just come to the rescue of Citigroup. After 9/11, there was a Prince Alwaleed. He came to the rescue of Citigroup.
Mr. GIULIANI: Right.
CRAMER: He also wanted to give $10 million to victims of 9/11. And you said no, because of the contingencies. What would happen if the Arabs said, `Listen, we will solve your mortgage problem, but we've got to come to some terms here politically'?
Mr. GIULIANI: Well, not negotiable. The two things are--there's business and then there's government, and the two things shouldn't mix. I have no objection of people investing in Citi. These are all private businesses.
Mr. GIULIANI: Citigroup, any place else. But if they're going to ask for concessions, the reason I gave that money back is exactly for that reason. He had every right to make a contribution to the Twin Towers Fund. We were grateful that me made the contribution. You can go to the firefighters and the police officers. But he wanted to tie it to criticizing American foreign policy, criticizing Israel, condemning American foreign policy, not just with regard to Israel but in other respects. And I said, `That's blood money, you know. We can't take that.' And I was backed up by the people who probably had the most to lose in that situation, the people who were going to get that money.
CRAMER: All right. Well, we're going to be right back with more one-on-one with Mayor Rudy Giuliani. So I want you to stick with Cramer!
CRAMER: I'm here with Mayor Giuliani. Let's get back to business. Mayor, management style. Great book about management. Always been a hands-on guy. Is the presidency a place to be a hands-on guy or is it a place to sit back and maybe show a little bit of deference to others and build coalitions?
Mr. GIULIANI: It's both. And of course, I've had both experiences. US attorney is hands-on.
Mr. GIULIANI: Three hundred people, you know everything, you know everybody. Mayor of New York City, 300,000 employees. You can't be hands-on except sort of on a trial-and-error basis. In other words, so people know you're interested and people know that you're involved. I was very hands-on with the budget. I learned the budget because I--maybe working in the Reagan administration, I realized that a mayor's way of affecting priorities, a president's way, is to affect the budget. What I fund, what I cut back on, what I put more money into really reflects my priorities. So there you've got to be kind of hands-on, maybe more so than I think prior presidents have been. But by and large, look, you stand or fall on the people you select. The US attorney's office, my success was I had really good people.
CRAMER: You have always surrounded yourself with people who are impeccable. Absolutely never had a problem ethically. Is it a stumble that you associated with Bernie Kerik, who did such...
Mr. GIULIANI: It was a mistake. Sure, it was a mistake. I acknowledge the fact that I should have checked him out more than I did. His job performance was superlative. I mean, he did everything you could ask as corrections commissioner, police officer, won one of the highest awards for bravery, police commissioner. Heroic performance on September 11. Brought down crime. Then he had this other part of him, and I should have found it when we vetted him. I didn't and it's my fault, and hey, I'll improve in the future.
CRAMER: But learning lesson for president?
Mr. GIULIANI: Absolutely, absolutely. Learning lesson for being the president. And it's not that I haven't done it before. I mean, I have made mistakes also before. I selected some terrific assistant US attorneys, I made some mistakes in selecting US attorneys. We didn't check them out enough of something they did surprised you. A couple of cases, they were really kind of shocking. So I kind of have gotten used to that. I even write about it in my book. I think a person who makes good management decision makes them eight out of 10 times, nine out of 10 times, you're going to blow some.
CRAMER: OK. All right. You were always known--and in my old show with Larry Kudlow, we always just praised you as a pro-growth mayor. You've always been pro-growth. We have seen some incredible income growth among some people and not a lot among others. Is it possible that there's an echelon in this country that has gotten too rich?
Mr. GIULIANI: If there is, it's the function of our free economy, and the best way to deal with it is to create opportunities for everyone else, not to put a lid on our--on our society. I see the debate this year between Republicans and Democrats as they want to put a lid on and level off growth, which I think means decline for everyone. I want to take the lid off and let everybody aim for the sky. And if there are unfairnesses along the way, well then we'll deal with that. Let's get people better educational opportunities. Let's give them opportunities for more jobs. Let's get them opportunities for more jobs where we're doing more exporting. I mean, as part of this whole trade thing, we've missed the fact that our exports have gone up. Our exports are now a bigger part of our GDP than they have been, I think, in a long, long time, over 11 percent.
CRAMER: Well, then what is the matter with the weak dollar? I've never heard an elected official or anyone running for office ever say, `You know what? A weak dollar does provide some sort equality vs. our trading partners,' who have always kept their currencies...(unintelligible).
Mr. GIULIANI: Isn't it all in moderation? I mean, hey, a dollar too strong is not good, a dollar too weak is not good. A dollar that verges back and forth between strong and weak is probably the best. And I think the best way you deal with the dollar is the fundamentals of the American economy. Right now, if President Bush did a major program to reduce government spending, on his own, with his own agencies, with the civilian agencies in government, 5 percent cuts, 10 percent cuts, he'd immediately restore some increased confidence in the dollar. But it would be the healthy way. It would be increased confidence in our economy and the growth of our economy. A nice tax reduction would help right now. How about the corporate tax?
CRAMER: If they're pretty low, if they're pretty low.
Mr. GIULIANI: Corporate tax, 35 percent, second highest in the world. We're losing business because of the corporate tax.
CRAMER: Now, I heard Senator Clinton talk about the notion that the oil companies are making too much money. We should tax them, tax them, tax them! Take that money and do alternative energy with it. Is that confiscation or is that a great idea?
Mr. GIULIANI: That's central government bureaucracy at its worst! It's exactly what European governments do. It's exactly what Sarkozy wants to move France away from.
CRAMER: Right, right.
Mr. GIULIANI: All of a sudden, Hillary is going to make us more French than the French, and Sarkozy's going to make them more American. I mean, that's a very, very strange way to do it. The way to do it is to give everybody a chance to succeed, not to put a lid on growth the way she wants to do.
CRAMER: But is there ever a scenario where we want to raise taxes, where it just pays--look, I was a hedge fund manager. I never took advantage of this loophole where I turned my ordinary income into capital gains. Is that the kind of situation where we ought to examine people who make ordinary income, turn it into capital gains, and then escape the ordinary taxman?
Mr. GIULIANI: I don't think so. Not at a time in which we want a lot of events, a lot of alternative events. We want to attract a lot of money to the United States. We see money going elsewhere now. There's a real competition between New York and London for deals. I think we're going to see competition with Tokyo. There are markets elsewhere, some of which seem to be more desirable to people. If they significantly lower corporate tax rate elsewhere. So this is kind of a trade-off that in very, very many ways is helping. Here's what I tried to do with taxes as mayor of New York City. I tried to figure out the optimum. In other words...
CRAMER: Some were bad.
Mr. GIULIANI: Almost like the price of a product. Where can you price it where you're going to make the most on it, meaning bring down--I brought down the income tax 24 percent, I was collecting 42 percent more revenues from the lower tax than from the higher tax. Maybe if I had brought it down too much more, I wouldn't have done that. If I had kept it where it is, I'd have had less money. So there's a strategy to tax reduction, it's called stimulating the economy.
CRAMER: But what happened to the Republican Party? I...
Mr. GIULIANI: Well, we didn't lose it on tax reduction. We lost it on spending too much.
Mr. GIULIANI: The two things go hand in hand.
CRAMER: Yeah, but you know 9/11. A lot of people don't talk about this. But you were at ground zero, you know the truth, which is that we have to spend to keep the world safe.
Mr. GIULIANI: Right.
CRAMER: You can't cut that part of it.
Mr. GIULIANI: Cannot. You cannot. But the reality is, we don't have to spend on all these earmarks with bridges to nowhere, museums for this, museums for that, counterculture museums. Who the heck knows what we're spending on? And the reality is here's what I learned as mayor of New York City, with the hands-on management kind of thing. You've--the mayor, the president, has to impose spending caps on your civilian agencies. Otherwise, they just spend out of control. No commission--I had great ones--I don't think very few Cabinet secretaries ever walk into a mayor or president's office and say, `Cut my budget.' So if you don't impose this from the top, spending gets out of control. It wasn't happening in the White House, it wasn't happening in Congress. The Republicans spent too much, the Democrats started to spend more. We've got to get our spending under control.
CRAMER: OK. Now, let me ask you one last question. From the time that I was at Goldman Sachs, you led my boss out of the trading room in handcuffs.
Mr. GIULIANI: Which was?
CRAMER: Bob Freeman.
Mr. GIULIANI: Right.
CRAMER: And do you have any regrets?
Mr. GIULIANI: I do. I do about that. Not the case.
CRAMER: No? OK.
Mr. GIULIANI: The case was a case that we evaluated, it was a fair evaluation, it was the right thing to do. Some of it turned out to be correct, some of it turned out to be wrong. Some people--either the case was dropped or were...(unintelligible)...I don't remember.
CRAMER: But your--there are components of Wall Street that hate you.
Mr. GIULIANI: But it didn't have to be...
CRAMER: Just hate you from the way you handled yourself.
Mr. GIULIANI: It didn't have to be done that. It didn't have to be done with the handcuffs. It could have been done the way it was done more often, which is in these situations, you invite somebody to come down, they come down, you have confidence that they will. One of them, I don't remember that situation well, but I remember another situation in which the handcuffs came about because the postal inspectors showed up...
Mr. GIULIANI: ...they said, `We have a warrant for your arrest.'
Mr. GIULIANI: The gentleman said, `Come back after the trading day is over.'
CRAMER: Well, that's...
Mr. GIULIANI: (Unintelligible).
CRAMER: Well, there's always big money downtown.
Mr. GIULIANI: And they put--and they put the handcuffs on him and they took him out. Probably if they had called, I think I would have said, `We don't have to do this.' But I don't tend to second-guess the people. I take the responsibility for what they do. There probably was a better way to do that. You know, after that, we did it--we didn't do it that way in the past--in the future.
CRAMER: Is it cleaner now?
Mr. GIULIANI: And it was the right decision at the time. In retrospect, it could have been a little better.
CRAMER: Are things cleaner now?
Mr. GIULIANI: Yeah, they are, absolutely.
CRAMER: All right. OK.
Mr. GIULIANI: Yeah. I think they are. I think all these investigations, all these prosecutors help us to move maybe slowly, but to a much more ethical climate.
CRAMER: Excellent. Thank you for coming on MAD MONEY, Mayor.
Mr. GIULIANI: Thank you. Thank you.
CRAMER: Thank you very much.
Mr. GIULIANI: Thank you.
CRAMER: Good to see you, sir.
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