What follows below is my interview on Tuesday night's Kudlow & Company with former New York City mayor and former Republican presidential candidate, Rudy Giuliani. Mr. Giuliani joined us live from the Democratic convention in Denver. Hat tip toCQ Politics.
KUDLOW: Joining us now, America’s mayor, as I still call him, a great friend, along with Charlie Rangel, Rudy Giuliani, obviously a former presidential candidate, former New York mayor. He’s, by the way, going to be a keynote speaker at the Republican convention. And this evening, he is visiting with us from Denver with the Democrats as a McCain surrogate.
Mr. Mayor, it’s great to see you, sir.
GIULIANI: Good to see you, Larry.
Charlie, good to see you.
KUDLOW: I love this love-in there, Giuliani and Rangel. I think that’s a great story. Mr. Mayor...
GIULIANI: I need all the help I can get on the floor of the Democratic convention, believe me.
KUDLOW: I thought they’d all embrace you for good sense and wisdom. But I really -- one of the big topics of this program tonight for investors is, are we going to return to a real tax-and-spend approach to economic policy, which was used in the 1970s? As you well know, it caused -- it caused sluggish economic growth, it spurred inflation. Stock markets did very badly.
The Wall Street Journal highlights it on page one. It lays out the risks, spending, spending, spending, higher taxes. What is your first response to this whole question?
GIULIANI: My first response is that that is clearly what would happen if Barack Obama was elected. After all, you have a ticket right now with the most liberal of the United States Senate leading the ticket, Barack Obama, and the number-three liberal in the Senate, Joe Biden, number three in the Senate, who is the number-two on the ticket.
So you’re going to end up with a very, very left-wing approach to the economy. Barack Obama has promised enormous spending, not just on health care. He doesn’t talk about it as much now, but he has this whole plan to end poverty, in which he’s going to spend billions and billions of dollars. Someone described it as a possible U.N. tax.
I mean, the reality is, he’s going to raise taxes. He does not agree with Charlie Rangel, with you, and with me that corporate taxes should be lowered. He’s resisted that.
And we’re going to see individual income taxes go up. We’re going to see the inheritance remain high and actually go up. And we’re going to see taxes at the highest level since I think the 1970s.
KUDLOW: I want to ask you a McCain question in just a minute, Mr. Mayor, but let me ask you just to qualify. The advisers to Mr. Obama -- and we have Robert Reich on the program tonight, as we talked, we have Jared Bernstein, two distinguished economists, friends of mine, and brilliant guys.
They will say that, in fact, most of Obama’s tax plan is a tax reduction for roughly 95 percent and only the top end, the so-called rich, are going to have tax hikes. What do you make of that? Is it credible? What’s the economic impact?
GIULIANI: It’s gobbledygook. The reality is, if you raise taxes and you have to collect the kind of money he’s spending, you have to raise taxes on everyone. Every Democrat who’s raised taxes and said they’re going to raise it on the rich raises it on everyone.
Not enough people pay taxes in order to raise the kind of money they’re talking about. So if you add up what Barack Obama has promised to spend, he is not going to be able to afford it by raising taxes on just a few people.
KUDLOW: All right.
GIULIANI: And the reality is, when you raise the capital gains tax, which he has promised to do, you’re raising taxes on over 50 percent of the American people. That’s not just the rich.
KUDLOW: That’s the investor class.
GIULIANI: It’s a very substantial...
KUDLOW: The investor class.
GIULIANI: Not just the investor -- everybody who has a 401(k).
KUDLOW: That’s what I mean.
GIULIANI: Everyone who has a pension plan, absolutely, 50 percent of America, the American middle class. So they’re not telling you the truth when they tell you they’re not going to raise taxes on the middle class.
An increase in the capital gains tax goes right to the heart of the middle class. It will hurt our economy, I think in a way that you understand, Larry. It’s exactly the worst thing to do right now in the economic cycle that we’re in.
KUDLOW: All right, now, let me turn to Senator McCain. And if you can just bear with us, you can hear this. We’re going to play an ad from the McCain campaign. It’s called “Broken.” Please take a listen and, if you can, take a look. Here it comes, sir.
(VIDEO CLIP BEGINS)
(UNKNOWN): Washington’s broken. John McCain knows it. We’re worse off than we were four years ago. Only McCain has taken on big tobacco, drug companies, fought corruption in both parties. He’ll reform Wall Street, battle Big Oil, make America prosper again. He’s the original maverick.
One is ready to lead: McCain.
I’m John McCain , and I approve this message.
(END VIDEO CLIP)
KUDLOW: Now, Mr. Mayor, I find that a very troubling ad for two reasons. I want you to respond to it.
KUDLOW: Number one, he is basically saying, as he has more specifically in an earlier ad that was an iteration of this, that we are worse off today -- that we were worse off today than we were four years ago. I don’t believe the data support that view.
And, number two, Mr. McCain is engaging in some very interesting class warfare bashing of business, of Wall Street, of so-called Big Oil, of drug companies. Now, this to me is self-defeating. This sounds like Obama and Biden in their speeches in Springfield. It’s class warfare.
Why is John McCain going there? It totally dilutes his message and defeats his effort to make a distinction. What’s your take on this?
GIULIANI: I think the point of that whole ad is that he’s a different kind of Republican, that he’s always been an independent. He’s always been somewhat of a maverick and that he is someone that independents and Democrats who are disillusioned with Barack Obama can vote for.
Look, we realize that there is tremendous animosity in the Democratic Party because Hillary Clinton was not selected for vice president. She was the logical choice. She had 48 percent of the vote of the Democratic Party. She had 18 million votes; Joe Biden had 9,000 votes.
Some of those people are inclined to vote for John McCain, if they believe that he’s someone who can be bipartisan, someone who can reach out, someone who can work with the other side.
Senator Obama says that but has never done it. He is the single most liberal member of the United States Senate, the single most partisan member of the United States Senate, never passed a single bit of bipartisan legislation in his life. I’m not sure he’s passed any legislation, actually, he’s been in the Senate so little.
John McCain has been one of the leaders in passing bipartisan legislation. So I believe, like John McCain does, that you win elections in the middle. Going for independents, Democrats, I think that John McCain will do that, and that’s why he’s going to get elected.
KUDLOW: But Mayor Giuliani, if I may, when you ran for president, you had, in my judgment, the strongest, most pro-growth, supply-side message I have ever heard, even in some respects stronger than my former boss, Ronald Reagan. You were unbelievable, if you ask me.
You’re saying McCain is a different kind of Republican, but if McCain sounds like Obama, then it seems to me a lot of the Republican base is going to stay home. A lot of the business folks are going to stay home.
Why bash business? He’s not going to get those votes, Rudy. You know it, and I know it. This ad’s a mistake...
KUDLOW: ... and you should tell Mr. McCain to get it off the air.
GIULIANI: Well, first of all, I have my own areas in which I differ with the party, and I’m independent. It happens to be in economic policy I’m very conservative, because I think it works.
I think you have to be able in modern America to demonstrate that. And when John McCain is talking about the country being broken, he’s not talking about the country. He’s talking about the political system. Every American knows this.
We are so partisan now that we can’t get anything done. And I think we have a chance to elect a senator who has actually gotten things done with Democrats. He’s gotten campaign finance reform, things that maybe even Republicans disagree with.
But the reality is he will be so much better for business that there is no choice. He will lower the corporate tax. He’s in favor of that. He’s actually said he’ll lower it to 25 percent. He will keep the inheritance tax low, not see it go way back up to where it used to be.
He will -- he will retain the Bush tax cuts, which is to avoid a tax increase. There will be a substantial difference.
And John McCain is very conservative in one area that’s enormously important. He’s very conservative on spending. He’s probably been the single most hawkish senator in terms of keeping government spending low.
KUDLOW: All right. All right.
GIULIANI: So those are all things that our economy needs right now.
KUDLOW: All I’ll say, Mr. Mayor...
GIULIANI: You can never have 100 percent, Larry.
KUDLOW: You’re right, sir. All I’ll say, Mr. Mayor...
GIULIANI: Never 100 percent. It never works that way.
KUDLOW: ... I hope you stay close to him. He needs your economic advice, Mayor Rudy Giuliani.
GIULIANI: He’s a good friend and a great American.
KUDLOW: It’s great to see you. It’s great to see you, sir.
GIULIANI: Thank you.
KUDLOW: Thanks ever so much.