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CNBC INTERVIEW: CNBC'S BECKY QUICK SITS DOWN WITH JEFFREY IMMELT, GENERAL ELECTRIC CHAIRMAN & CEO TODAY ON "SQUAWK BOX"

** FILE ** General Electric (GE) Chairman, Jeff Immelt at Isaac Sheppard Elementary School in Philadelphia, in this file photo from April 25, 2006. General Electric Co. expects sales in China to double in the next four to five years, while its Chinese researchers should play a growing role creating products for global markets, Immelt said Monday May 29, 2006. (AP Photo/Matt Rourke,File)
Matt Rourke
** FILE ** General Electric (GE) Chairman, Jeff Immelt at Isaac Sheppard Elementary School in Philadelphia, in this file photo from April 25, 2006. General Electric Co. expects sales in China to double in the next four to five years, while its Chinese researchers should play a growing role creating products for global markets, Immelt said Monday May 29, 2006. (AP Photo/Matt Rourke,File)

WHERE: CNBC's "Squawk Box" Following is the unofficial transcript of a CNBC interview with Jeffrey Immelt, GE Chairman & CEO, today on CNBC's "Squawk Box."

All references must be sourced to CNBC.

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BECKY QUICK: THERE'S A LOT HAPPENING RIGHT HERE IN WASHINGTON THIS MORNING. THE PRESIDENT'S ECONOMIC ADVISORY BOARD IS MEETING AT THE WHITE HOUSE TODAY. WE'RE JOINED RIGHT NOW BY ANOTHER DISTINGUISHED MEMBER. JEFF IMMELT IS GE CHAIRMAN AND CEO, GE.IS A PARENT OF NBC. CNBC'S A UNIT OF NBC UNIVERSAL. JEFF ITS GREAT TO HAVE YOU HERE.

JEFFREY IMMELT: GREAT BECKY GOOD TO SEE YOU AGAIN.

QUICK: WE'VE BEEN TALKING ABOUT THE ECONOMY ALL MORNING LONG. WE JUST HEARD FROM ROBERT WOLF THAT THERE ARE SOME SIGNS OF LIFE OUT THERE BUT THAT WE HAVEN'T MADE IT PAST THE HUMP YET.

IMMELT: BECKY, I WOULD HAVE TO AGREE WITH WHAT PEOPLE ARE SAYING. THINGS HAVE STABILIZED AT A LOW LEVEL. THERE ARE CERTAIN SIGNS, I WOULD SAY APPLIANCE ,WHICH IS A SHORT CYCLE BUSINESS FOR US, THEY'RE STILL BELOW LAST YEAR BUT SEEM TO HAVE STABILIZED. SMALL BUSINESS DEMAND FOR COMMERCIAL LENDING HAS GROWN DRAMATICALLY. IT WAS ALMOST NONEXISTENT IN THE FIRST QUARTER. IT'S GROWN DRAMATICALLY IN THE SECOND QUARTER.I VIEW THOSE AS BEING GENERALLY POSITIVE SIGNS, BUT LOOK, I STILLTHINK THIS IS, THE CONSUMER IS GOING TO HAVE LESS CREDIT COMING OUT OF THIS. THIS IS GOING TO HAVE TO BE TO A CERTAIN EXTENT, AN INVESTMENT-LED RECOVERY, PEOPLE HAVE TO START TAKING RISKS AGAIN IN ORDER TO PULL US OUT OF THIS.

QUICK: AUSTAN, YOU'VE BEEN COMMENTING ON WHERE YOU SEE THINGS ARE HEADED RIGHT NOW, TOO. WHAT ARE THE BIGGEST CONCERNS FROM THE ADMINISTRATION'S PERSPECTIVE.

AUSTAN GOOLSBEE: THE NUMBER ONE CONCERN FROM THE ADMINISTRATIONS PERSPECTIVE IS ABOUT JOB GROWTH. THAT EVEN WITH A STABILIZATION OF THE ECONOMY AT A LOW LEVEL AND MAYBE THIS INKLINGS OF A RECOVERY, THAT STILL LEAVES YOU MONTHS AWAY FROM THE JOB MARKET RECOVERING BECAUSE IT TENDS TO COME WITH A LAG. SO I THINK AT THIS MEETING TODAY OF THE PRESIDENT'S ECONOMY RECOVERY ADVISORY BOARD, THE ONE NUMBER SUBJECT IS GOING TO BE JOB GROWTH, WHAT CAN WE DO TO CREATE JOBS, HOW DOES THAT DOVE TAIL WITH THE CLEAN ECONOMY AND WHAT DO WE GROW INTO? SO I WOULD SAY JOB GROWTH IS NUMBER ONE. THE SECOND, I WOULD SAY,THERE'S STILL LINGERING CONCERN, THERE'S BEEN IMPROVEMENT IN THE CREDIT MARKETS, BUT IT'S STILL VERY DIFFICULT FOR SMALL BUSINESS, SMALL BUSINESS LENDING HAS RECOVERED A LITTLE, BUT IT'S STILL LARGELY MORIBUND. YOU SAW THE PRESIDENT TALKING ABOUT THAT OVER THE LAST FEW DAYS, BUT THE NOTION THAT THE CREDIT CRUNCH CONTINUES TO PUT REALLY A GOVERNOR OR BREAK ON THE SPEED AT WHICH THE RECOVERY CAN COME BACK, THAT'S A SECOND MAJOR AREA.

QUICK: SO, JEFF, WHAT WILL YOU WEIGHING IN WITH ON THIS PANEL TODAY? WHAT'S WORKING? WHAT DO WE NEED TO SEE MORE OF?

IMMELT: BECKY, I'VE ALWAYS BEEN A BIG BELIEVER IN R&D SPENDING, INNOVATION AND TECHNOLOGY, THAT IS THE CORNERSTONE OF WHAT COMPETITIVE UNITED STATES HAS TO BE ABOUT. IF YOU PICK ONE PLACE THAT YOU WANT TO LEAD IN THE 21st CENTURY, IT'S ENERGY SO WE NEED A BROAD BASED ENERGY POLICY.WE NEED TO BE LEADING IN GREEN ENERGY AND GREEN JOBS. AND I THINK WE WANT TO CREATE A COMPETITIVE EXPORT BASED NATION AGAIN. SO YOU WANT TO MAKE SURE THAT COMPANIES LIKE GE COULD GO OUT AND SELL AND CHINA AND INDIA AND KHAZEKSTAN AND ABU DHABI AND ALL THE OTHER PLACES AROUND THE WORLD. SO INNOVATION AND COMPETITIVENESS HAVE TO BE AT THE CORNERSTONE OF A 21st CENTURY UNITED STATES.

QUICK: DO YOU THINK THAT'S WHERE THE ADMINISTRATION HEADED RIGHT NOW? EARLIER THIS MORNING MONTH, GE ANNOUNCED A NEW PROJECT THAT ITS UNDERTAKING IN NEW YORK FOCUSING ON BATTERY TECHNOLOGY THAT WILL HELP THE LOCOMOTIVES OF THE FUTURE AND OTHER THINGS TO COME ALONG. ONE OF THE THOUGHTS WAS TO APPLY FOR FEDERAL FUNDING FOR THIS AS WELL.DO YOU FEEL LIKE YOU'RE GETTING SOME HELP?

IMMELT: THE PRESIDENT SET-ASIDE THROUGH THE STIMULUS, REAL GOALS AND TARGETS AS IT PERTAINS TO CLEAN ENERGY, HEALTHCARE IT INFRASTRUCTURE SPENDING, THINGS LIKE THAT BUT IT'S NOT JUST THE U.S., THE GOVERNMENT OF CHINA IS DOING THE SAME THING, THE GOVERNMENT OF FRANCE IS DOING THE SAME THING. WE'VE SPENT $50 BILLION IN R&D INVESTMENT IN AREAS LIKE THAT. SO TO THE EXTENT WE CAN BRING THOSE TECHNOLOGIES TO MARKET FASTER, THE STIMULUS, I THINK IS GOING TO BE DOING EXACTLY WHAT IT WAS SUPPOSED TO DO WHICH WAS ACCELERATE THINGS, ACCELERATE JOB CREATION AND INVESTMENT. THAT'S WHAT IT'S GOING TO DO AT GE AND OTHER COMPANIES.

QUICK: YOU TALK AN ENERGY PLAN, BUT THAT'S A TERM THAT GETS TOSSED AROUND BY A LOT OF PEOPLE.WHAT'S THE RIGHT DIRECTION, WHAT'S THE MOST IMPORTANT ASPECT OF AN ENERGY PLAN?

IMMELT: YOU NEED A GOAL TO START WITH. IT OUGHT TO BE ABOUT SECURITY, IT OUGHT TO BE ABOUT DIVERSITY OF FUELS. IT OUGHT BE TO ABOUT ECONOMICS. THERE'S GOING TO HAVE TO BE A PRICE FOR CARBON. IN SOME WAY, SHAPE OR FORM, YOU HAVE TO BE ABLE TO CREATE SOME CERTAINTY YOU HAVE TO MAKE TECHNOLOGY YOUR FRIEND IN THIS DEBATE.BUT LOOK, WE SIT HERE TODAY, BECKY, I THINK ABOUT THINGS LIKE GLOBAL WARMING, RIGHT? WE'VE BEEN ON THIS FOR FOUR OR FIVE YEARS. I THINK THE SCIENCE AS A CEO, I'M NOT AN ENVIRONMENTALIST JUST PURELY AS A CEO WHO HAS TO MAKE A PAYROLL, THINGS LIKE THAT THE SCIENCE IS COMPELLING.SO IT'S A QUESTION OF WHEN AND NOT IF THERE'S GOING TO BE SOMETHING DONE ON CARBON. GIVE US SOME CERTAINTY AND LET'S GO. WE'RE NOT BUILDING NUCLEAR POWER PLANTS HERE. WE'RE FALLING BEHIND IN COAL GASIFICATION, EUROPE LEADS IN RENEWABLE, WE'RE NOT LEADING IN ADVANCED BATTERIES, WE'VE GOT A CHANCE TO SOLVE SOME BIG PROBLEMS AND CREATE A MASSIVE INDUSTRY AT THE SAME TIME.

QUICK: IS CAP AND TRADE THE WAY TO GO THOUGH?

IMMELT: I'VE SAID IT, THERE'S GOT TO BE A PRICE FOR CARBON. I'VE COME TO THE CONCLUSION THAT CAP AND TRADE IS THE MOST EFFECTIVE WAY TO CREATE A MARKET AND GO. THERE'S GOING TO BE PEOPLE THAT ARGUE FOR TAXES, BUT I JUST THINK THAT CAP AND TRADE IS THE MORE PRACTICAL APPROACH. BUT LET'S DEBATE ALL THAT STUFF BUT GET IT DONE.

QUICK: DAVE SOKOL HAD AN OP-ED PIECE IN THE WASHINGTON POST YESTERDAY FROM MIDAMERICAN ENERGY, HE SAID THAT JUST CREATES A WHOLE NEW MARKET FOR DERIVATIVES AND WALL STREET FINANCIAL PRODUCTS AN OTHER WILL BE BENEFITING OFF OF THAT.

IMMELT: IN A SMALLER SCALE, WE HAD A MARKET FOR SULFUR DIOXIDE THAT WORKED FAIRLY EFFECTIVELY. AGAIN, IT IS THE ONE THING THAT CAN GEL NGO'S BUSINESS TOGETHER IS CAP AND TRADE SYSTEM TO CREATE A MARKET. IS IT GOING TO BE PERFECT? NO, BUT LET'S BE REALLY HONEST WITH EACH OTHER RIGHT NOW.WE HAVE A POLICY, WE JUST DON'T KNOW T THE LAST 40 COAL PLANTS HAVEN'T BEEN PERMITTED IN THIS COUNTRY. WE'RE NOT LEADING IN CORE TECHNOLOGIST, WE'RE THE WORST OF ALL WORLDS, SO LET'S HAVE THE DEBATE, CREATE CERTAINTY, THE ONE THING BUSINESS GUYS HATE IS UNCERTAINTY. IN ENERGY TODAY, THAT OUGHT BE TO THE MARKET WE STAKE OUT TO LEAD, CREATE CERTAINTY, CREATE INCENTIVES FOR SMALL BUSINESS, BIG BUSINESS, WHOEVER YOU WANT TO, LET'S GO.

GOOLSBEE: THIS IS THE KEY THING JEFF IS RAISING HERE. JOE, YOU PAY ATTENTION TO THIS.HERE'S A CASE WHERE GOVERNMENT POLICY WITH THE PRIVATE SECTOR WORKING TOGETHER IS THE ONLY WAY THAT IT REALLY CAN GET DONE.AND IN LOOKING AT INTERNATIONALLY, TOO, IT'S GOT TO BE DONE IN AN INTERNATIONAL CONTEXT SO THE U.S. ISN'T THE ONLY ONE PASSING THESE RULES, BUT WE'VE FALLEN BEHIND IN THIS. THAT'S A PLACE WHERE THE GOVERNMENT'S ENERGY POLICY COULD BE USED IN A WAY THAT WOULD HELP AMERICAN BUSINESS AND THUS FAR, YOU KNOW, HAS BEEN LESS SO. SO WE'RE TRYING TO PUSH THAT TODAY IN THIS MEETING.

JOE KERNEN: HEY, JEFF IS TAXING MULTINATIONALS THE WAY TO KEEP JOBS AT HOME? LISTEN UP, AUSTAN, IS THAT THE WAY TO KEEP JOBS AT HOME?

QUICK: JOE THEY WERE WORRIED ABOUT THIS,TALKING ABOUT THIS BEFORE YOU ASKED IT.

IMMELT: I THINK INTERNATIONAL TAX REFORM IS GOING TO HAPPEN IN SOME WAY, SHAPE OR FORM, BUT IT DOES NOBODY ANY GOOD IF SIEMENS PAYS LOWER TAX WHEN IS THEY SELL IN CHINA THAN GE DOES.

KERNEN: WHAT AUSTAN IS DOING RIGHT NOW? DID HE LEAVE?

IMMELT: I'M GOING TO BE OPEN ABOUT THIS.

GOOLSBEE: GROSS MISCHARACTERIZATION OF WHAT THE PRESIDENT'S POLICY IS.

KERNEN: SO YOU'RE SAYING IT'S INDIVIDUALS DOWN IN THE CAYMAN ISLANDS THAT YOU'RE GOING TO GO TAX?

IMMELT: I SAY WE SHOULD WANT BE TO THE MOST COMPETITIVE COUNTRY IN THE WORLD AND I THINK THAT'S WHAT THE PRESIDENT WANTS. AND I, IN MY OWN WAY, I'M GOING TO BRING MY VOICE TO BEAR IN THIS DEBATE.

GOOLSBEE: WELL, WE'RE IN AGREEMENT. I DON'T KNOW WHO THE REAL "MORNING JOE" IS.

KERNEN: YOU DON'T?

GOOLSBEE: I WAS GOING TO VOTE FOR YOU BUT I'M HAVING SOME SERIOUS THOUGHTS ABOUT CHANGING MY VOTE.

KERNEN: MAYBE YOU'RE RIGHT, AUSTAN. IF YOU'LL GO WITH ME, I CAN'T. I HAVE TO STAND UP. JEFF, ON ANOTHER SUBJECT, YOU'VE SEEN THE T.A.R.P., THESE BANKS CAN'T PAY IT BACK FAST ENOUGH. GE DOESN'T HAVE ANY T.A.R.P., YOU'VE GOT THAT GOVERNMENT GUARANTEED STUFF. YOU'VE DONE $45 BILLION, YOU'RE DONE WITH THIS YEAR FOR GE.YOU'VE ALREADY GOT SOMETHING TO APPLY NEXT YEAR. WILL YOU ISSUE ANY GOVERNMENT-GUARANTEED DEBT AGAIN OR WILL IT ALL BE NONGOVERNMENT GUARANTEED?

IMMELT: JOE, I DONT KNOW. YOU KNOW THE CAPITAL MARKETS WE'VE DONE ABOUT $3 OR $4 BILLION OF UNGUARANTEED THE LAST FEW WEEK, SO WE LIKE TO KEEP OUR OPTIONS OPEN FOR WHEN WE LOOK AT THE FUTURE FROM BOTH A GUARANTEED AND UNGUARANTEED BASIS AND SEE WHERE THE CAPITAL MARKETS GO, BUT I THINK WE ARE ENCOURAGED BY WHAT WE'RE SEEING IN THE CAPITAL MARKETS RIGHT NOW.

CARL QUINTANILLA: SPEAKING OF WHICH JEFF, WHETHER IT'S GE PAPER OR DEBT. WE CAN'T KEEP ALL THE DEALS STRAIGHT. VERIZON WE MENTIONED THE REGIONS, THE NEW COMMON, SOME OF THE CONVERTIBLES, DO YOU THINK THIS NEW APPETITE FOR CREDIT IS BECAUSE OF REAL DEMAND OR IS IT JUST SOME PEOPLE SUGGEST THAT JUST BECAUSE SHEER MONEY SUPPLY HAS GROWN SO MUCH AND JUST THE FLOW OF CASH IT'S JUST MUSHY, WHAT DO YOU THINK IT IS?

IMMELT: ON SEPTEMBER 15th OF LAST YEAR, BASICALLY THE WORLD ALMOST CAME TO AN END, THE CAPITAL MARKETS REALLY ALMOST COLLAPSED. WE NOW HAVE SEEN STABILITY. I THINK WHAT YOU SEE COMPANIES DOING IS WHEN YOU SEE A LITTLE BIT OF STILL WATER, YOU'RE GOING TO TRY TO GET SOME OF THE WORK DONE THAT YOU WANT TO GET DONE. NOW, WHAT I SEPARATE THAT FROM IS WHAT AUSTAN SAID, IF YOU'RE IN FINANCIAL SERVICES, YOU'RE IN THE BUSINESS OF LENDING MONEY. WE WANT TO LEND MONEY, YOU KNOW? SO I THINK WHAT WE WANT TRY TO DO IS GET A FULLY FUNCTIONING CAPITAL MARKET GOING AND I SEE SIGNS OF THAT, I REALLY DO. I DON'T THINK IT'S JUST HORDE THE CASH AND THINGS LIKE THAT. I DO THINK PEOPLE WANT TO SEE THE MONEY GO TO WORK AGAIN.

KERNEN: SORRY, BECK. I HAVE ONE MORE FOLLOW-UP ON THE SHRINKING GE CAPITAL. AT THE SAME TIME, JEFF, THAT YOU'RE SAYING THAT CREDIT CRISIS HAS CREATED A LOT OF OPPORTUNITIES FOR GE CAPITAL, THE ASSET BASE YOU WANT TO GET THAT DOWN TO 400 TO 450 BILLION FROM 540 BILLION. THAT DOESN'T SEEM LIKE IT MAKES SENSE.

IMMELT: WE JUST EXIT PRODUCT LINES. WE WANT TO GROW IN THE PLACES WE WANT TO GROW. THIS IS GREAT TIME TO DO THAT AND WHAT WILL DO IS NOT, WE WON'T STARVE THE BUSINESSES WE WANT TO BE IN FOR CAPITAL BUT WE'RE GOING TO EXIT THE PRODUCT LINES AS WE GO THROUGH IT. THE UK MORTGAGE BUSINESS IS GOING TO BE SMALLER AS WE GO FORWARD BUT WE WANT, YOU KNOW MID MARKET LENDING IN THE U.S. TO GROW AND GROW DRAMATICALLY.

GORDON BETHUNE: WHAT ABOUT YOUR PRODUCT LINES, LETS SAY IN AVIATION OR BIG ENGINE MANUFACTURING, YOU OWN A LOT OF AIRPLANES THROUGH YOUR CREDIT. THE RESIDUAL VALUES OF AIRPLANES ARE BECOMING MORE DOWN FOLD. WHAT IS YOUR TAKE ON THE FUTURE OF THAT SECTOR OF YOUR BUSINESS?

IMMELT: THAT SOUNDS LIKE MY OLD FRIEND GORDON. I THINK, YOU HAVE A SAFER COCKPIT THAN YOU USED TO HAVE MY FRIEND. I THINK GORDON, AVIATION, AS YOU WELL KNOW, IT'S ABOUT THE QUALITY OF YOUR ASSETS AND THE WAY YOU RUN THROUGH A CYCLE. SO, GORDON, WE CAME INTO THIS CYCLE WITH NEWER PLANES, MORE FUEL EFFICIENT PLANES LIKE WE ALWAYS HAVE DONE, AND KIND OF IN THE AIRCRAFT LEASING BUSINESS, WE'RE THE LAST GUY STANDING.

BETHUNE: YOU ARE.

IMMELT: WE KNOW HOW TO PLAY THE CYCLES. IT'S AN ASSET CLASS WE KNOW. I REMEMBER, GORDON, YOU CALLED ME RIGHT AFTER 9/11. YOU SAID HEY, JEFF, IF SOMETHING DOESN'T HAPPEN WE ARE GOING TO HAVE TO TAKE CONTINENTAL INTO BANKRUPTCY. I SAID CONTINENTAL HAS ALREADY BEEN IN BANKRUPTCY 15 TIMES, YOU CAN'T EVEN GET MY HEART BEATING FAST.

BETHUNE: WE DIDN'T GO THERE.

IMMELT: YOU DIDN'T GO THERE. YOU DID A HELL OF A JOB. WE KNOW HOW TO MANAGE THESE CYCLES. IN THE AVIATION CYCLE, WE COME OUT OF EACH ONE WITH BETTER COMPETITIVE ADVANTAGE THAN WE WENT IN BEFORE. THE ACTION IS GOING TO BE IN AFRICA AND MIDDLE EAST AND CHINA.THE CHINESE COMMERCIAL AVIATION BUSINESS IS GOING TO BE BIGGER THAN THE UNITED STATES BY 2025, 2030, WE WANT TO BE THERE.

BETHUNE: SO WHEN YOU TALK ABOUT DIVESTING ASSETS THAT'S NOT ON THE TABLE FOR YOU IN AVIATION?

IMMELT: I THINK IN AVIATION, WE'RE GOING SEE GREAT DEALS AND DO SOME GREAT DEALS.

BETHUNE: YOU NEED TO BE THERE. THAT'S GOOD.

QUICK: LET'S TALK MORE ABOUT GE CAPITAL. GE DID NOT TAKE T.A.R.P. MONEY, YOU WERE NOT ONE OF THESE BANKS THAT WAS PUT UNDER THE STRESS TEST, BUT YOU HAVE BEEN GIVING US UPDATES OF WHERE THINGS STAND WITH GE CAPITAL. IN MARCH YOU SAID PROFIT WOULD BE $2 TO 2.5 BILLION BASED ON THE FEDS BASE CASE SCENARIO, BUT RECENTLY YOU SAID THINGS ARE LOOKING BETTER. CAN YOU GIVE US AN UPDATE.

IMMELT: ALL I CAN SAY IS THAT OUR GE CAPITAL TEAM IS MAKING GREAT PROGRESS IN A BRUTAL TIME. YOU KNOW, I THINK WE FEEL VERY COMFORTABLE WITH OUR BALANCE SHEET. WE'VE TAKEN OURSELVES THROUGH THE SAME STRESS TEST THE BANKS TOOK THEMSELVES THROUGH. WE'VE GOT MORE CASH ON THE BALANCE SHEET, WE'VE REDUCED COMMERCIAL PAPER, LOWERED LEVERAGE, WE'VE DONE ALL THE SMART THINGS WE MADE A VERY DIFFICULT BRUTAL DECISION TO CUT THE DIVIDEND WE DID THAT TO PROTECT THE BALANCE SHEET. PROBABLY THE TOUGHEST DECISION I'VE HER HAD TO MAKE AS A CEO OF A COMPANY. FIRST TIME WE CUT IT SINCE 1938, WE'VE ONLY DONE IT TO PROTECT IT, SO ALL I WOULD SAY IS I'M ENCOURAGED WITH THE PROGRESS WE'RE MAKING AND I THINK WE'RE RUNNING IT AT AN INVESTOR FRIENDLY WAY.

QUICK: BACK LAST FALL --

IMMELT: DON'T LET AUSTAN GET BORED HERE.

QUICK: I'M NOT. BACK IN THE FALL, THERE WERE A LOT OF CEOs HAVING SOME SLEEPLESS NIGHTS WATCHING WHAT WAS HAPPENING IN THE MARKETS. WE'VE MADE IT PAST THE ROUGHEST TIMES, BUT IF THERE'S ONE OR TWO THINGS YOU WORRY ABOUT NOW, WHAT WOULD IT BE?

IMMELT: IT'S WHAT AUSTAN TALKED ABOUT. I ACTUALLY THINK DUE TO COURAGEOUS DECISIONS IN A BRUTAL TIME BY PEOPLE LIKE TIM GEITHNER, BEN, HANK PAULSON, THAT PEOPLE MADE WITH NO -- YOU CAN ALWAYS LOOK BACK AND CRITICIZE. BUT YOU HAVE TO RECOGNIZE THAT WHEN YOU WERE SITTING THERE THE DAY AFTER LEHMAN BROTHERS DECLARED BANKRUPTCY, TRYING TO DECIDE WHAT TO DO WITH AIG, THERE WAS NO PLAYBOOK ANYBODY HAD WITH HOW TO DEAL WITH ANY OF THAT STUFF. GIVEN THE UNCERTAINTY, I THINK THE COUNTRY OUGHT TO TIP THEIR HAT TO THAT TEAM. NOW, TO ME, BECKY, IT'S ALL ABOUT JOB GROWTH, ECONOMIC GROWTH. WE'VE GOT TO RECOGNIZE WE'VE GOT A NEGATIVE GDP IN THE THIRD QUARTER, DOWN SIX IN THE FOURTH QUARTER. SEVEN IN THE FIRST QUARTER.THESE ARE OFF THE CHARTS BAD NUMBERS. SO NOW IT'S GOING TO BE WHAT WILL BE THE ENGINES THAT PULL US OUT OF THIS? THAT'S WHY I COME BACK TO, IT'S GOT TO BE A REAL PERSPECTIVE ON ENERGY, IT'S GOTTA BE A REAL PERSPECTIVE ON EXPORT, ON COMPETITIVENESS, I LEAVE FRIDAY NIGHT, I GO TO JAPAN, CHINA, KAZAKHSTAN, ABU DHABI AND I AM SELLING MY BUTT OFF AT EACH STOP, GAS TURBINE, JET ENGINES, LOCOMOTIVES. IT'S GOT TO BE ABOUT ENERGY, IT'S GOTTA BE ABOUT JOB CREATION, IT'S GOTTA BE ABOUT COMPETITIVENESS, IT'S GOTTA BE ABOUT EDUCATION, BECAUSE I DON'T THINK WE HAVE THE LUXURY OF JUST SAYING, PHEW, WE DODGED THAT ONE, NOW WE'VE GOT TO GET OUT OF THIS. EVERYBODY HAS GOT TO BE INTO THAT.

GOOLSBEE: YOU CAN SEE FROM THIS WHY THE PRESIDENT WANTED JEFF ON THE ECONOMIC RECOVERY ADVISORY BOARD. PEOPLE FROM WIDELY DIFFERENT INDUSTRIES, MAJOR EXPERTS ON FINANCIAL OR OTHER BUSINESS MATTERS, IT'S IMPORTANT THAT THEY HAVE A VOICE, IT'S IMPORTANT THAT THE PRESIDENT BE ABLE TO HEAR FROM PEOPLE WHO ARE WORKING OTHER THAN HERE IN THESE VARIOUS TWO BUILDINGS BECAUSE ULTIMATELY THE EQUALITY OF THE INFORMATION OUT IN THE PRIVATE SECTOR IS IN THE MARKETPLACE A LOT BETTER THAN WHAT YOU CAN GET FROM JUST INSIDE THE SILO OF WASHINGTON.

QUICK: WHAT'S SOMETHING YOU CALLED JEFF UP ON AND ASKED FOR HIS ADVICE ON?

GOOLSBEE: WELL, I'VE ASKED A LOT ABOUT THESE ENERGY AND JOB GROWTH THINGS AND A LOT ON MANUFACTURING WHAT'S A FUTURE MANUFACTURING OF THE COUNTRY? IT'S BEEN A TOUGH PERIOD FOR MANUFACTURING, NOT JUST THIS RECESSION BUT THE PREVIOUS FOUR OR FIVE YEARS. BUT I'M NOT GOING TO TELL THOSE OTHER SECRETS OUT OF TURN, BUT THOSE HAVE BEEN TWO BIG AREAS RECENTLY.

QUINTANILLA: BUT YOUR JEFF, YOUR POINT ABOUT COURAGEOUS DECISIONS IS WELL TAKEN, BUT THIS IS LINE FROM GEITHNER SPEAKING AT A CONFERENCE RECENTLY TALKING ABOUT NEW REGULATION. HE SAYS YOU WANT TO MOVE AT A POINT WHERE PEOPLE STILL HAVE THE MEMORY OF THE TRAUMA. IF YOU WAIT FOR THE MEMORY TO FADE, THEN THE IMPETUS FOR REFORM WILL FADE AND WILL PROBABLY GET LESS CHANGE THAN YOU NEED. THERE IS THIS WORRY, RIGHT? THAT THEY WILL TAKE WHAT WE'VE BEEN THROUGH AND THAT TRAUMATIC EXPERIENCE AND TRY TO USE IT TO PUSH AN AGENDA THAT IS BEYOND HEALING THE CRISIS.

IMMELT: YOU KNOW, CARL, I THINK THIS IS A PLACE WHERE A LOT OF VOICES HAVE TO BE HEARD. PAUL VOLCKER, MARTY FELDSTEIN, PEOPLE LIKE THAT TO REALLY URGE THAT WE'RE GOING TO DO REGULATION, WE ALL KNOW THAT. WE NEED TO DO IT IN A WAY THAT CAN BE ROBUST AND THOUGHTFUL OVER THE LONG-TERM. I CREATE A THOUGHT, THOUGH. PEOPLE ARE SO ANGRY RIGHT NOW. AND THE SENSE IS THAT SOMETHING IS IS GOING TO HAVE TO CHANGE IN THAT CONTEXT, OKAY? BUT I DO THINK WE DON'T WANT TO MAKE THE SYSTEM WORSE. WE DON'T WANT TO CREATE REGULATION THAT STARVES THE SYSTEM FOR LIQUIDITY AND THAT TAKES CREDIT OUT OF THE SYSTEM. SO I THINK IT'S STRIKING THE RIGHT BALANCE BETWEEN MAKING SURE THAT THE THINGS THAT HAPPEN IN THE PAST DON'T HAPPEN AGAIN WITHOUT TAKING CREDIT AWAY BECAUSE THE ECONOMY WILL NEVER GROW WITHOUT CREDIT. I THINK BUSINESS GUYS HAVE TO RECOGNIZE THAT WHAT THE PEOPLE HERE IN WASHINGTON HAVE TO WRESTLE WITH IS INCREDIBLE ANGER BY THE MAN ON THE STREET WHO FEELS POWERLESS IN WHY ALL THIS HAPPENED IN THE FIRST PLACE.

GOOLSBEE: LOOK, CARL, WHAT I WOULD ADD TO THAT, THAT'S EXACTLY RIGHT. BUT AS THE PRESIDENT HAS FREQUENTLY SAID, IT DOESN'T MAKE YOU AGAINST CAPITAL MARKETS TO BE FOR REGULATORY OVERSIGHT. WHEN THE PUBLIC LOSES TRUST IN THE CAPITAL MARKETS, THEY DON'T FUNCTION. WE SAW THAT HAPPEN ALMOST LITERALLY OVER THE PAST SIX OR EIGHT MONTHS. SO THERE HAS TO BE STRONGER REGULATORY OVERSIGHT THAT PEOPLE CAN TRUST THE NUMBERS THAT ARE COMING OUT AND THAT THEY CAN TRUST THE FINANCIAL INSTITUTIONS. OTHERWISE WE GOT NOTHING.

QUINTANILLA: AUSTAN, WHEN YOU HAVE SOMETHING LIKE JEFF IMMELT ON THE BOARD, RIGHT, WHO CLEARLY HAS SOME OPINIONS ABOUT SOME TOPICS THAT DIFFER FROM THE PRESIDENT'S, WHAT IS THE END RESULT? THE PRESIDENT ABSORBS THAT AND THEN WHAT? HOW DOES THAT END UP GOING INTO THE MACHINERY SOMEWHERE.

GOOLSBEE: WELL, I THINK THAT THE PRESIDENT HIMSELF AND OTHER SENIOR ECONOMIC ADVISERS WILL HEAR FROM JEFF, MARTY FELDSTEIN SEEMS LIKE HE'S ATTACKING THE ADMINISTRATION EVERY FEW DAYS. WE'VE GOT A WIDE VARIETY OF PERSPECTIVE, OF INDUSTRIES OF PEOPLE AND SOMETIMES IT CHANGES THE EXPLICIT DECISIONS THEY'RE MAKING IN SHORT ORDER BUT I THINK HEARING ALL SIDES TO AN ISSUE HELPS NARROW THE PRESIDENT'S FOCUS TO REALLY FIGURE OUT WHY DOES HE THINK ON SOME ISSUE VERSUS ANOTHER ISSUE?

KERNEN: JEFF, I KNOW YOU'VE SEEN THE CONTROVERSY. HONEST PEOPLE HAVE TRIED TO STAND UP FOR WHAT'S RIGHT. I THINK AND PRESSURE HAS BEEN BROUGHT TO BEAR ON THESE PEOPLE AND THEY'VE KIND OF FOLDED WHEN IT WAS BROUGHT TO BEAR. I THINK YOU'RE A GUY THAT NO ONE CAN TELL HIM HOW TO THINK. WOULD YOU CARE TO WEIGH IN ON THE REAL "MORNING JOE" CONTROVERSY?

IMMELT: WELL YOU KNOW, JOE, I'VE GIVEN THIS GREAT THOUGHT.

KERNEN: YOU BETTER WATCH OUT.

IMMELT: I CAN'T TELL YOU BECAUSE I HAVE NOTHING ELSE TO DO DURING THE DAY BUT THINK ABOUT THIS.

KERNEN: THANK YOU.

IMMELT: BUT I WOULD HAVE GIVE A DEFINITIVE ANSWER THAT WHEN I'M ON CNBC, YOU'RE "MORNING JOE."

QUINTANILLA: THAT IS GOOD.

KERNEN: OKAY. AUSTAN, ARE YOU READY TO GIVE ME SUCH A ROUSING ENDORSEMENT I DON'T KNOW.

GOOLSBEE: WELL, LET'S HEAR SOME OF YOUR THOUGHTS ABOUT TAX POLICY BEFORE I ANSWER THAT.

KERNEN: ALL RIGHT, I'M NOT -- PROBABLY BETTER THAN SCARBOROUGH'S, AREN'T THEY? ALL RIGHT.

QUICK: JOE, I HAVE TO TELL YOU, THIS WAS A HUGE CONVERSATION WHEN WE WERE IN THE COMMERCIAL BREAK.

KERNEN: AND THAT'S ALL YOU GOT, WHEN HE'S ON --

GOOLSBEE: JOE. I'M GIVING YOU THE VOTE.

QUICK: YOU SHOULD HEAR WHAT THEY SAY ABOUT YOU OFF CAMERA, THEY LOVE YOU.

GOOLSBEE: WE GO BACK A LONG WAY, JOE, SO I'M GIVING YOU THE VOTE.

KERNEN: THAT'S ENOUGH FOR ME RIGHT THERE. 2-0, IN YOUR FACE, SCARBOROUGH.

QUICK: JEFF, THANK YOU FOR JOINING US THIS MORNING. WE APPRECIATE T GOOD LUCK WITH EVERYTHING HAPPENING WITH THE PRESIDENT'S ECONOMIC RECOVERY ADVISORY BOARD TODAY. AUSTAN WILL BE WITH US FOR THE REST OF THE PROGRAM.





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