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Steffanie Marchese
Carly Fiorina



Following is the unofficial transcript of a CNBC interview with Carly Fiorina, Former HP CEO, and Senator John McCain today on CNBC's "The Kudlow Report" at 7pm ET.

All references must be sourced to CNBC.

LARRY KUDLOW, host: Welcome back to THE KUDLOW REPORT, where we still believe free market capitalism is the best path to prosperity.

All right, it's bad enough taxpayers have to bail out banks that are too big to fail, now BP, the creator of the worst energy and environmental catastrophe ever, plus they trade with the enemy Iran, looks to be on the edge of bankruptcy tonight with their crashing stock price that has brought the entire stock market down. And you guessed it, they may yet come groveling to Washington for a bailout before this whole sordid story is all said and done.

Can you believe it? So I'm going to ask, is BP actually too big to fail? What a bizarre question.

Well, first up tonight, we are honored. We have Arizona Republican Senator John McCain to help us out with this.

Senator McCain, great to see you, sir.

Senator JOHN McCAIN: Great to see you, Larry, and I'd love to--I'd love to help you out, but this is certainly bizarre.

KUDLOW: I know.

Sen. McCAIN: By the way, thanks for having Carly Fiorina on.

KUDLOW: Well, it...

Sen. McCAIN: She's going to be a great United States senator.

KUDLOW: All right, we're going to have some fun with Carly Fiorina in just a couple of minutes, sir. But I want to ask you about this bizarre BP story. The markets are reading into it a BP bankruptcy. Now let me ask you this, first and foremost, if BP were to go into bankruptcy, can you imagine any circumstances where taxpayers would be asked to bail them out?

Sen. McCAIN: I think it would be a very cold day in Gila Bend, Arizona. But, Larry, correct me if I'm wrong. I heard something like they--didn't they have profits of some $5 billion last year or something like that?

KUDLOW: Well, I'm sure you're right. Yes, I think that's about the number. They may be $35 billion in the hole in terms of cleanup costs and legal liabilities, but no one really knows the answer. But let me ask you this. Some people are blaming this on politicians in Washington and the White House, and this is a serious issue. Apparently secretary--Interior Secretary Ken Salazar is saying that not only does BP have to pay the cost of the cleanup, which certainly is fair enough, but they should also repay the salaries of any workers laid off because of the six-month moratorium of the Deepwater exploratory drilling, that moratorium imposed by the government, I guess it's going to be six months. Now, on top of everything else, should BP pay for that, in your judgment?

Sen. McCAIN: I think so. I also think that there's going to be--have to be compensation for the fishing industry, as you know, which has been basically put out of business, and, you know, when you fail to have the supplies that come from the gulf fishing--oysters, etc.--that's also going to have a ripple effect, an inflationary one, is only one of the many aspects of it. So, yeah, I think that they should be charged for it, Larry.

KUDLOW: Now, you're going to hear a lot of whining from Wall Street, Senator McCain, and it won't be the first time you've listened to Wall Street whining. People are going to say that BP is bringing the whole stock market down, and they're going to say that we should do something about it, and they're going to say that maybe we should give BP some help. So I want to ask you once again. You've had time to consider these opening questions from me. I didn't mean to put you on the spot. Can you imagine any circumstances under which BP gets help from Uncle Sam?

Sen. McCAIN: I cannot, Larry. I just think it would be--if it required congressional approval, I could not imagine something getting through the Congress. And, look, I feel bad about the effects on Wall Street, but I feel a lot worse about the effect on all of the people in the tourist industry, all the people that had planned to have their once-a-year vacation, all the people who make a living and have for generations off the gulf and the abundant sea life that's there. I've sympathy for everybody, but the fact is that BP is responsible, and if--I wouldn't like to see them go under, but the fact is that they had--must bear responsibility for this.

KUDLOW: This is a bit distant, but what if other drillers went down? What if Transocean went down, just to put them on the screen? Would you change your mind about government assistance?

Sen. McCAIN: Well, I simply can't. Look, I think that when we baled out AIG it was a huge mistake. So--and I said so at the time. So I'm not for bailing these people out. I always thought that the TARP--in fact, I was told, as you were, that the TARP would take care of the home--the housing crisis. Instead, they turned around and gave the money to the major financial institutions in Wall Street that have very little to do with home ownership, and meanwhile, in my home state of Arizona, about half--or less than half of the homes are still underwater. So I'm--I don't--look, bailouts, I just--I'm sorry, but I just can't support them, and certainly I wouldn't make them part of another stimulus package.

KUDLOW: Well, there's going to be more stimulus packages. And now let me ask you one more before we finish this on politics. Ben Bernanke was testifying on the Hill today, the House Budget Committee, and he tells the congresspeople, he says, `Look, it's too soon to cut spending.' Now, Bernanke already said the economy, in his opinion, is growing at 3 1/2 percent. And he says, `But we mustn't cut spending right now because that would hurt recovery. It's OK to cut spending later, but not right now.' Senator McCain, is there ever a good time to cut spending in Washington, DC?

Sen. McCAIN: Well, you know, couple of numbers. The size of government has doubled since 1999. It took us 206 years to accumulate a $1 trillion deficit; now apparently we're going to have a 13 to $16 trillion deficit in just three or four years. Look, if we don't cut spending, we're going to destroy this economy. That's--and stop the growth of government. We got to cut spending, stop the growth of government, and unless you do that, I am not optimistic about the long-term future because, as you have often talked about, crowding out in the private markets when the government has to order--has to borrow so much, and of course the inflationary aspects of debasing the currency in order to get at this debt, neither one are acceptable options to--I think to most Americans.

KUDLOW: All right, let me move on to yesterday's election primaries, in particular in the state of California. Two alumnae from your presidential campaign, Meg Whitman and Carly Fiorina, had huge victories. Whitman's going to square off against "Governor Moonbeam," Jerry Brown, and Carly Fiorina's going to square off against Barbara Boxer, who is a longtime colleague of yours. I believe we have a surprise for you coming up in just a moment, if I play my cards right. Oh, look who's here. There is Carly Fiorina. Now, let me be sure, in case you two don't know each other.

Sen. McCAIN: Hi, Carly.

KUDLOW: Carly Fiorina, I want to introduce you to Senator John McCain.

Senator John McCain, I want to introduce you to soon-to-be Senator Carly Fiorina.

Sen. McCAIN: Well, hi, Carly, and I'm proud of you. And I left phone messages for you. Could I say, Larry, that I'm the loser, so I'm the last one to give advice, but I know that one of the aspects that--of Carly's campaign is going to be is that she can be effective in Washington for the people of Arizona in these tough times. Barbara Boxer has not shown to be an effective member of the Senate.

KUDLOW: If you would give Miss Fiorina one...

Ms. CARLY FIORINA: Oh, Larry, can I just say one thing real quick back to the great senator?

KUDLOW: Yeah. Yes.

Ms. FIORINA: John, you have never been a loser. All of America is proud of you, and I so appreciate you giving me the chance to ride on the Straight Talk Express, and, believe it or not, I've gotten asked a few times today about singing that T-O-L-E-D-O song.

KUDLOW: You see that, Senator McCain? She's not only tough...

Sen. McCAIN: Don't do it, Carly.

KUDLOW: She's not only tough, she's not only smart, she's not only Margaret Thatcherlike, she's gracious on top of all those other things. Such a thing is possible in politics.

John McCain, let me just ask you, concluding.

Sen. McCAIN: Yep.

KUDLOW: If you could give one piece of advice to Carly Fiorina in her campaign against Barbara Boxer, what might that piece of advice be?

Sen. McCAIN: Straight talk, and the fact is these are most difficult times for the people of California and this country, and she has solutions. And she can go to Washington and reconnect the people of California with their representatives in Washington.

KUDLOW: All right, straight talk for Carly Fiorina. Thank you, Senator McCain. We appreciate...

Ms. FIORINA: God bless you, John. Thank you.

Sen. McCAIN: Thank you.

KUDLOW: We appreciate your time very, very much, as always...

Sen. McCAIN: Thank you.

KUDLOW: ...on this program.

Carly, welcome back. Congratulations. You really--stunning victory yesterday, just knocked off everybody. We've got--we invited, by the way, your opponent, Barbara Boxer. She politely declined. I'm not shocked by that, but she did. But what we do have is a sound bite from Miss Boxer. We have a sound bite from Barbara Boxer. She's already attacking you, and she's already getting into the mud. And what I...

Ms. FIORINA: What a shock.

KUDLOW: I know. It's a shocking development. And I want to give you a chance. Let's put the sound bite from her making an attack on you. Let's let you respond to it first. Let's listen to Miss Boxer.

Senator BARBARA BOXER: On the number one issue, which is jobs, the differences couldn't be clearer. I've worked my heart out since this recession started, and my opponent, Carly Fiorina, she's opposed every single jobs initiative, every single one. And of course when she was a CEO, before she got fired, she laid off more than 30,000 workers and shipped jobs to China, to India. She's got a great record on job creation in China and India and Europe, but not in America.

KUDLOW: All right, so you heard that. You probably heard that from before. Ms. Fiorina, would you like to respond to what Boxer is saying?

Ms. FIORINA: Well, first, the choice could not be more clear between Barbara Boxer and myself. She actually believes the way to create jobs is to pass bills in the US Senate. And we know here in California that the stimulus bill, $800 billion dollars worth of taxpayer money, has done nothing to alleviate the tremendous suffering in the state. We have 2 1/2 million people out of work here in California, many hundreds of thousands for more than six months; and many hundreds of thousands more have quit looking for work altogether. The facts are we're destroying jobs in this state through bad government policy.

During my time at Hewlett-Packard, yes, I had to make some tough choices, just like families and businesses all across California are making tough choices. China fights for our jobs. North Carolina fights for our jobs. Nevada and Texas fight for our jobs. We have to start fighting for our jobs here in California and here in America. And we know what it takes to create jobs: cut taxes, particularly on small business owners, family-owned businesses, innovators and entrepreneurs; get government regulation out of their way. Get big government off their backs. That's what it takes to create jobs. Barbara Boxer doesn't understand that people are enraged that while we have a 12.6 unemployment rate here in California and the employment picture has gotten worse in the last year, not better, that the federal government is growing employees at 14 1/2 percent a year. We now learn that our debt will be $19.6 trillion in five years, and Barbara Boxer has voted, in her 28 years in Washington, DC, for over a trillion dollars of tax increases. People are enraged because Barbara Boxer in Washington can't seem to make any tough choices.

KUDLOW: Well, let me ask--let me ask you this now. As a former CEO, you did have to make some tough choices...

Ms. FIORINA: Sure.

KUDLOW: ...and you did have to incur some layoffs in order to remain profitable. Fair enough. Because of your business experience, will this qualify you in Washington, if you win the race and become senator, to go after the government's payrolls? This is what a lot of people are talking about...

Ms. FIORINA: Sure.

KUDLOW: go after--to make the spending cuts in government workers, to make the spending cuts in their salaries and their benefits, which are running substantially ahead of their private sector counterparts. In other words, are you going to turn this on its head with Ms. Boxer and say, `Look, because of my business experience, here's what I would do.' And tell us, please, what you would do to deal with this bankrupt federal government.

Ms. FIORINA: Well, here's what we know from the real world. Here's what I know from my business experience. When you have billions of dollars for which no one is accountable that's absolutely--there's no scrutiny, then you're going to have hundreds of millions of dollars of waste, fraud, abuse; and we have that in Washington, DC. For heaven's sakes, Larry, you and I have been talking about the SEC. Now we find out that SEC executives making $225,000 a year couldn't find Bernie Madoff, but they can watch pornography eight hours a day on the government's time and the taxpayers' dime? This stuff makes people crazy. We now learn we have 13 separate government agencies down in the gulf running around, trying to help clean up? Of course we have to streamline government. Of course we have to cut spending. And why don't we start with something really fundamental? Why don't we start by putting every agency budget up on the Internet for every taxpayer to see? And then why don't we change the questions we ask in appropriations hearings. Instead of, `Tell me why you need more money,' the question needs to become, `Tell me how you're going to do what you're chartered to do on 10 percent less, 15 percent less, 20 percent less.' These are the questions and the tactics that are being used all over America, but somehow we're not using them in Washington, DC.

KUDLOW: You know, it's interesting, on this point, European countries--not just Greece, but other European countries--Ireland, for example, and others--are being asked to cut their work force or their salaries and benefits by 10 to 15 percent. When you look at the American numbers on deficits and debt, we're in just as bad a shape as Greece.

Ms. FIORINA: Absolutely.

KUDLOW: Would you advocate 10 to 15 percent cuts in salaries and benefits? Would you terminate some of these agencies you're criticizing?

Ms. FIORINA: Of course. Look, Greece is many thousands of miles away, but it's exactly what's happening to the city of Los Angeles. It's exactly what's happening to the state of California. And it's exactly what's going to happen to the United States of America if we don't stand up and say--have the guts and the courage and the real world experience to stand up and say, `You know what? Let's start by stopping the increase in federal government employees.'


Ms. FIORINA: `Let's reform entitlements. Let's make sure that we no longer have a situation where we are growing government jobs and destroying private sector jobs.' And that's precisely what is going on in California, the leading economy in this nation.

KUDLOW: What would you do about this BP story? I asked Senator McCain. It's a late-breaking story today. Really, the financial markets are now signaling that BP is on the verge of bankruptcy, and they may have to go into bankruptcy. They probably should have already cut their dividend. Can you imagine any circumstances by which, as a senator from California, you would vote to bail out BP?

Ms. FIORINA: Absolutely not.

KUDLOW: Do you think there's any reason, any rhyme or reason, if they came on their knees groveling--you know, the way a lot of banks, a lot of businesses--General Motors did it--well--is there anything in there, any possible reason to bail out BP?

Ms. FIORINA: Absolutely not. And, by the way, the bailout of General Motors and Chrysler didn't work. I mean, we spent a lot of taxpayer money, but the reason I say they didn't work, factories closed, tens of thousands of workers got laid off, 3600 auto dealerships, which are small, family-owned, community-based businesses, went out of business. But what we did was permit people to, you know, forestall the tough choices. BP has made a terrible, a tragic series of calculations and miscalculations, and they must pay the consequences of it. That's what happens in the real world. You pay your money, you take your chances. You take unacceptable risk, you have to be prepared to face the consequence.

KUDLOW: So last night in your acceptance speech, in your victory speech, you said about Barbara Boxer `bring her on,' and then you said, if I got this quote right, that Miss Boxer is on the fringe of American politics and that she is guilty of destructive elitism. That's pretty tough stuff. What'd you mean by that?

Ms. FIORINA: Well, she is on the fringe of American politics. Barbara Boxer is known as one of the most partisan, the most liberal, left wing members of the US Senate. This is a woman who voted against body armor for troops in

Iraq and Afghanistan. This is a woman who voted against extended family leave for our fighting men and women. This is a woman who said we should have universal health care. This is a woman who believes that taxpayers should be funding partial-birth abortions. This is a woman who is backed every year by extreme environmentalists who now hold agriculture hostage in the state of California. And she is a woman who is captured by the unions. So she is on the fringe of American politics, and the people of California, I believe, have had enough.

KUDLOW: Will you make an issue of the fact that you were a successful businesswoman, and that Miss Boxer has never been in business?

Ms. FIORINA: Of...

KUDLOW: Is that going to be an issue in this campaign?

Ms. FIORINA: Of course. It has been an issue already. What I have said to people is that I've lived the American dream, because I have. I started out as a receptionist. I typed, I filed, I answered the phones for a little nine-person company.


Ms. FIORINA: And only in America could a woman like me rise to become the chief executive of one of the largest companies in the world. But that real world experience gives me the perspective to actually get something done. That real world experience gives me the opportunity and the ideas to tackle some of these 21st century challenges. Barbara Boxer has been a professional politician for 34 years, and she clearly believes that the answer to every

problem is more government spending, higher taxation and thicker regulation. And it is destroying the economy of California.

KUDLOW: All right, many thanks, Carly Fiorina. Again, congratulations on your whopping victory last night.

Ms. FIORINA: Thanks.

KUDLOW: We hope to see you many times before the Election Day. We appreciate it very much.

Ms. FIORINA: It's always a pleasure, Larry, thanks.

KUDLOW: All right. Likewise.

All right, now I want to turn to the Kudlow Caucus. I would--decided to put the California Senate race in the hands of our KUDLOW regulars, so I asked the Caucus a very simple question: Will Carly Fiorina beat Barbara Boxer in the California Senate race? And here's what they said. Out of our 12 members, 10 said yes; only two said no. Very interesting.

To see why each member voted the way they did and to cast your own vote, head over to Many thanks to Carly Fiorina. Now, again, we did ask Senator Barbara Boxer to join us this evening, but she declined.

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