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CNBC TRANSCRIPT: CNBC'S LARRY KUDLOW SPEAKS WITH CALIFORNIA GUBERNATORIAL CANDIDATES REPUBLICAN MEG WHITMAN & DEMOCRAT JERRY BROWN TONIGHT ON CNBC'S "THE KUDLOW REPORT"

Meg Whitman, former eBay CEO
Source: AP
Meg Whitman, former eBay CEO
Jerry Brown, California State Attorney General
AP
Jerry Brown, California State Attorney General

WHEN: TONIGHT, THURSDAY, JULY 15TH AT 7PM ET

WHERE: CNBC'S "THE KUDLOW REPORT"

Following is the unofficial transcript of a CNBC interview with California gubernatorial candidates Meg Whitman & Jerry Brown tonight on "The Kudlow Report."

All references must be sourced to CNBC.

LARRY KUDLOW, host: All right, so what's the fix for California's fiscal and jobs crisis? Earlier I was joined by California gubernatorial candidate and former eBay CEO Meg Whitman with her new jobs plan. Take a look.

Meg Whitman, Republican candidate for California governor, welcome back to THE

KUDLOW REPORT.

Ms. MEG WHITMAN: Thank you very much. Happy to be here, Larry.

KUDLOW: All right. So you spoke today in Ontario, California, to the Maglite Corporation about jobs and the Cal economy. Can you just tell us what's new on your front?

Ms. WHITMAN: Well, in the 18 months that I have been running for governor, the economy in California has only worsened. Unemployment is still at record highs. There's 2.3 million Californians out of work, and it has become the number one issue for virtually every Californian. So I talked today about how we're going to get Californians back to work.

KUDLOW: What were some of your proposals out today?

Ms. WHITMAN: First is targeted tax cuts to give employers like Mag Instruments the confidence to go ahead and hire; eliminating the factory tax, which penalizes manufacturers in California; eliminating the start-up tax, so new entrepreneurs can get going; streamlining regulation. Regulation is strangling businesses of all sizes in California, and we've got to streamline regulation so it's easy, not hard. to do business. And then finally, we have to stand up and compete for jobs. You know, California has a choice. We can put our head in the sand and continue to lose jobs overseas and to other states, or we can say, `You know what? We are not going to lose another job from California, and we're going to be the very best place to start and grow a business.' So I'll be the chief sales officer for California businesses.

KUDLOW: Meg, are you still planning to eliminate the state capital gains tax, which has always been a jobs killer?

Ms. WHITMAN: I am. That is one of the key elements of my proposal, because we compete with other states who have no capital state--capital gains tax, or rates that are half of Californians'. And if we are going to continue to be the innovation hub of America and the world, that's a very important element of my tax plan.

KUDLOW: And looking at your Web site with the latest postings, it says you want to accelerate the depreciation of business investment in plants and equipment. Is that still on your program?

Ms. WHITMAN: That is still on my program because we've got to give businesses more cash flow to invest in their business. This is an incredibly difficult time for businesses like Mag Instruments. Sales are down, foreign competition is up, and we've got to give these businesses a fighting chance to be successful. And they want to be successful. Tony Maglica, who is the founder of Mag Instruments, is an inspiration. He wants to hold on to manufacturing in California. And that's why I am running for governor in—of California, is we've got to fix the business climate here and fix jobs and the economy, or I promise you, Larry, there is no way out of this financial mess.

Because what happens is, as the economy suffers, tax revenues go down. But unlike businesses, where at least your variable costs go down, in government your variable costs go up: unemployment insurance, workmen's compensation, health care benefits, welfare, you name it. We're running $237 million a week in unemployment benefits alone in California.

KUDLOW: You know, we're also having your opponent on tonight, Attorney General Jerry Brown, former governor. I'm waiting to talk to Mr. Brown, see what he has to say, but from what I gather in reading the media out there, he is accusing you of trying to buy the governorship, and he says you have no experience. Would you care to respond to Attorney General Brown?

Ms. WHITMAN: Well, I think California is a--voters are really smart. You can't buy elections. What you can do is get out and tell Californians what you stand for and what your specific plan is to fix the state. As you know, I've got a very specific plan, not only around jobs, but cutting government spending, education, crime. And Jerry Brown has refused to put out the first proposal on how he wants to fix the state. You know, he often says, `I don't like 10-point plans.' Right now I'd settle for one great idea on how he's going to fix California because he has no concrete plans. And I don't think Californians are going to put up with it.

KUDLOW: You have to have experience to be governor? That's his B--I mean, he's been in politics for a long time.

Ms. WHITMAN: You know, you have to--I...

KUDLOW: He's held many offices. Well, he's been governor.

Ms. WHITMAN: Yeah.

KUDLOW: He's been Oakland mayor, he's now attorney general. He once ran for president. OK, so he has a lot of experience. What do you say to this so-called experience deficit?

Ms. WHITMAN: I--you know, I would say Jerry Brown is a career politician.

This is the 14th election he's run, and that doesn't count primaries and when he ran for the California Democratic Party head. So he is a career politician, and my view is, actually what we need is someone who actually knows about running and fixing businesses and how to create the conditions businesses for small businesses to grow and thrive. I have run large organizations, I know what it takes to create a healthy business climate, and I have more experience than Jerry Brown doing that. So it'll be a stark contrast, a career politician vs. someone who has met a payroll, gotten a return on investment, knows how to use technology to do more with less. I come from Silicon Valley, 130 miles from Sacramento. It might as well be a million miles away, based on how the government uses technology to run things efficiently and spend taxpayer money wisely. So I think I have exactly the experience that's required in the worst economic downturn that we've seen in California in half a century.

KUDLOW: Just one more, lightning fast, Meg. In covering this race, a lot of journalists out there are telling me you can't overcome the registration problem. There are two--there's a two million voter advantage, Democrats over Republicans, 45 percent to 31 percent. That's just the party registration.

What do you say to that? Can you overcome those numbers, a two million deficit in party affiliation voters?

Ms. WHITMAN: We absolutely can overcome that registration deficit because you know what the number one issue is for Californians? Jobs and the economy, how do we get Californians back to work. And people recognize that I have the skill set and the outlook to get that done. And we're running about in a dead heat with Jerry Brown right now, which I couldn't be more pleased about. And we're going to take that message to every part of California.

KUDLOW: All right, we'll leave it there. Meg Whitman, running for governor as a Republican in California. Thank you ever so much for coming back on.

Ms. WHITMAN: Thanks a lot. Nice to see you.

KUDLOW: All right, coming up right after the break, Ms. Whitman's competitor, California AG Jerry Brown, who is the Democratic gubernatorial candidate. He's going to react to Meg Whitman's claim that he, Mr. Brown, doesn't have a plan for anything. We're going to give him equal time. Keepit right here. We are THE KUDLOW REPORT. Back in a jiffy.

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KUDLOW: All right, joining us now is California Attorney General Jerry Brown.

He's the Democratic gubernatorial candidate.

Mr. AG, welcome back to the show. It's been awhile. You probably heard Meg Whitman say...

Mr. JERRY BROWN: It has been.

KUDLOW: ...you don't have a plan for anything. What is your response, sir?

Mr. BROWN: Well, like much of what she's doing in this campaign, either she's not informed or she's just not telling the truth. Just go to my Web page, jerrybrown.org, you'll see a great plan for new energy jobs, about 500,000 from investing in 20,000 megawatts of renewable energy and efficiency retrofits. This is a very powerful proposal. I know what I'm talking about.

I did it as governor. California became the world's leader. In wind-generated electricity. Now it's China, and even Texas and Iowa are doing better than us. I know how to get this thing done. When I was governor last time, Proposition 13 came along. Yes, I opposed it, but when it got there, I rolled up my sleeves and I not only made 13 work, but I bailed out the local government so we could protect the schools and the fire and the police, and Howard Jarvis himself said I did a hell of a job. But I went beyond that. I put a--I supported a limit on state spending that a Republican governor later took off; and number two, we cut the income tax by five billion. I got rid of the inventory tax. And in a confrontation where the state employees wanted pay raises they couldn't afford, I vetoed those pay raises, not once, but twice. No other governor's done that. I got a record of innovation...

KUDLOW: So, Mr. Brown--listen, Jerry.

Mr. BROWN: I got a record of frugality, got a record of honesty, of telling the truth.

KUDLOW: All right, but, you're not really--this--OK. You're fired up tonight, and I love it. OK, I love it.

Mr. BROWN: And I got a plan. Right now. Got the plan going forward.

KUDLOW: I think it's great. But I'm just saying to you, sir, all right, you got your new energy, jobs thing on your Web site, fine.

Mr. BROWN: Good.

KUDLOW: But Meg Whitman's been out there with a plan to cut welfare, with a plan to freeze government union pensions. She's got about half a dozen tax cuts on factories and business start-ups. She wants to abolish the capital gains tax. OK. I'm not taking sides in this interview, I'm just saying, the media in California is all calling you the invisible man. They said you haven't put any money, you don't have energy. You got it on the show tonight; thank you. And you haven't been out there putting forward just the kind of proposals that you just said. Have you waited for THE KUDLOW REPORT? I mean,

I'm honored, but we may not help you win the state, sir.

Mr. BROWN: Yeah. Of course. Larry, I don't want you putting on old material here. We want to get new stuff. Look, the campaign is just beginning. This is the summer. It wasn't too many years ago that people waited for Labor Day. Now, Miss Whitman, you know, she got her billion dollars out of that eBay even though the stock was--dropped 50 percent by the time she left, but--and she made some dumb decisions like the Skype purchase, where she forgot to get the licenses and the patent, so she bought a--made a very bad deal. So that's not much of a resume. Look, what it takes here is not a plan with mostly pictures or tax reductions, you don't say how much they're going to cost. You need a plan to engage the people and the legislators because you got to persuade. It's not like being a CEO. You don't give edicts to the legislator or to the civil servants; you got to lead them. And it's damn tough. And I've done it before, and I did it in Oakland and I cut red tape and dumb rules. I got 10,000 people to move into town and revitalize the center of that city, a very tough city. So, yeah, I've worked in politics, but I've also worked with Mother Teresa in India. I've lived in Mexico. I've done a lot. I've been a private lawyer. I've seen a lot of things. But one thing I do know is this politics is a very tough shark-infested kind of operation...

KUDLOW: Well...

Mr. BROWN: ...and you got to know your business.

KUDLOW: All right, Jerry, look, nobody...

Mr. BROWN: It's not enough to put out three pamphlets and speak--look...

KUDLOW: Nobody doubts--I'm not doubting that you know your business.

Mr. BROWN: One more thing. I...

KUDLOW: I mean, I--look, I'm not doubting.

Mr. BROWN: Yeah.

KUDLOW: But I want to ask you, specifically...

Mr. BROWN: Sure.

KUDLOW: ...Meg Whitman said...

Mr. BROWN: Please.

KUDLOW: ...that Jerry Brown doesn't get business, doesn't understand business, never met a payroll and therefore doesn't know how to create jobs.

What's your reaction to that? That's a tough charge...

Mr. BROWN: Yeah, my reaction is...

KUDLOW: ...and you know she's going to make it stick.

Mr. BROWN: Hey, she's saying--talks out of both sides of her mouth. In English, she says she's against illegal immigrants, and in Spanish she says she's for them. I mean, let's get to the truth, and we'll get our commercials on to explain it. Look, as mayor of Oakland, eight years, tough city, I was the most probusiness mayor that city ever had. And ask anyone in the city, and that's why 65 percent of the people still very much like what I had to do. I know I'm a Democrat, so I don't have some of the same philosophies she does, but I'll work with the unions, I'll work with the legislators, but I'll keep those taxes down. As you remember, I'm the guy that lowered taxes. I got rid of the inventory tax. I've put the limit on. I was a pretty tough-minded governor.

KUDLOW: Well, let me stay with this tax thing.

Mr. BROWN: I'm independent. Yeah. Yeah.

KUDLOW: All right, this tax thing is a cool subject for you and me because...

Mr. BROWN: Sure.

KUDLOW: ...when you ran for president, Art Laffer was your adviser...

Mr. BROWN: Yeah.

KUDLOW: ...and you were running on the low rate flat tax. You even called me once when you were in New York City, and I appreciate...

Mr. BROWN: Exactly.

KUDLOW: I appreciated that. Now, where is the flat tax, Jerry Brown? Why aren't you out there pounding for lower tax rates in California like Meg Whitman? Because the state's not competitive anymore, Jerry. Where are you on this stuff?

Mr. BROWN: She's not talking about an overall lower marginal tax rate. She has a lot of little picky--a little tax break for this group and a little tax break for that group. If you want to restructure the track system and lower the marginal rates and spread out the base, that could be a very fine plan, but it's going to take a process. You're not going to get it by a little pamphlet. And you also have to deal with the fact that we got a $19 billion deficit, and you're going to have to go over each department and start cutting this thing back in the best way you can. And it isn't just snapping your fingers and saying five tax breaks in a pamphlet. I believe that I can pull people together. Government is by consensus, and she's already running a very divisive campaign. What we need to do is unify the people of California, think not as Republicans or Democrats, but as Californians first. And I'm not only do that, I want to bring government closer to the people. Sacramento has taken on too much power--not while I was governor, but in the four governors since, and bring in on these amateur, never been part of it.

KUDLOW: All right.

Mr. BROWN: That's what Arnold said.

KUDLOW: All right.

Mr. BROWN: In fact, Arnold and Meg sound exactly the same.

KUDLOW: All right.

Mr. BROWN: I'm afraid the same result may occur.

KUDLOW: I got to leave it there. I offered equal time.

Mr. BROWN: Thank you.

KUDLOW: You know you're always welcome on this program, as you have been down through the years. I like the energy, Jerry, and I hope you stay with that on the campaign trail.

Mr. BROWN: OK.

KUDLOW: And I hope to see you again. Thanks ever so much.

Mr. BROWN: Thank you.

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