When: Tonight, Wednesday, January 26, 2011 at 7pm ET
Where: CNBC’s “The Kudlow Report”
Following is the unofficial transcript of a CNBC EXCLUSIVE interview with New Jersey Governor Chris Christie on CNBC’s "The Kudlow Report" tonight at 7pm ET. Here is a link to Larry Kudlow’s story on CNBC.com http://www.cnbc.com/id/41278132.
All references must be sourced to CNBC.
Governor CHRIS CHRISTIE: Happy to be here, Larry. Thanks.
KUDLOW: All right. I really enjoy--and I got a chance to watch you in action in this town hall meeting today with your epic battle against the teacher's union and the other state unions. But I want to ask you, did you hear any of that--President Obama's State of the Union message last night, did you hear leadership on the fiscal breakdown issues from the president?
Gov. CHRISTIE: I am--I said at the town hall meeting today, I was a little disappointed--I was encourage when I heard the president say we're going to do the big things, and then I didn't really hear about the big things from a fiscal responsibility perspective; you know, a five-year freeze on domestic spending, it's a relatively small item in the grand scheme of the big problems that we have. And I didn't hear about taking on any of those really big issues from a fiscal perspective. Heard about raising taxes, which I wasn't happy about. So in that portion of the speech I was--I was disappointed in what the president had to say.
KUDLOW: I mean, you've got this budget freeze from the elevated, highly inflated baseline. The numbers come to $400 billion for the next 10 years. His own deficit commission, from Erskine Bowles and Al Simpson, their plan cut the deficit over 10 years by $4 trillion. He's like one-tenth of his own commission. I mean, would you do that as governor? I mean, that is just a paltry reaction, it seems to me, compared on the state scale. I mean, did Obama miss the boat on this? Was it--this is the day of fiscal reckoning. I didn't see any reckoning last night.
Gov. CHRISTIE: Well, I think what we got to look at is what is going on in the states because it really is the canary in the coal mine for what's happening to the federal government. We in New Jersey last year had an $11 billion budget deficit that we closed by cutting spending and not by raising taxes. And that means you had to cut every department of state government. We did 90 percent year over year reduction in spending, not reduction in the increase. Real reduction dollar for dollar in spending, and we're going to continue on that path, you know, for fiscal year '12 because we just have this huge structural problem that we've created because we've overspent and we've overtaxed and we've overborrowed. And, you know, I think the president needs to look at what's happening in the states. And this is part of the job of the Republicans in the House, though, Larry. I mean, they're going to have to put a spotlight on this issue, they're going to have to remain firm and strong in their mandate that they were given by the people of this country in November, which was to rein in the size and scope of government.
KUDLOW: Have you spoken to President Obama?
Gov. CHRISTIE: Yeah. I've met him a number of times.
KUDLOW: And have you talked to him about your epic battles here, and his own epic battle in Washington with respect to our bankrupt government that doesn't seem to be epic to...?
Gov. CHRISTIE: We haven't had a substantive conversation like that, no. But I've met the president an number of times. We've had brief conversations, but nothing like that.
KUDLOW: Were you surprised in last night's speech--I mean, he talks about investment and competitiveness, but really he's spending even more on education, even more on energy, even more on infrastructure. Now, from the governor's standpoint, does that make any sense to you?
Gov. CHRISTIE: Well, let's just get related to my own experience in New Jersey. In New Jersey, we spent $17,620 per pupil per year, the highest of any state in America. And we're not getting the results. I mean, it is not just about funding more, it is about doing better job at teaching kids. And in this area the president and I have some common agreement. I think we need to have more charter schools. In New Jersey, I just approved 23 new charter schools, which is one-third of all the charter schools that have been approved in the 15 years since Christie Whitman had put the charter school law into effect. We need to completely eliminate the system of tenure the way it exists today. It's there to protect bad teachers. And we need to have good teachers at the front of every classroom, we need to pay those good teachers what they're worth and get rid of the bad ones. We need to make fundamental change, we need to give parents more choice. Right now we're considering in the legislature, and I'm supporting something called the Opportunity Scholarship Act, which will give corporations tax credits for donating money for kids in troubled districts to have scholarships to go to private and parochial schools. We need to provide the full range of choice to make our education system a competitive one, and then we'll get great results. It's not just all about spending money.
KUDLOW: Don't you really--in New Jersey you've got the same entitlement problems as the federal government has, OK? You've got pensions in New Jersey, we call it Social Security at the federal level. It's going bankrupt, yours are going bankrupt. You're trying to deal with that. It's called Medicare, and now Obamacare at the federal level. Here it's called medical benefits for the government, state workers and so forth. Now, those are the entitlement battles. I want to ask you first, before we get to Jersey, what is Obama going to do? Were you surprised he didn't have any definitive—I mean, he's had a deficit commission that tried to tackle it. Were you surprised, were you disappointed he didn't provide any leadership on that last night?
Gov. CHRISTIE: I was surprised and disappointed it did not take a central place in the speech last night.
KUDLOW: And do you think the Republicans are getting it done? Do you like what you hear from the new Republicans in the House? Paul Ryan gave his counter speech last evening. Do you think they're going to get it done?
Gov. CHRISTIE: I think they have to because if they don't, they're going to be shown the door. I mean, our party got elected on that basis in November. And it's our time to show leadership on that and to work with the president to lead him where we--where we need the country to go.
KUDLOW: Can you be a laboratory of reform here in New Jersey? As far as I understand, reading up on all the issues here, we've had dinner before, you want--with respect to pensions and the health benefits, you want more co-pays, you want to put a cap on cost of living adjustments, you want the individuals to be able to pay up on medical premiums, for example, all these things which sound so much like the federal problems. Is New Jersey going to be a laboratory experiment?
Gov. CHRISTIE: I hope so. That's what I've been trying to do for the last year. And I think you see governors all over the country who are following New Jersey's lead now, and it's regardless of party. I mean, when we started saying this stuff last year--you know, you were watching--people said, `He's crazy. You can't talk about these things. These are the third rails of politics.' But I came to the conclusion during my campaign in 2009 that New Jerseyans were ready to be treated like adults, and they wanted to be told the truth. And I've done that for the last year, and we've done some tough things. And I told folks in the campaign last year, if we do this the right way we're going to be an example for the rest of the country. Well, look at now. You have guys like Scott Walker in Wisconsin, Rick Snyder in Michigan, John Kasich in Ohio, who are saying all the same things. But not just them. Andrew Cuomo in New York and Jerry Brown in California talking about the fact that we have to lower our costs, cut public sector salaries, cut back on reform benefits, both pension and health benefits. You know, I think what New Jersey has started is a national movement at the state level, and I hope that it creates a brush fire that's so intense that it'll put so much heat on Washington, DC, that they're going to have to do it.
KUDLOW: So you're going back and forth with Governor Quinn of Illinois, as I understand it. He just took a riposte at you, I want to give you the chance to take a shot back at him. They've just jacked up their tax rates. You believe business should come to New Jersey, but you've got very high tax rates here.
Gov. CHRISTIE: Right. Except his are going up and mine are going down. We cut the corporate tax rate last year, we're going to put together in my budget address on February 22nd more tax cuts that we're going to do in the context of a balanced fiscal year '12 budget.
KUDLOW: Tell me more about the tax cuts. The Tax Foundation--you've referred to this, right? The Tax Foundation has moved New Jersey from 50th in the business tax climate to 48th, OK?
Gov. CHRISTIE: Yeah.
KUDLOW: That's progress, but it ain't great.
Gov. CHRISTIE: Right.
KUDLOW: Now, what specific--you've got a 9.4 percent corporate tax, if I have these numbers right, and a 9 percent top personal tax rate. What you going to do about it?
Gov. CHRISTIE: Well, we're going to wait till the budget address, Larry, on February 22nd to lay some of this stuff out. I want to leave some suspense and mystery for the people of New Jersey and the Democrats in the legislature. But we are moving towards tax reduction and tax reform in New Jersey. And so between me and Governor Quinn in Illinois, here's the very simple difference: He's raising taxes, I'm cutting them. And the promise I made to the business owners in Illinois is come to New Jersey, and for as long as I'm governor we're not going to raise your taxes. If you stay in Illinois, you know for a certainty that Pat Quinn's going to raise your taxes. Because what he's done is made his bed with the public sector unions during the election campaign. I was out there during the election campaign, Larry. I campaigned for Bill Brady in what turned out to be a very close race. I heard what Pat Quinn was saying. He made a deal with the public sector unions in order to get elected and win by one-half of 1 percent, and he's now going to pay off on that. But it's not him who's paying off, it's the taxpayers of Illinois who are going to have to pay. So what I say to the folks of Illinois is, listen, New Jersey's not the perfect place to do business yet, but we are on the upswing.
Gov. CHRISTIE: And where you are is on the downswing.
KUDLOW: As just an aside, I want to come back to the Jersey economy and the tax story. But has President Obama made the same devil's pact with the public unions, with the government unions? Is that what's preventing him from dealing with entitlements and education issues and so forth?
Gov. CHRISTIE: I don't know. I really don't know. I think he has said some very good things on education reform, which makes me think that maybe that's not the case. But again, like I said to you last night, I was a little surprised not to hear more of that last night. So I don't know what the explanation is.
KUDLOW: OK. So in New Jersey, as I get it, the unemployment rate is 9.1 percent, lower than the national rate at 9.4. Let me ask you, you're seeing some pretty good economic statistics nationwide. The Dow Jones, I'm told, is crossing 12,000, that's a good benchmark. There is a recovery going. A, do you agree with that, and do you see it in New Jersey?
Gov. CHRISTIE: Yes on both. I agree that there is a recovery going, although it needs to get stronger. It's a little bit lackluster, from my perspective, at the moment. But New Jersey's unemployment rate when I became governor was 10 percent, and it was above the national average. We're now at 9.1 and we're below the national average. Now, it's still much too high. The 9.1 percent unemployment is not something that I'm going to take a victory lap over. But again, the same way as we're doing with taxes, Larry, we're making progress, we're moving in the right direction. And I am seeing also that this year our tax revenues are up about 5 percent over projections. So things are happening out there. I think we need it to be more robust, and we have to continue to prime the pump with lower regulations and lower taxes.
KUDLOW: Are regulations the biggest obstacle to job creation?
Gov. CHRISTIE: I think that combined with tax rates in New Jersey, it's the two. It's a double whammy. You're paying high tax rates and you're getting a hidden tax of great regulation. But to give you a benchmark for comparison, this administration cut regulations by one-third over the Corzine administration in our first year. So we're making absolute effort...
KUDLOW: What did you cut, may I ask? Just some of examples of regulatory cuts.
Gov. CHRISTIE: Oh, it is--it is--it is crazy, some of the stuff we had in New Jersey. We had, like, the tire police in New Jersey. Like, there had to be a special stamp put on tires about the date when it was manufactured inside the tire and shipped to New Jersey that made it different when we sold tires here than anyplace else in America. I mean, all kinds of crazy stuff that we're doing that the lieutenant governor's been put in charge of, and she is in charge of a now a permanent red tape review group. Any new regulation proposed by one of my departments has to be reviewed by the lieutenant governor's office first. And if she thinks it's anti-competitive, she's going to reject it.
KUDLOW: So you're going to have more regulatory rollbacks in your State of the State or in your budget, and you're going to have across the board tax cuts? I don't want to put words in your mouth, but...
Gov. CHRISTIE: No, don't put words in my mouth because I'm keeping--I'm keeping the tax plan secret, Larry.
KUDLOW: You are.
Gov. CHRISTIE: You're going to try a number of times to do it.
KUDLOW: I'm going to try to unveil it here on CNBC, KUDLOW.
Gov. CHRISTIE: No, I was not going to unveil it on CNBC. But I want to unveil it on February 22nd during my budget address. But what you will see is the beginnings of tax reduction and reform in my budget on February 22nd. You already saw some tax reductions even in my FY11 budget, a $11 billion deficit. I allowed the corporate surcharge to sunset...
Gov. CHRISTIE: ...which Jon Corzine had extended a number of times while he was governor. I vetoed an income tax increase, and that veto was sustained by the legislature. So we are pushing back on this. We made a down payment on it in FY11, we'll make another down payment in FY12.
KUDLOW: So you told us when we had dinner, the American Spectator group a month or two ago, answering a question about running for higher office. You,said, `I'm not ready. I'm not ready to run yet.' But what it sounds like is you are creating a state laboratory for entitlement reform, for public union reform, for tax reform, for regulatory reform. Why do you think you're not ready to be president?
Gov. CHRISTIE: Because in my heart I know I'm not. I mean, you know, Larry, you've been around people who have run for high national office in your career. If you don't believe in your heart that you're ready, you have no business running. And just because you see political opportunity, that's not an excuse to run. I have to believe in my heart that I'm ready. I have a job to do in New Jersey. I love being the governor. I've only been doing it for a year. I have big things to accomplish here. And that does not include leaving and running for national office. And again, when I walked into the governor's office in January of 2010, I felt completely confident that I was ready for the job. Not that there wouldn't--weren't going to be difficult days, because there are difficult days. But I never feel like I'm over my head. I do not want to go for national office unless and until I believe that I'm completely prepared in my heart and in my mind. And if I don't believe that, then I have no business running.
KUDLOW: You know the last reformer who was governor of New Jersey, he was a liberal reformer, but he became president.
Gov. CHRISTIE: Yep, Woodrow Wilson.
KUDLOW: Woodrow Wilson.
Gov. CHRISTIE: Absolutely.
KUDLOW: So 12 months from now, when you have more experience, you would still rule it out?
Gov. CHRISTIE: Yeah, I don't see it.
KUDLOW: You had dinner with Mitt Romney, I read. How was that, and is he one of your interesting reference points for the Republican nomination?
Gov. CHRISTIE: Well, listen, Governor Romney was a supporter of mine when I ran for governor in 2009, came in and endorsed me both in the primary and in the general election. And he's giving some thought to running for president. And so he asked if he could come to New Jersey and sit and chat, and so we did. We had a very nice dinner together with some friends of mine at the governor's residence in Princeton. But, you know, we're far away from making any kind of decisions about, you know, who we might support for president or what we might do on the national level in 2012 in that regard. But, you know, I consider Governor Romney a friend, and so we had a nice meal together and we had a good conversation.
KUDLOW: Have you had dinner with any other GOP wannabes?
Gov. CHRISTIE: Well, listen, I traveled across the country in the last week of the campaign with Governor Barbour of Mississippi, who I have extraordinary respect for. In that plane traveling with us with Governor Pawlenty, another guy who I've gotten to know over my time running for governor and being governor who I have great respect for. Mitch Daniels is somebody who I've spent a number of evenings with over the course of the last year because he is a absolute storehouse of great ideas for how to get your state under fiscal control. He's one of the brightest governors in America, and I have great respect for Governor Daniels. So, you know, back to the list of the--of the folks that I know and that I've--that I've met with over the last year, and I think they all are really credible folks, and we have to see now whether they decide whether they want to offer themselves for service of not.
KUDLOW: Can President Obama be beaten? Should he be beaten?
Gov. CHRISTIE: Well, listen, anybody can be beaten. And I don't think anybody's immune from being beaten. And listen, the president's first two years were not necessarily to my liking in a lot of areas; you know, higher taxes, Obamacare, more spending than our country's ever seen. I think that's gotten us to the position we're in. And so yeah, listen, I'm a Republican and I hope that we're going to be able to nominate someone who's going to be able to firmly and strongly make that case that having Republican leadership in the White House will be better for America's future.
KUDLOW: All right, Governor Chris Christie, you've had dinner with and visits with all these others. Thank you for visiting with THE KUDLOW REPORT. We appreciate it very much.
Gov. CHRISTIE: Thanks for having me, Larry.
KUDLOW: All right.
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