WHEN: TODAY, TUESDAY, October 25
WHERE: CNBC’S “SQUAWK BOX”
Following is the unofficial transcript of a CNBC interview with GOP Presidential Candidate Governor Rick Perry today on CNBC’s “Squawk Box.” All references must be sourced to CNBC.
JOHN HARWOOD: Governor Perry, thanks for being with us.
RICK PERRY: You're welcome, John.
JOHN HARWOOD: Your plan-- by cutting the top rate to 20 percent, eliminating dividends, capital gains, interest income taxes would provide a huge tax cut wealthy people in this country. Given what's happened with income inequality, why is that a good idea?
RICK PERRY: We're trying to get this country working again. And that's what I focus on. And as a matter of fact as we looked and we talked, and as we went through what are the ways to really give incentives to those that are going to risk their capital to create the jobs. I mean, this country's got 14 plus million out of work. And-- I want to get that money back out into the economy-- where people have confidence that they can have a return on their investment, and they'll hire-- individuals.
And that's what this is really all about. Those that want to get into the class warfare and talk about, oh my goodness, there are going to be some folks here who-- make more money out of this, or have access to more money, I'll let them do that. I'm worried about that man or woman sitting around-- the coffee table tonight or in their kitchen talking about how are we going to get to work. How are we going to have the dignity to take care of our family. This plan does that. And it also is a tax cut across the board. It doesn't make any difference what-- strata you're in. It gives a tax cut across the board.
JOHN HARWOOD: But for those at the top, it is hundreds of thousands, maybe even millions of dollars for them.
RICK PERRY: But I don't care about that. What I care about is them having the dollars to-- invest in their companies. To go out and maybe start a business because they got the confidence again 'cause they actually get to keep more of what they work for. This idea that we've got to have a tax system in this-- country where you take more away from-- those that have the ability to create jobs. I'm all about job creation. That's what I've done for ten years as the governor of Texas, and that's what I'm focused on.
So I'll take the criticism. If that's what comes, I'll take that criticism. Because what I'm interested in is getting Americans working. And I think most people in this country want to see a president that's got the courage to say we're going to cut the tax burden, and reduce the regulatory climate, and we're going to get Americans working.
JOHN HARWOOD: What do you think is the main problem with the economy now? Because some point out that the cost of capital is extremely low right now. And the problem is lack of demand.
RICK PERRY: Well I think there's three things-- from a law standpoint. From a statutory standpoint. Obama care has got everyone on edge. I mean, small business-- men and women or big business are sitting out there saying we have no idea what this is going to cost, but we know it's going to cost us and cost us a lot.
You have section 404 in the Sorbaines Oxley for these, you know, $75 or $100 million companies that are just hammering them from the standpoint of the cost of compliance. And obviously, Dodd-Frank. I mean, Dodd-Frank is strangling small community banks. It doesn't make any difference what the interest rate is. They're not-- they're not going to loan the money because they can't make any money for one thing plus the cost of compliance. I'll give you just one example. U.S.A.A. which is not a small business by any sense of the imagination, San Antonio Texas, has-- gives us veterans-- insurance basically of how they got started.
But their cost of compliance on Dodd-Frank is approaching the total amount of outlays that they make in dividends and-- awards $500 dollars. That's the type of overreaction, kneejerk reaction that we've seen out of Washington D.C. So to answer your question specifically, statutes like these that I've just mentioned and the regulatory climate, this administration for three years put regulations in place that are killing small businesses, they're stopping our exploration of oil and gas. If you look at the Gulf of Mexico, it takes 400 percent longer now to get a permit and permits are down 80 percent.
I was talking to Bobby Jindal yesterday-- which happened to be his 40th birthday. But anyway-- 12,000 of our citizens lost their jobs because of the kneejerk reaction by this administration. Regulations are killing jobs in America.
JOHN HARWOOD: To clarify one philosophical point. You have a flat-tax option in your plan, but of course there are deductions, and-- in some preferences, the personal exemption that takes some people off the rolls. Do you fundamentally believe we should not have a progressive tax system in the country?
RICK PERRY: I do. I think you need to have a tax system that basically is flat, fair and simple. And-- that you can put on a post card. I mean, even Timothy Geithner could do this one and get it on time. So my point is—
JOHN HARWOOD: But the idea of taking-- of having-- higher rates-- of various kinds for people who earn more are not right?
RICK PERRY: I don't agree with that. My deal is have a flat, simple tax. And-- Americans want-- Americans I hope-- aspire to be-- be wealthy. I hope they aspire to have a better quality of life. And we have this class warfare that's going on now. And I don't agree with that. I'm interested in people getting to work. And folks who generally have money are the ones who invest money, that hire folks, so that those folks who get hired can work their way up to become someday owning the company.
JOHN HARWOOD: And you mentioned class warfare. In 1996, when your advisor Steve Forbes was running on a flat tax, Mitt Romney said it was a tax cut for fat cats. If he says that about your plan, what are you going to say to him?
RICK PERRY: Well I would said that he ought to go look in the mirror I guess. I consider him to be a fat cats. Because-- here it doesn't matter to me what-- what, you know, anybody says about this. I know what will work. And I'm more interested in getting people out there, investing in their companies-- bringing back this-- this money that's offshore.
We've sent a rate of 5.25 percent to bring those offshore moneys back in here. I want it in America. I want it creating jobs here. I'll promise you one thing, the corporate tax rate is at 20 percent too. You put a 20 percent tax rate which puts us down then average what it is across America-- or across the world, rather-- and you remove these onerous regulations, we can bring manufacturing back into this country.
JOHN HARWOOD: What does this say about the difference between you and Mitt Romney, that he's proposed a plan that preserves the current rates, and you've proposed this plan that would radically change the system?
RICK PERRY: Well I consider what Mitt's doing kind of nibbling around the edges. I consider what we're doing bold. Appropriate. And when you couple it with the rest of things in our plan, whether it's the budget-- in the balanced budget amendment we've talk about, when it's cutting the spending-- setting it at 18 percent-- of our gross domestic product-- spending caps-- you got to get the spending under control. I mean, it doesn't make any difference what the tax system is if they keep spending money like they've been spending. You got to have a courageous president to stand up and says, listen, if-- if you send a bill to me that spends more money than what we've coming in, I'll veto it. I mean, I'm going to try to work with you the best I can, but I'm going to veto it.
JOHN HARWOOD: You say we need a courageous president. Do you think that-- he really is a moderate, and that's he's nibbling around the edges? Or do you think that he lacks the guts to propose a plan this strong?
RICK PERRY: You know, I don't know. I happen to think that when he had the opportunity to move private sector-- experience into the public sector as the governor of Massachusetts, they were 47th in job creation in America at that particular point in time. So I have led the nation in job creation. I know how to get things done from a government standpoint. I have been an executive-- in governing that has been successful. And that's what I think Americans are looking for. Someone who has the courage to stand up and say we're not going to spend that money. I cut spending in Texas for the first time since World War II. I know how to do this. I got the track record.
JOHN HARWOOD: Now if you cut the top rate to 20 percent, you eliminate estate, capital gain, dividend taxes. You give a tax cut for people who will benefit from the higher standard deduction in your plan, or if they don't benefit, they stay in the old plan. All that adds up, does it not, to a huge whole in the budget deficit.
RICK PERRY: I don't think it does. And-- and the budget deficit needs to be addressed through a number of ways. We think this will balance the budget by 2020. And you got to have some hard cuts. You got to deal with the entitlement issue, you got to go in and-- and address these things.
JOHN HARWOOD: But-- produces growth, that's going to take time for that to happen. Year one, year two, you're going to blow a huge hole in the deficit, right?
RICK PERRY: Look I'm looking long term. I'm looking to get this country back on track. If you're looking for somebody-- that's going to nibble around the edges, if you're looking for somebody that's going to say hey listen we're not going to make it hard on you it's all going to work it out and it's just, you know, kumbaya, I'm not your guy. I know how to get this country back on track. And it's going to require some hard decisions. But it's going to-- have someone who understands that you have to give incentives to those job creators so that they have the confidence so that they can risk their capital and have a return on investment. My plan does.
JOHN HARWOOD: Now Standard and Poor's this summer downgraded the United States because they decided our political process wasn't serious enough about reducing the budget deficit. Why wouldn't your plan pose the risk that all of a sudden the world, Standard and Poor's investors would say they are not serious about the budget deficit, and trigger a financial crisis?
RICK PERRY: Because we're going to cut the budget. I mean, that's-- the big issue as I said already, it's not about the tax plan per se. Here's how to put one in place that will put one in place that will give confidence to job creators. But the real issue is about spending. If you don't get the spending under control-- listen. Tom Colburn's got a great plan, Back in Black, some I think $9 trillion worth of cuts. And look at Paul Ryan.
I mean, there are a number of plans out there that deal with entitlements, that deal with spending. These are some thoughtful guys. But there are tough-- decisions to be made. And-- and anybody that's standing up and running for president and saying hey, let's-- everything's going to be all right, there's not going to be any sacrifices, it's all going to be nice smooth sailing, they're lying to you. It's-- this country is on the precipice.
We need a president who will stand up and say listen, we got to fix social security. You can call it anything you want. Those who are on it today, those that are-- fast approaching it, it's going to be there for them. But our kids need to understand that we need to give them some options. Whether it's give them private accounts or what have you. Those are hard decisions that have to be made.
I don't want to wake up 2026 and-- and have 23 percent of our social security cut overnight because we didn't have the courage to do this, John. That's what this president-- must do. Or the next president must do. Make hard decisions. I'm willing to do those. And I'm willing to be really honest with the American people. But here's a way to get Americans working. And that's the most important thing.
JOHN HARWOOD: Now you cut the corporate rate to 20 from 35. Tax experts tell me that for every point you cut off the corporate rate, that's $10 billion year. So that's $1.5 trillion over ten years for cut of that magnitude. Do you intend to offset that cut by cutting $1.5 trillion loopholes, or are you willing to add to the deficit to get a lower corporate rate?
RICK PERRY: But-- well that's a snapshot in time. This plan does a whole lot-- of other things. Like bringing a trillion dollars back offshore, at that 5.25 percent. I mean, that's-- I want to say that's like $385 billion worth of impact. So just to-- take a-- little snapshot, this-- by itself is-- impact the-- the deficit this much. I get that, but it's not the whole story. You got to look at this whole package.
We will balance the budget by 2020. Capping our-- spending at 18 percent of gross domestic product. And-- and -- addressing a host of other issues, whether it's our entitlements, whether it's on social security, what have you. But you got to look at the whole plan here. We can get this-- we can get this country back going.
But here's the most important thing. And I'm going to keep going back to it. If you do not create the climate in this country where people will risk their capital-- and you got to get rid of Obama care. You got to get rid of part of Sorbaines Oxley 404, or-- or-- you got to get rid of-- Dodd-Frank. And quit spending money we don't have. That's what you have to do. Get a tax structure in place, give incentives to those job creators. We can get this country back on track, and we can get this balanced-- budget balanced.
JOHN HARWOOD: To make sure I understand your reasoning. Your view is that spending cuts plus the dynamic scoring of the growth in the economy produced by the cuts is what's going to make the budget.
MALE SPEAKER: Sure.
JOHN HARWOOD: You're not saying you're going to pay for the individuals or the corporate tax cuts the way Washington is used to paying them-- by formally offsetting them?
RICK PERRY: No. As a matter of fact, when you take a look at the white paper and you see getting rid of dynamic scoring, getting rid of-- a lot of things that have allowed for-- the-- Washington to keep spending money. I've laid out some very powerful and I think good medicine-- to cure what's going on in Washington from the spending habit they've got. Look they're spending too much money.
I show-- $100 billion of-- non-defense discretionary spending going away-- with some pretty simple things. For instance, taking-- secondary-- education programs at the Department of Education. Cutting those things in half, and sending the other half back to the States. Save you $25 billion in year one. And there's lot of those types of things we can do. It just takes a president who has the courage to stand up and say this is what we're going to do. And when you look at getting-- the country back to work, what I laid out two weeks ago with our job plan on the energy side, 1.2 million jobs-- on the energy side of this thing. I mean, all of that dynamically-- I mean, we can-- I mean, moving manufacturing back in here. If we just want the pre-Obama-- offshore drilling will be 230,000 people back to work. I mean, it is staggering the number of jobs this administration killed because of the regulatory-- there's a lot of affair with regulations that they have.
JOHN HARWOOD: Your white paper says that you would raise the retirement age for social security. And also limit-- the benefits-- the benefit calculation for high earners. How much do you have to make before your benefits are reduced in that way? How high would you raise would the retirement age?
RICK PERRY: Well I'm not ready to-- give some hard numbers on that one. But those are the types of-- thoughtful debates that we're-- need to be having-- with-- with Congress. We know-- you know, when your dad-- when he-- was just being eligible for that, the average age is probably in the mid-60s. Now we're up to, you know, close to-- 76 and 80 for women. I mean, the idea that we're not moving this forward. Still leaving people-- to get it at 62 if they want, but obviously moving it up.
All of those things-- giving kids the private options. I happen to think that-- you ought to open it up like they did for the states to take their employees out of there. Galveston did it, and the folks have great programs now.
JOHN HARWOOD: If state and local government employees are taking out of the system, and if you also, as your plan does, remove the taxes on benefits-- imposed now. Isn't that the first step towards the dismantling of the system?
RICK PERRY: Not at all. As a matter of fact, one of the things we have to do is-- the-- the federal highway trust fund, you can't go take any of that money, and spend it on your fat cat programs. And that's what we need to do with the social security trust fund. I mean, put that thing in there, and say, listen, this is for social security.
It's not for you to go in there and borrow, and put an IOU in there. There's nothing in that thing except IOUs. We need to do the same thing with this as we've done with the highway trust fund. So-- we're not going to dismantle the program. It's going to be there for the folks who are already in it. It's going to be there for the-- plan their retirement on it or moving into it. But for the mid-career, and particularly the younger-- they're not-- let's not kid them and say hey, listen, it's going to be there, don't worry about.
JOHN HARWOOD: You talk in your white paper-- modernizing Medicare and reforming Medicare. Has Paul Ryan got it right? Do we need to go to a voucher system that had a specific amount of money for the purchase of private sector plans?
RICK PERRY: I think that Paul has some very good ideas. That being one of them. That I think is--
JOHN HARWOOD: You're not endorsing his plan, though?
RICK PERRY: I'm not endorsing his plan in whole. But-- look, he and-- Tom Colburn-- Jim DeMint. I mean, all of these individuals who have done some really good work on fixing social security, fixing Medicare, and-- and on Medicaid. Listen, I had to deal with this for ten years as the governor of Texas. I know how to-- address that issue too. You get Nikki Haley or Bobby Jindal or John Casek, I mean, there's a bunch of really good governors out there who know how to better deliver those Medicaid programs than this one-size-fits-all that we got in Washington D.C. today. So Medicaid, Medicare, all of those, there are some fixes for them. But we just got to have a president that will stand up and say, you know what, let's fix this. Let's not dump it onto-- I mean, $14.7 trillion, $15 trillion debt on our kids.
JOHN HARWOOD: President Obama has been frustrated by his-- inability to get his jobs program through Congress. He says he's now going to push executive actions. He can do-- trying to-- spur refinancing for the housing market-- trying to ease repayment on student loans. Has he got it right?
RICK PERRY: No. We've already tried his plan before. And it cost us $4 trillion. I don't think this president understands basic economics. Not economics that work. He may understand some theory that someone in Princeton sat and dreamed up, but it's not working. This President would be wise if he addressed the economy in the way that we know it works. You give incentives to job creators. Lower the tax burden, lower the regulatory climate, and this President would be stunned I'm sure. But America's economy would take off and take off quickly. That's what we need in a president that respects how this country got to the point-- to being the greatest economy in the world. And it was done simply by giving the incentive to job creators so they knew they could keep more of what they work for.
JOHN HARWOOD: Mitt Romney after the President released his birth certificate earlier this year said that issue's done and settled, I accept it. You chose to keep it alive in your interview with Parade magazine over the weekend. Why'd you do that?
RICK PERRY: I-- it's a good issue to keep alive. Just-- you know, Donald's got to have some fun. So-- and the issue is this.
JOHN HARWOOD: But it sounds like you really do have some doubt about it.
RICK PERRY: Well, look, I haven't-- I haven't seen his-- I haven't seen his grades. My grades ended up on the front page of the newspaper. So, let's-- you know, if we're going to show stuff, let's show stuff. So. But, look, that's all a distraction. I mean, I get it. I'm-- I'm really not worried about the President's birth certificate. It's fun to-- to poke and add him a little bit and say hey, how about-- let's see your grades and your birth certificate.
JOHN HARWOOD: Well so--
RICK PERRY: But here's what's really serious. Is we got people sitting around watching this interview while the president has killed 2 and a half million jobs. That's serious. And that's what we got to better get right.
JOHN HARWOOD: But are you saying that your comments about that are kind of a joke? Or do you seriously have unresolved questions like Donald Trump has about them?
RICK PERRY: I don't have a clue about where the President-- and what this-- birth certificate says. But it's also a great distraction. I'm not distracted by it. If those of you in the media want to talk about it that's fine, but I hope what you'll really get focused on is how are we going to get this country back on track. Because if we don't, America's next generation is not going to have as good a future as what we had, and that's what I'm concerned about. I know how to do that. And you do it by giving a flat tax. You get these regulations pulled off of businesses, and you allow entrepreneurs the confidence that they can go risk their capital.
JOHN HARWOOD: In the last debate, what were you thinking when-- when Mitt Romney put his hand on you?
RICK PERRY: I wasn't giving a thought to it.
JOHN HARWOOD: I mean, did you expect something like that? I've never seen that in a debate.
RICK PERRY: Yeah, no, I-- it didn't affect me. I went about my business.
JOHN HARWOOD: Jon Stewart ran a thought bubble over your head with a little video of Clint Eastwood coldcocking somebody in a western movie. The-- there've been two Rick Perrys in the debate so far. From debates, you've been low energy. And the last-- last debate, you were very high energy, very aggressive in going after Romney. When we have our debate, CNBC debate in Michigan on November the 9th, which Rick Perry are we going to see?
RICK PERRY: Well, I'll try to get a lot of caffeine.
JOHN HARWOOD: Are you going to be aggressive?
RICK PERRY: I'm going to lay out my vision to the country to get back working again. And I'm passion about that. Listen, for ten years we created the most dynamic economy in this country in Texas, and that would be the 13 largest economy in the-- in the-- in the world if we were a stand-alone entity. If you can do that in Texas, you can do that in this country. I'm passionate about getting this country back working. I'm passionate about somebody having the dignity to take care of their family. So expect me to be passionate. Expect me to be high energy about it. And expect me to bring-- be bringing the A game.
JOHN HARWOOD: One more thing. And that is, Occupy Wall Street, this movement that has taken root in New York City and some other places around the country. Some people on the left think it's their answer to the Tea Party. I wonder what you would say to both groups, when you have this proposal to dramatically cut taxes for-- people at the top, you want to repeal Dodd-Frank, going back to the old system of regulation of Wall Street. How would you explain that to Occupy Wall Street and to the Tea Party?
RICK PERRY: I would say that-- you have plenty of rules on the book and-- insist that the people that are working in those agencies do their job.
JOHN HARWOOD: You think the previous regulation on Wall Street was adequate?
RICK PERRY: Yes, absolutely, I think it was adequate. 'Cause we had a bunch of regulators that weren't doing their job-- I would fire those regulators. I don't know whether you could fire them or not because of the federal laws in there. But until we can fire them, I'll reassign them somewhere they won't find very pleasant, and get people in there that actually do their jobs. That's what needs to be done.
We have regulators in the state of Texas that actually get up every day and go do their jobs. And I would expect the-- federal regulators to do the same. But here's what I would tell those young people on-- and-- you know, the old Churchill saying, you know, if you're not a liberal in your heart when you're 20 and you're a conservative when you're 40.
I hope what they will see is that America's a fabulous country and it gives them the opportunity to go say your peace, go protest on the street. But at the end of the day America's about having the opportunity to take care of your family. That-- creating an environment that those that really care about the future of this country and care about their family-- they'll be more concerned about who's occupying the White House than they will be occupying Wall Street.
JOHN HARWOOD: And as a member of the Tea Party in South Carolina says, I'm trying to take care of my family. Why are you giving millions of dollars in tax cuts for people at the top, what do you say to them?
RICK PERRY: I say to them that we want those people at the top to be investing in this country so that you have a chance to have a job. Because that's the way this country has always worked. People who have money go by and large invest it. They create-- you know, expand their business. They go invest somewhere. I want this money that's offshore to come back, and-- and to create jobs. That's the future of this country.
If we don't get-- the confidence in the businesses community. If the small businesses men and women, or as a matter of fact, big don't have the confidence, they can risk their capital, they're not going to have to spend their money on Obama care, or you know, hundreds of thousands, if not millions of dollars on Sorbaines Oxley. If you're a small operator or if you're trying to have-- this Dodd-Frank banking bill.
I mean, all of those are job killers. You got the EPA killin' jobs. The other three statutes are pikers compared to the EPA. So we know how to get this country back working. You got to have a president that has the courage, has the vision. And I will assure you that that tax plan, that regulatory plan, that spending plan that I'm laying out does all those.
JOHN HARWOOD: Promise this is the last one. Aside from Steve Forbes, who advised you on putting together this plan?
RICK PERRY: Mill Pass. And-- Mitt Mulvaney-- were a couple other guys that we sat down with. And-- and a host of others, but those are three names that most people will-- go oh yeah, those guys know what they're talking about.
JOHN HARWOOD: Thank you, Governor. Appreciate it.
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