When: Today, Thursday, November 17th

Where: CNBC’s "The Kudlow Report"

Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Senator Pat Toomey tonight on “The Kudlow Report” (M-F, 7-8PM ET). All references must be sourced to CNBC.

Super Committee Stalemate


LARRY KUDLOW, host: But we begin this evening with our top political story, breaking news, and still no deal from the congressional super committee. Just six days and counting. What's the holdup? Joining us now, an exclusive CNBC interview, fresh from inside super committee negotiations, we have Pennsylvania Republican Senator Pat Toomey. I wouldn't wish it on my worst enemy.

Senator Toomey, welcome back to the show.

Senator PAT TOOMEY: How are you?

KUDLOW: Listen, I--it's been reported the full committee hasn't met in weeks, and you may have heard the clip we ran. Senator Murray is blaming Republicans for not having a tax plan. Now, you have a tax plan. I'd like you to tell us what's going on here.

Sen. TOOMEY: Well, Larry, you know, it's obviously late in the game. The discussions are continuing, I don't know--I can't--I can't give you a prediction of an outcome at this point except to say we're still at work. You know, we've developed a plan. See, I think there's got to be two important priorities here. One is we've certainly got to, you know, get our deficit under control. The other thing is we need pro-growth policy. We need economic growth here and job creation. So I think you meet those two by doing tax reform that lowers marginal rates, simplifies the system, broadens the base. You do that on the individual and the corporate side and, my goodness, get out of the way with the kind of revenue that would generate just from the reforms.

But, you know, we were willing to say that if we could avoid the huge tax increase that's coming in January of 2013, if we could get lower rates, if we could simplify the code, we'd even acknowledge the reduction in deductions to offset some of the rate lowering. That would generate a little bit of static revenue for deficit reduction. We're--you know, we've been willing to do that because I think you get so much growth, it'd be worth the price.

KUDLOW: Well, Senator Murray specifically seemed to rule that out today. Now, whether this is true or not, I don't know. But she was quoted saying she didn't want the Bush tax cuts extended and she didn't want lower tax rates at all, that those were non-starters. Does that leave you in a hole? Can Republicans, therefore, make a revenue deal without the kind of tax reform that you yourself have proposed?

Sen. TOOMEY: I think that would be very problematic, Larry, because if we did that, we wouldn't be helping the economy, we'd be hurting it. You know, we've already got this uncertainty. The reality, if it comes to pass, this big tax increase in 2013 would be very, very damaging. I can't see how we ought to add more damage to that by raising taxes and then doing nothing about that. That doesn't strike me as the right thing to do for the economy. So I think we still need to focus on pro-growth tax reforms. We've done a lot of work, we've got a lot of stuff on the shelf that could be taken down and cobbled together.

KUDLOW: So, Senator, let me just ask, though, instead of a super tax hike that would doom the economy, why not go for the across-the-board budget trigger? The price-outs that I've seen suggest about a $70 billion budget cut in 2013, OK? So about an 8 percent across-the-board cut, excluding the big entitlements. What is wrong with that? Why not go with that across-the-board trigger?

Sen. TOOMEY: Are you talking about the sequestration that occurs?

KUDLOW: I am. Yes, I am.

Sen. TOOMEY: Yeah. Well...

KUDLOW: We like to call it a trigger on the network because sequestration's such a difficult word. But, yes, you took the word right out of my mouth.

Sen. TOOMEY: Yeah, yeah. Well, I think the big problem with the automatic spending cuts, there are a few. I mean, it's really not the optimal way to rein in the size of government and--for several reasons. Number one, it really won't make meaningful changes to the entitlement programs, which are driving this whole thing. And, number two, they're very heavily concentrated on defense and national security. And the president's own Defense secretary has said that going ahead with these Defense cuts would hollow out our military. So I think that's a very bad way to go. In the very unfortunate event that our committee were not to be successful, and I still hope we will, but if not, then I think we would have a very concerted effort to reconfigure the sequestration.

KUDLOW: Reconfigure it?

Sen. TOOMEY: We certainly need--that's right.

KUDLOW: You mean you'd take--rip it, open it up? I thought everybody, Harry Reid, John Boehner, I thought every--President Obama, was opposed to reconfiguring that.

Sen. TOOMEY: I don't think everybody is opposed to reconfiguring that. I think, on our side, you would find that people believe the $1.2 trillion in cuts are absolutely necessary, but the composition of those cuts is something that we could improve upon because the amount that's currently planned for Defense is way too high. So, again, I still hope that our committee will be successful. We're working hard on it. I just came from a meeting. I'm going to go back to another one on this. But in the event that we're not successful, I think it's important that we reconfigure those cuts.

KUDLOW: Are Republicans working out, to use your word, a reconfigure plan?

Sen. TOOMEY: I'm not...

KUDLOW: Is that going on behind the scenes?

Sen. TOOMEY: You know, there might be some folks might be working on that, Larry. That's possible. I can't speak for it. I'm not, and it's not been the subject of conversation among the super committee members. But I can't speak for all my colleagues.

KUDLOW: I mean, it just seems to me, last one, Senator Toomey, Jeff Hensarling told us night before last on this show, $250 billion revenues with the Toomey tax reform plan to lower marginal tax rates, OK. Maybe he's a little more flexible. But if the Democrats, if Patty Murray and the Democrats are at 5, 6, 700 billion and you guys are at 250 or 300 billion, it seems to me a compromise would be a gigantic tax hike without lower rates, which would be a disaster for the economy. I'm just using simple arithmetic here.

Sen. TOOMEY: That--yeah, yeah, and no argument. That would be a disaster for the economy. That's not going to be the outcome. The other thing I would just remind you is that the Democrats may not all be on exactly the same page. I mean, Congressman Clyburn mentioned on Sunday on a national broadcast that there was no consensus view on the part of the Democrats. So there may be a difference of opinion on that side, but I can tell you, on our side, we think pro-growth tax reform is really, really important.

KUDLOW: All right, we'll leave it there. Many, many thanks. Senator Pat Toomey, we appreciate it, sir.

Sen. TOOMEY: Thanks, Larry.

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