When: Today, Thursday, March 29, 2012

Where: CNBC’s "The Kudlow Report"

Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Senator Mitch McConnell (R-KY) tonight, Thursday, March 29th on “The Kudlow Report” (M-F, 7-8PM ET).

All references must be sourced to CNBC.

Video: Sen. Mitch McConnell on Oil Companies

Sen. Mitch McConnell, (R-KY), disapproved of Senate Democrats' pending legislation to raise taxes on the nation's largest energy producers Thursday. He shares his views with CNBC's Larry Kudlow.


LARRY KUDLOW, host: Major news to report out of Washington this week, and who better to discuss it all than our next guest, Senate Republican Leader Mitch McConnell, who joins us now for an exclusive interview.

As always, sir, welcome back to the show. You know, I've got three...

Senator MITCH McCONNELL: Larry.

KUDLOW: ...big stories I want to share with you.


KUDLOW: Paul Ryan's budget got thumbs up in the house, President Obama's apparent energy gap when it comes to gas prices, and the fate of Obamacare and the Supreme Court. Can I just begin with gas prices? President Obama comes back from these international meetings in Korea, and the first thing he does is he launches a kind of tax and bash on oil and fossil fuel companies in the Rose Garden. What is up with that? What's your take on that?

Sen. McCONNELL: Every time gas prices go up, the president says we need to raise taxes on energy companies, which of course would make the price of gas go even higher. It doesn't make any sense at all. It doesn't pass the smell test. It's completely laughable. Americans are suffering from pain at the pump of $4 a gallon gasoline, and the president says we have to raise taxes on the producers. It really doesn't pass, as I said, the smell test. But that's what they always do. When gas prices go up, they take off after oil and gas companies.

KUDLOW: All right. Do you ever anticipate that that would pass in the Senate? I mean, it got a majority of votes, but it didn't get enough to pass, didn't get 60 votes, taxing oil companies. Which, by the way, as we talked about earlier in the show this evening, oil companies pay among the highest effective tax rates of any industry in America.

Sen. McCONNELL: Yeah. You're absolutely correct. In fact, somebody told me the other day that the revenue off of oil companies alone provides about 10 percent of the federal budget, so it's not like they're getting away with anything. Look, there were at least three Democrats who voted with us against the proposal, so there was bipartisan opposition to raising taxes on oil companies. Not because, you know, we're here to defend oil companies, but they're already paying an enormous amount of revenue, and we don't the price of gas at the pump to go up even higher. And the Congressional Research Service, which is certainly an objective group, says that if you raise taxes on oil companies, you send the price of gas at the pump up.

That's the last thing we need right now.

KUDLOW: All right. So I'm surprised--maybe you are too--that when he came back, he didn't talk about the great discussion of Obamacare in the Supreme Court. And I want to ask you, why isn't he talking about that? And you, yourself, what do you take away from these three days of hearings on the Supremes and Obamacare?

Sen. McCONNELL: Well, first, the reason the president stopped talking about the two-year anniversary of Obamacare or the Supreme Court review of the constitutionality of the case is because it is deeply unpopular with the American people. So I think his view is, the less said about it, the better.

Predicting what the Supreme Court is going to do is a pretty hazardous thing to engage in. Let me just say this, if the court decides that it's constitutional for the federal government, through the Commerce Clause, to order us to buy a product that we don't want to buy because it might raise the cost of health care for someone else if we don't buy health insurance, then could the federal government, consistent under the Commerce Clause, order us to eat carrots? Or to quit smoking? Or to lose weight? Is there anything the president--the federal government could not do in the name of health care cause?

I think it's safe to say, Larry, that if this is not unconstitutional, then you can forget the Commerce Clause, it doesn't mean anything at all. It's just a relic of the past in the Constitution. So I'm hopeful that the Supreme Court will strike it down. If they don't, it's still an awful law. There are plenty of bad laws that have been passed that are not unconstitutional. If they say it's not unconstitutional, it still ought to be repealed and replaced.

KUDLOW: Let me ask you about, quickly, Paul Ryan's budget passed the House. Of course, the president's own budget didn't get a single vote when that House came--when that vote came up in the House. I guess the question is, will anything happen in the Senate regarding the Paul Ryan budget? I reckon you support it, but does it go anyplace?

Sen. McCONNELL: Well, it probably won't pass the Democratic Senate, but we will have a vote on the--on the House-passed budget. We also will have a vote on the Obama budget. I offered it myself last year. They didn't want to, and it went down 97-to-nothing in the Senate. I'll offer it again this year because I don't anticipate any of our Democratic friends will. We have two other members who've been very active on budget matters, Senator Toomey of Pennsylvania and Senator Rand Paul from my state. They have both developed budget alternatives. We'll probably, Larry, vote on all of them. But the Senate Democratic majority hasn't passed a budget in 1,000 days, and I doubt if they will this year.

KUDLOW: Let me ask you another one on the campaign trail, Senator. As you know, Senator Marco Rubio just endorsed former Governor Romney. Papa Bush endorsed him, Jeb Bush endorsed him. Firstly, do you intend to endorse Mitt Romney?

Sen. McCONNELL: Well, my view so far is that the Republican primary voters out around the country didn't need any particular advice from myself. I think I will say this, it's pretty obvious this nomination is essentially over, and I think we'd be a lot better off to begin to rally behind the almost certain nominee and begin to take the case against President Obama to the American people.

KUDLOW: Well, is it time? I mean, if you came out with an endorsement, would that help rally the party? Would that help bring closure to this and start focusing on what's going to happen in November?

Sen. McCONNELL: I think more and more members are going to be embracing our almost certain nominee, and I think this matter's going to be wrapped up in a matter of weeks.

KUDLOW: And when will you come out publicly for it?

Sen. McCONNELL: I'll let you know.

KUDLOW: I thought maybe you'd break a story. Anyway, Senator Mitch McConnell, Republican leader from Kentucky, thank you, sir, as always. We appreciate it.

Sen. McCONNELL: Thank you, Larry.

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