Following is the unofficial transcript of a CNBC interview with former President Bill Clinton today on CNBC’s “Closing Bell with Maria Bartiromo.”

All references must be sourced to CNBC.

MARIA BARTIROMO: Mr. President, I know we have limited time so we'll get started if that's all right with you.


MARIA BARTIROMO: Great. Thanks so much for joining us.

PRES. BILL CLINTON: Glad to do it.

MARIA BARTIROMO: So I was just hearing so many stories about last night. It struck me-- last night, given the fact that-- when I was reading one of the headlines it said, "President Obama and President Clinton Courting New York's Elite." And it struck me because it seems like this is the same group that the president has, in many cases, been villainizing and attacking for not paying their fair share. Did this come up that he's going to them now for campaign money?

PRES. BILL CLINTON: No, he said clearly last night-- both at the theater, at the end it's a big crowd event, and at the first event, which was quite small at Marc Lasry's house, that he thought they and then he looked at me and said Bill Clinton and I should pay more taxes in a long-term debt reduction plan.

Most the people who were there agree with him. Most Americans agree that if we could have a long-term debt reduction plan that the people that got the most tax cuts in the last decade should give back a little and contribute to it. But I think the interesting thing to me is the order you put these things in. For example, right now there's private activity's flat again. Interest rates are almost zero because-- American bonds are in demand even though we're-- people are virtually paying us to take their money.

Interest rates are I think a quarter of a percent on a ten-year bond. And-- that's because people think we're going for growth now and will have a long-term debt reduction policy. And I don't think we should switch the order because the problem I have with the Republican position is they want austerity now and they've enforced it in the House.

So while we had 4.3 million private sector jobs in the last 27 months, we've lost 600,000 teachers, firemen, other state and local jobs because we didn't give them assistance. And they all had to run on balanced budgets. But I think we should have a long-term debt reduction plan. And you can't have a balanced budget unless you have three things. You have to have growth, spending restraint, and an adequate revenue stream. And so it's just a question of how you think you get those things.

MARIA BARTIROMO: So what about this upcoming fiscal cliff? Because a lot of people are worried and the markets certainly have been reacting to the-- to the idea that these Bush tax cuts will expire at year end along with the spending programs that will expire. Should those programs and those tax cuts be extended?

PRES. BILL CLINTON: What I think they should do is find a way to keep the expansion going. And I think the-- as weak as it is here, you know, unemployment in the euro zone I think is 11%. And-- Germany's doing well but the-- and a lot of the smaller countries are doing extremely well, many of which are not in the euro.

But they're trying to figure out a way to promote growth. And what I think we need to do is to-- find some way to avoid the fiscal cliff, to avoid doing anything that would contract the economy now, and then deal with what's necessary in the long-term debt reduction plan as soon as they can, which presumably will be after the election.

MARIA BARTIROMO: So does that mean extending the tax cuts?

PRES. BILL CLINTON: Well, I think what it means is they will have extend-- they will probably have to put everything off until early next year. That's probably the best thing to do right now. But the Republicans don't want to do that unless he agrees to extend the tax cuts permanently, including for upper income people.

And I don't think the president should do that. That's going to-- that's what they're fighting about. I don't have any problem with extending all of it now, including the current spending level. They're still pretty low, the government spending levels. But I think they look high because there's a recession. So the taxes look lower than they really would be if we had two and a half, 3% growth. And the spending is higher than it would be if we had two and a half, 3% growth because there are so many people getting food stamps, so many people getting unemployment, so many people are Medicaid.

But-- the real issue is not whether they should be extended for another few months. The real issue is whether the price the Republican House will put on that extension is the permanent extension of the tax cuts, which I think is an error.

MARIA BARTIROMO: Something's going to give, though, right? I mean, if we don't deal with this by November then you probably don't deal with it by 2013. And in the meanwhile, sort of the markets and the economy hang in the balance.

PRES. BILL CLINTON: We don't want to do anything to roil the markets any more than they already are. And the Europeans, in defense of them, they're trying to move away in a sensible way from the perception and the reality that they've been too austerity driven.

And you can see it separately. And if you look at what happened in the U.K., 'cause they're not in the euro zone, and I like the prime minister and the current government and I admire Mr. Clegg. But they tried to do this austerity first. And what happens when there's no private demand is that no matter how much you cut spending, the revenues drop more and the deficit goes up because the economy slows down.

And that's what we have to avoid here. But what I think the president is right about is not wanting to make any commitments that will constrain our ability to have a long-term debt reduction plan because two years from now, three years from now, five years from now, we need to be bringing this deficit down when the economy grows because then you'll have the private markets needing capital.

And if the government's taking so much of it to finance the debt, interest rates will go through the roof. So the trick is to promote growth now while they're literally zero interest rates for American securities because we're perceived as a safe country with a sensible economic policy and to keep your options open to deal with a deficit in a responsible way going forward.

MARIA BARTIROMO: So what about that debate in Europe? There's a debate right now. Should the IMF be contributing to this-- fund, to these needs in Europe? And of course that ultimately means the U.S. taxpayer money. Should the IMF, the U.S. taxpayer money, help to bail out Europe right now?

PRES. BILL CLINTON: I don't know that it's needed. I don't know yet. It depends on what the European central bank does. And-- Chancellor Merkel is clearly open to a change. I think Germany's got a little bit of a bad rap here. That is they have put in a lot of money trying to save the euro zone.

But they did it with the feeling that there had to be extreme budget restraint on these other countries. And that's hurting Germany because it's undermining those other countries' ability to buy German products as well as their own. So let's see first whether the Europeans can do it on their own. They may not need IMF money. They may be able to do it with the European central bank initiatives and what the other major countries do.

MARIA BARTIROMO: It's pretty extraordinary that these issues are sort of playing out around the world, whether you look at Europe, the U.S. Today in Wisconsin we see the voters going back to the polls. Of course you campaigned with Mayor Barrett. If Scott Walker wins do you think that's a referendum? Does that tell us something about what may happen in the fall? What are the implications if Scott Walker wins?

PRES. BILL CLINTON: I don't think so. President Obama's got a pretty good lead in the polls in Wisconsin. I think if it-- if it wins-- if he wins it'll mean, number one, he had a lot more money and he got a lot of money from people who agree with him that-- but the voters will think, well, I'm glad we got rid of the deficit. And that's all they'll think.

I'm glad he got rid of the deficit, too. My problem with it was Tom Barrett, the mayor of Milwaukee, was not supported by the public employee unions in the primary because he also got rid of the deficit. He dealt with the biggest budget cut in Milwaukee history. And-- but the difference is the governor used the occasion of the budget fight to break the union.

Barrett used the occasion of the budget fight to negotiate with the union, to drive them down to an affordable level. And that's different. Also, the governor used the budget fight to both cut expenditures and cut taxes more. So he had to cut expenditures more. Now 73% of the school districts in Wisconsin have laid teachers off.

And I think if the clear-- if that message could be gotten out clearly, I think Barrett would win a narrow victory. But you have to-- the sort of the advantage probably goes to Walker 'cause he's got so much more money. A lot of money's coming from out of state, including some from the unions to support Barrett, but not nearly as much as Walker's received. It’s going to be a close and an interesting race.

MARIA BARTIROMO: Why do you think President Obama stayed away? He didn't campaign. Some of your colleagues were frustrated by that.

PRES. BILL CLINTON: I don't know. You'll have to ask them. But, you know, all of us have mixed feelings about recall elections. And ordinarily-- I don't support them. When they recalled Grey Davis, I didn't support him in California. And it turned out I think in retrospect I was right because it looks like they got hosed by Enron and didn't-- nobody knew what the deal was when he was being, in effect, blamed for their exploding utility rates and their economic difficulties.

But I think the American people have to make some decisions about whether they want us to have shared prosperity in good times and shared sacrifice in bad times and whether we're going to do these things together or somebody's just going to take a hammer and beat the heck out of somebody else.

The places in America that are already back that are doing really well, their places are working together. We've got a Republican mayor of San Diego coming to our conference who works with all the Democrats to make it the genome capital of America. We've got a Democratic mayor of Chicago who's working with all the Republicans in banking and finance there to give America its first urban infrastructure bank, something that used to have bipartisan support in Washington.

So I really believe this is a big decision the American people have to make. And I-- was hoping by going there I could clarify that decision. And I hope I did and I'm glad I did it.

MARIA BARTIROMO: And of course you've been very fair minded and sort of in the middle of the aisle. You even recently complimented Bain Capital and Romney's record, called it a sterling record.

PRES. BILL CLINTON: I've got friends who worked there.

MARIA BARTIROMO: And so do you think some of the broad sides, these negative comments about private equity from the president-- is sort of working against him at this point? I know a lot of your colleagues on the left are basically saying, look, this is actually turning people off. What do you think?

PRES. BILL CLINTON: I think-- well, I talk to a lot of people here in New York in finance who didn't deal in securitized subprime mortgages. And therefore-- and didn't have improperly secured derivatives trades. And I've listen very carefully to what they don't like.

And what I-- what I believe is important is to be as specific as possible. If there's-- a particular action you don't believe in, I think it’s okay to criticize that and say it. Then you can have an argument about the facts. But I think that most important thing in this election is what will President Obama do and what would Governor Romney do with the economy and how would they deal with people who disagree with them. Would they divide and conquer or would they be "let's bring everybody together"? And would they-- do they favor growth now and restraint later, which I think is right? Or do they favor austerity and more unemployment now and then adopt a budget that will explode the deficit later? That's what I'm most worried about.

MARIA BARTIROMO: Yeah, no, I agree with that. It seems that there-- these attacks against private equity, against wealth have turned people off.

PRES. BILL CLINTON: Well, the American people are remarkably-- one of our great characteristics is we don't resent other people doing well. We want people to do well. We like it when people make money. But we want them to do it in a way that benefits the overall economy.

And the point I was trying to make the other day is that you have examples of private equity doing good and bad things over the last decade. You can look if you go in and there's a company that's not doing well, it's failing, and you buy it and you have to impose some economies there and cutbacks because you're trying to turn it around so it can thrive in the economy, whether you succeed or fail, that's a good thing to do.


PRES. BILL CLINTON: And you can't do it. If you go in and buy a company and intentionally run it up with debt, loot its assets, and then the people lose their jobs and their retirement and they lose the jobs earlier than they would have and they lose benefits they otherwise wouldn't have lost, that's a bad thing.

So to make a judgment on that, you have to know a lot of facts about every case. And I just think that we-- we'd all be better off, we just-- let's talk about we got two people running for president. What would they do? What would they do on these big issues that will affect millions of people?

And-- I think the president was on stronger ground I thought when he went after what he disagreed with in Governor Romney's record as governor because that's something that's out there in the public domain. We don't have to dig for the facts. We don't have to wonder what the case was. And I just don't know enough about that other thing to have a judgment one way or the other, the case that they ran the ad on. I just don't know.

MARIA BARTIROMO: Is tax policy fair right now? I mean, the president talks a lot about fairness in-- in taxation. And yet, what, the top 1% or 5% pays 40% of the tax. 50% of the people pay no income tax at all. So what should tax policy look like? And if the president wants to get rid of the idea that you could turn ordinary income into capital gains, why not just get rid of carried interest? Why come out with a bucket rule that everybody who has $1 million, including small business-- gets impacted there? So my first question I guess is, is the tax policy today fair?

PRES. BILL CLINTON: Well, first of all, a minimum tax of 30% is not all that high. If you look at the percentage of GDP going to taxes in America compared to every other wealthy country in the world, there are only-- of the top 31 countries, I think we're 29th in the percentage of total tax take.

Now, if you live in New York City, you don't feel that way 'cause our taxes here are markedly higher in New York City and in the collar counties than in the rest of the country. But as a whole in-- in the country, we-- our tax rates are not out of line. And what-- the problem in having this conversation now is when I was president we had a booming economy. Most people didn't resent those tax rates. And keep in mind, even middle income people were paying slightly higher taxes when I was president. Everybody was.

MARIA BARTIROMO: Right. Instead of just a portion of the population.

PRES. BILL CLINTON: That's right. Everybody was. But we had a booming economy. So I think that-- that we're in a different situation now because in the day before this crash occurred, we'd only had two and a half million private sector jobs created since I left office. And median family income had gone down $2,000 after inflation and healthcare costs and college costs had soared.

So I think that's why the president believes that those people, since their incomes are stagnant, shouldn't have a tax increase. And people whose incomes have grown a lot can pay a little more. I think that's the argument.

MARIA BARTIROMO: So what is your idea to get this economy back on track? I mean, everybody wants to hear what you have to say. You oversaw an economy during the best of times, the last president to balance our budget. The jobless numbers on Friday were horrible. How do you characterize Obama's handling--

PRES. BILL CLINTON: Here's what I think is happening. I think-- in the country you've got this European thing as having a bigger impact than people know. All that uncertainty in Europe and the fact that-- that-- you know, that's a lot of our markets slowing down the gold double exports of America.

MARIA BARTIROMO: How much is Europe and how much are the president's policies?

PRES. BILL CLINTON: Well, I don't think-- the thing that's cost jobs here has been the Congress policies. If the Congress had enacted his jobs plan, we know we'd have 6,000 more state and local workers still working. And we know we'd have an infrastructure program going which would have some more jobs. So the jobs numbers would have been better there.

The only part of the jobs plan that the Congress enacted was to continue the payroll tax cuts that had been previously instituted. So I think that that's a problem. I still believe that we could get a little bit quicker recovery if we could resolve the home mortgage crisis quicker.

I think that's important. I think we could get a quicker recovery if we could reform the corporate tax laws, lower the rates, broaden the base, and offer the corporations a chance to bring the money back free now if they would invest at least a portion of it in the infrastructure back where they get a very good return on investment, very good. And then we could put the American people to work.

You know, this is one thing I think-- I think the Republicans should really be for. We're one of the few countries in the world that builds almost all its roads and bridges and other infrastructure, power lines and other things, either with tax money or with utility rates. We don't have enough public/private partnerships there in an area where there's a real good return on investment. You can give people-- a reliable return far better than they can get on a lot of traditional investments today.

MARIA BARTIROMO: And we're going to talk about all of this on Thursday at CGI America. You've taken the lead on job creation. You have come up with new ideas outside the box like clusters. Talk to us about your ideas in terms of putting a dent in this unemployment story and what we will be hearing in CGI.

PRES. BILL CLINTON: Yeah, those things are out of my control, the two things I just mentioned. But one thing that I'm trying to do is to get-- and I'm doing more of that at this meeting than the last meeting. The last meeting I just tried to find new ideas. This meeting I'm trying to point out that there's wealth potential everywhere.

And that what's working in America are these cooperative clusters like we were talking about San Diego. I mean, San Diego has become the human genome research capital of America.

MARIA BARTIROMO: And clean tech.

PRES. BILL CLINTON: Yeah. Now I know that not every city can do that. But let's just look at what they did. They got a Republican mayor. They've got the University of California at San Diego and San Diego State. There were 66,000 applications for the freshmen class at the University of California, San Diego. Their acceptance rate was as low as Harvard and Yale this year. Why?


PRES. BILL CLINTON: Because they've got all these-- Craig Venter's got his foundation there which is doing this work and these science centers. And then since nobody can see a genome, you need computers. Qualcomm, the biggest computer company there, is headed by a very prominent Democrat, Irwin Jacobs, who's a good friend of mine.

But there are now 700 other computer companies in San Diego. 700. Why? Because they're all working together. And they say this is what we're going to do. And it-- on a much smaller scale, Joplin, Missouri, is coming back quicker than a lot of towns after the tornado because they decided, instead of having a grand plan, they'd have a bottom-up entrepreneurial system. And everybody's working together to, you know, open new businesses and do things and build the housing back quicker.

These are the kinds of things that are working. When Rahm Emanuel told me that how is going to set up an urban infrastructure bank, I wasn't sure he could do it. But when I-- went to Chicago for the announcement and there they were, you know? All the bankers and all the finance people, all of the housing development people, Republicans, Democrats, Independents, everybody was there together. That's what's working.

So to-- in this meeting, we're going to emphasize, like-- this group called Got Your Six, Got Your Back, it's trying to place 500,000 veterans and spouses in jobs by 2014. The veterans unemployment rate, 25% above the national average. They're going to try to place 100,000 people in mental health support jobs for all the people that have the aftermath of post-traumatic stress syndrome. And-- these are the kinds of things that are working.

When FALTO committed to give a raise-- investor raise $10 billion in-- housing and building retrofits last year, we realized that there were really no mechanisms to do it. So we're having to set up this alt-- you know, these mechanisms so that cities can figure out how to access this money and put people to work. And my whole theory is if you-- the American people will work like crazy. And they've got all these entrepreneurial ideas. And there's wealth potential all around us.

What we really need to do is to go back at the grass roots and start there and work up. And a lot of-- and a lot of these places-- banks are making loans to small businesses again. The credit is there. And it's because they're good credit worthy loans. And there's a whole spirit, a confidence building spirit that you get if you got something going on as grass roots.

MARIA BARTIROMO: I love all the startup activity. Mr. President, would you like to add anything else?


MARIA BARTIROMO: Can I ask you one more thing?


MARIA BARTIROMO: You look absolutely fantastic. You still on your vegan routine?

PRES. BILL CLINTON: I am. I have-- one exception. I did a whole bunch of blood tests. And-- Dr. Mark Hymen, who's a friend of mine, said that-- he got me to-- talked me into eating salmon once a week. He said, "You just need a little more protein." So I do that.

MARIA BARTIROMO: Good for you.

PRES. BILL CLINTON: You know, when you get older you lose muscle mass easier. So I have to-- he said, "Go back to the weights and eat salmon once a week. You'll be fine." So that's what I'm doing.

MARIA BARTIROMO: Good for you. Stronger than ever. Mr. President, thank you very much.


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