Rising Senate star Marco Rubio of Florida put out a strong growth message in our interview last night. Shrink the size of government; broad-based flat-tax reform; roll back regulations; balanced-budget amendment with tough spending caps. And the best solution for an ailing middle class: Create jobs. He believes the 21st Century can be an American century if we follow this path. There are few people more articulate than the gifted Senator Rubio.
Here’s the transcript:
LARRY KUDLOW: We welcome back Senator Marco Rubio of Florida to The Kudlow Report. It’s been a while, Senator, thank you.
SEN. MARCO RUBIO: Yeah, thank you. Thanks for having me.
KUDLOW: All right. Well, it’s great to have you as a senator. I appreciate it very much.
All right, the debt talks are very hot. President Obama’s involving himself now. He’s meeting with the senators. I want to ask you, over the weekend, the president said we can’t simply cut our way to prosperity. What does he mean by that and what’s he signaling in terms of these debt talks?
RUBIO: Well, I’m not sure what he means by that. I can tell you that we can’t cut our–only our way out of prosperity. We need to grow our way into prosperity, and that means economic growth. And government can be a facilitator of that in creating an environment where job creators are incentivized to create jobs. Job creators are not governments, they’re not presidents, they’re not US senators. Job creators are everyday people from all walks of life that start a business or expand an existing business, and what we need are government policies that make it easier for them to do that and that encourage them to do that. So if that’s what the president means, I think that’s very good.
If on the other hand what he means is we’re going to borrow a bunch more money and spend a lot more money to try to do what he tried to do with the stimulus, I think that’s very bad news for our future.
KUDLOW: I mean, he has his high-speed trains. He’s got his infrastructure. He’s got his clean energy technology and so forth. And I want to also put in, Vice President Biden over the weekend at a Democratic event said we can’t have the middle class place–have all the burden of this deficit reduction and debt. And then he singled out hedge funds who have a 15 percent capital gains tax rate for their income. I guess my question is, what is Mr. Biden saying along with the president? Are we looking at a significant tax increase as part of this debt ceiling?
RUBIO: Well, I think clearly many in the Democratic base have said that they want that on the table. Unfortunately for them, and I think fortunately for the country, I don’t think there’s going to be support for that in Washington, including among many Democrats, I hope, who realize that we can’t…
KUDLOW: No tax increases. The Democrats won’t take a tax…
RUBIO: Well, there can’t be a tax–well, I think some Democrats want there to be a tax increase, but I think ultimately the votes are not there, certainly in the Senate, I hope, because–I could be wrong, but I know among Republicans the votes aren’t there. Because, number one, there’s no way you can tax your way to prosperity. Number two, our tax code is already a source of great uncertainty and worry and concern about the future. And number three, even if he wanted to, which I do not, there’s no tax they could raise that would accomplish the deficit reduction they’re talking about. I mean, if you raise to 100 percent the taxes on every rich American under their definition of rich, which is people making over $250,000 or more a year, it still wouldn’t make a dent on the debt.
So, look, we’ve got to–we need a combination of two things. We need fiscal restraint. We need a government that begins to stop spending money it doesn’t have. And we need pro-growth strategies. We have to grow this economy. There’s not enough focus on the growth element of this.
KUDLOW: What about the issue of deductions, tax deductions? Now there’s a lot of talk, even by some Republicans in the Senate, that they could take some downward adjustment or elimination of certain deductions as part of a compromise package. Does that work for you?
RUBIO: Well, I think we’re in need of tax reform to make the tax code simpler and easier to comply with and more certain. I don’t think it’s a source of revenue, and that’s why I believe in the revenue neutrality in any of those measures that are taken. Again, I think if you want more revenue for government, the way you do that is by growing your economy, not by raising tax rates on certain people or getting rid of deductions. So if they want to make the tax code flatter and fairer, that’s fine. But if they–and I think that’s a good idea. But if they want to use it as a way to raise revenue–in essence, if it’s not going to be revenue neutral, I think that hurts economic growth, which has to be our number one priority.
KUDLOW: How do you react to what Mr. Biden is saying regarding the middle class? I mean, I guess the point is, the middle class rely on Social Security to a large part. They certainly rely on Medicare. At least Medicare is on the chopping block in these debt talks. Cutting Medicare back, what do you give the middle class in return? They’ve sort of taken it on the chin. You know this. Oil prices, gasoline prices.
KUDLOW: Wages are not keeping up with inflation. What is your message? What is the Republican message to the middle class?
RUBIO: Well, a couple of things. Number one, on oil prices, we have no one to blame but the government for a lot of that. And quite frankly, this administration has made it harder, not easier for Americans to produce their own energy. And it’s contributed greatly to the price of oil and to the price of–at the gas pump.
As far as Medicare and Social Security are concerned, let’s focus on Medicare for a moment because I think that’s an important one. It’s going to bankrupt and it has to be saved. I want to save Medicare. The status quo doesn’t save Medicare. The status quo bankrupts it. So there are a lot of people out there criticizing Paul Ryan’s plan. I would say to them, `Well, what’s your plan?’ Where is the president’s plan to save Medicare? Where’s the congressional Democrats’ plan to save Medicare. Where’s the Senate Democrats’ plan to save Medicare? They don’t have a plan to save Medicare. Their plan is to use it as a electoral weapon in the next election. So what I–my message would be very simple. If we keep doing the things that we’re doing now with Medicare, it will go bankrupt very soon. It won’t exist when I retire or when my child retire and it’ll lead to bankrupting this country. So I think–I am for reforms that save Medicare and keep it solvent.
KUDLOW: And do you think that there’s a middle class problem there inside that message for the Republican Party? Because I think it is true, in part, in part, that the kinds of reductions envisioned by Paul Ryan, let’s say, will clip down some of the middle class benefits. Now maybe all people’s benefits, but the middle class will share in that.
RUBIO: But the most important thing for middle class and working class folks in this country is jobs. They want to be able to go out and earn a livable wage so they can raise their family with and leave their children better off than themselves. And my argument is that what’s done that in America has not been our government. Certainly government can create an environment where that’s possible, but what’s done that in America is the job creators. And what we need is an environment of certainty when it comes to regulations, of certainty when it comes to our tax code. We don’t need leaders that are out there using rhetoric that discourages job creators from investing in America so the jobs return to the United States and are here again, so that middle class families can feed their families, raise their children and provide them opportunities they themselves didn’t have.
KUDLOW: What will it take to get you to vote for a debt ceiling compromise?
RUBIO: Well, I–you know what? I outlined it in the Wall Street op-ed I wrote over two and a half months ago. I don’t–this debt limit debate shouldn’t be just about the debt limit. It should be a comprehensive opportunity to deal with the issues that confront our nations economically. So I want some sort of regulatory reform. I want some sort of tax reform. I’d like to see us tackle or at least begin to tackle how to save Medicare and Social Security, or at least Medicare in the starting. I’d like us to see a balanced budget amendment. I’d like to see a spending cap. So these are the kinds of things I’d like to see in a package. I have said from the beginning that this debt limit debate is a golden opportunity to begin to confront the serious issues that stand between us and the next American century, which is what we have an opportunity to build here.
KUDLOW: Speaking of which, the next American century–really my last question, In in your excellent maiden speech on the floor of the Senate, I guess about 10 days ago, you say people aren’t the problem in America. It’s the government that’s broken. Could you just briefly tell us what you had in mind there.
RUBIO: There’s nothing wrong–yeah, there’s nothing wrong with the American people. Americans haven’t forgotten how to create jobs. Americans haven’t run out of good ideas. But we do have a broken government that through tax policies and regulatory policy and all the uncertainty they’re creating, are standing in the way. If only our government could do a few of these things right, the American people will give us here–the new American–the 21st century will also be the American century.
KUDLOW: You worry about decline a lot, but are you in your heart an optimist that we can solve these problems?
RUBIO: I am. I am. Because we have the greatest thing–we have the greatest people on Earth. All we need is a government that does its job. And if we have that, the 21st century will be greater than the 20th for us. And that’s–I know that’s hard to imagine, but that’s the opportunity before us.
KUDLOW: Sen. Marco Rubio from the great state of Florida, thank you very much for joining us on The Kudlow Report.
RUBIO: Thank you.
KUDLOW: All right, great stuff.