Here’s the transcript of my interview with Jack Welch from last night’s Kudlow Report on CNBC:
KUDLOW: We welcome back to The Kudlow Report an old friend, the great, famed CEO Jack Welch.
Mr. Welch, thank you for coming back, sir.
WELCH: Larry, it’s great to be here.
KUDLOW: Let me just begin, as we have all day, luminaries like yourself, the way too soon passing of the brilliant entrepreneur Steve Jobs, what’s your thought on that?
WELCH: Absolutely tragic. I mean, his family has certainly had the biggest loss, but America and the world has lost something. He wasn’t just a genius entrepreneur, he was an executor. He got–people are not giving him enough credit for getting a million or two million or five million to the customer on time with great quality. That’s a real job.
KUDLOW: He was a great retailer and a great marketer you got there.
WELCH: Great marketer. Great–a supply chain manager and a great genius of an entrepreneur. He–to show you his impact, though, I had an experience at home. My stepson’s grandmother called, 85 years old, upset as could be.
WELCH: The kids called from college, two of them. They don’t call when CEOs die.
WELCH: They were so impacted. What this guy did for business, he invented cool.
WELCH: He made cool–most business guys are in suits like you are and I am right now.
WELCH: This guy, though, delivered products that made business cool.
KUDLOW: And he made a better world of it. I think…
WELCH: You know…
KUDLOW: …everybody agrees that his impact was just vastly beyond just being a businessman.
KUDLOW: Just vastly beyond.
WELCH: I mean, he was a true visionary.
KUDLOW: Yeah. All right, I appreciate that very much.
Let me come back to some of the current events of the day. President Obama had a lengthy news conference today, over an hour. Among the many points he made, I want to get your take on this, he is endorsing the Senate Democrats’ idea of a 5.6 percent surtax on millionaires. And the president also indicated, however, that other tax increases would still be necessary to fund the budget. Do we need a millionaires tax? Will it help the economy grow? And the whole tax plan, how do you see it?
WELCH: Will this–will this tax be on income or wealth?
KUDLOW: I think it’s going to cover capital gains, dividends and ordinary income, as far as I know, take effect in 2013.
WELCH: Well, look, I think we ought to go back and look at what he’s done so far, Larry. He put a stimulus bill in, $785 billion, whatever it was. It did nothing. Now, let’s look at what he projected. He projected we’d have 6.2 percent unemployment in October 2011. We’ve got 9! Larry, if you’re in a business and you miss by that much, somebody’s calling you in for a chat.
KUDLOW: And, in fact, his whole plan is doubling down. Now…
WELCH: Same plan.
KUDLOW: …the financing, it’s more spending. I don’t want to prejudge it, but it’s more spending, and it’s temporary tax rebates or temporary tax credits. It didn’t work for George W. Bush, it didn’t work for Barack Obama 1. Why should it work for Obama 2? Isn’t there a better way? We all know the economy’s in lousy shape and it’s faltering, as Bernanke said. Jack, with your experience, what’s the better way to grow this economy?
WELCH: I would say you start out with discretionary spending. It’s 1.3, 1.4 billion. Eight hundred and fifty of it’s defense, 450 is total discretionary. Take 25 percent of the 450, that’s $100 million, 90 or so.
Take 5 percent of defense, that’s 50…
KUDLOW: Take it out of the budget?
WELCH: Take it out of the budget.
WELCH: Take–but reduce it, not from projections, actual take it out.
KUDLOW: Level. The level.
WELCH: The level we’re at.
WELCH: Take it down. That’s a billion-three or a billion-five–a trillion-three or a trillion-five over 10 years. That’s one step, OK? Step number two, freeze regulations.
WELCH: Freeze them. This Senator Johnson thing…
KUDLOW: President Obama mocked the Republican freeze on regulations at the press conference today. I just want to put that in. He mocked.
WELCH: He’s shown no ability to lead. Let’s talk about that. But let’s just take this point. Let’s just take freezing regulations until we get unemployment below 6 percent. So, you know, we–just freeze them. The third thing, entitlements. Go after means testing. Lower the age for those below 50. Increase the age till they can get it. Means test. I shouldn’t be getting Social Security. I shouldn’t be getting Medicare benefits at the level I’m getting them. I mean…
KUDLOW: This would provide some confidence, is what you’re saying, right?
KUDLOW: Let me come back to taxes. Is it time to raise the tax rates on the upper income?
WELCH: There’s nothing that says it should.
WELCH: All it is a transfer payment.
WELCH: Take it from one hand, give it the other hand. Doesn’t work.
KUDLOW: And I think a lot of people are skeptical. So you raise taxes on millionaires, which sounds good. `Hey, get the millionaire. I’ll feel better if a millionaire gets hurt.’ It’ll be spent on spending. It won’t be used for debt reduction. Isn’t that the possibility here?
WELCH: Everything’s going to be spend on spending.
WELCH: I mean, they are spenders. They believe government should do more. They don’t believe jobs come from the private sector. They believe government creates jobs. That’s just a fundamental difference.
KUDLOW: So another part of his news conference today, he was asked about the so-called Wall Street Occupiers, the Wall Street protesters, that’s going on around the country and predominantly here but not only here. He expressed a lot of sympathy for that group. And I want to ask you, those guys are against the banks, they’re against financial institutions, they’re against a lot of things to do with capitalism. Are we going to live through a period of kind of left-wing populism where we’re bashing millionaires and billionaires, we’re bashing banks, we’re bashing corporations, we’re bashing Wall Street, we’re bashing, you know, Bank of America for raising its debit card fees. Is that the way this election period is going to go? And how’s it going to affect the economy?
WELCH: Well, that’s all bad news. But it would be solved if we had jobs.
WELCH: I mean, these people have a case. Unemployment at 9 percent. The president promised 6 percent, Larry, in October of ‘11. That’s–nobody goes back and looks at the pledge they made.
KUDLOW: Where did it fail? Where did that plan break down?
WELCH: Shovel-ready jobs. People were ready to go, but we had a couple things wrong. Davis-Bacon wages, that changed the class structure. Buy America. A lot of these jobs–and with a penalty if you didn’t. So a lot of these jobs, they weren’t ready. From the cup to the lip was a much bigger distance. And then to put regulations on top of the stimulus.
KUDLOW: So how do we stop this demoralization, to use Governor Christie’s word? How do we get back to the Steve Jobs optimism, entrepreneurial model of economic growth? It worked for Jobs, it worked for this whole country. How can we preserve that spirit of Steve Jobs?
WELCH: Larry, companies–I just had a review of my 12 companies in the last week–they’re on fire. They’re growing revenues at 7 percent average, the 12 companies. Their EBITDA is up double digits, strong double digits in some cases. This economy doing more with less is not good for jobs because it’s not growing fast enough. It’s growing at a 1 to 2 percent range. We got to get it to 3 to 4, and that’s unshackling this government away from it. When I take out 25 percent of the discretionary spending, the same way we did in GE 20 years ago, guess what it does? You give them a soft landing, you take care of the people who are injured. You–we’ve got a balance sheet to do that. But when they come to work, they don’t come to work and say, `What can I do today?’ It’s when they come to work they cause problem, not the cost of them.
KUDLOW: And you’re sending a signal. There’s a confidence signal…
WELCH: Yeah. And we’re going to unshackle business.
KUDLOW: All right. So unshackling business, reforming the corporate tax code, freezing regulations. Some tough spending measures from Jack Welch. Who fits the bill for all this in the Republican presidential primary sweepstakes right now? Who are you backing? Can you tell me?
WELCH: Yeah, I’m backing Mitt Romney. Now, whether or not he takes the whole platform, because I want to drill, too. I want to drill on nongovernment land and I want to get royalties from that that are going to help lower the deficit. And I want to have by 2020 total energy independence not from renewables. I want to still support renewables. You don’t stop that, but I want to really unleash the energy-driven sector in this economy.
KUDLOW: I thought Romney was a greenie. He flirted with cap and trade when he was the governor of Massachusetts.
WELCH: I said he may not follow my whole platform.
KUDLOW: What about–what about Governor Perry. Last question, what about Herman Cain, who’s actually going to appear on the show later?
WELCH: I hope Herman Cain’s serious. I don’t think he’s serious. I think he’s got a book tour he’s on, OK, and…
KUDLOW: Well, I’m going to ask him that.
KUDLOW: OK, I’m going to ask him if that’s the case.
WELCH: Well, that’s one…
KUDLOW: But if he were serious, could you back him?
WELCH: I’m afraid he’s not electable, and I’m afraid–I think–I think Romney, by the way, will have more trouble in the primary than he will in the general.
KUDLOW: So you’re looking for a defeat of Obama?
WELCH: I want to take this administration out. They don’t understand how to create jobs. They don’t understand to grow this–America is on fire. America is still the greatest country in the world. And we have everything going for us except a government that is not supportive of capitalism.
KUDLOW: All right. I hear you. We’ll leave it right there. Mr. Jack Welch, former CEO of General Electric and just a famed businessman and adviser. I’m Larry Kudlow, we’ll be right back.