Following is the unofficial transcript of a CNBC interview with the Honorable Michael Pence, 48th & current Vice President of the United States, live from the CNBC Institutional Investor Delivering Alpha Conference in New York City on Thursday, September 19th.
Mandatory credit: CNBC Institutional Investor Delivering Alpha Conference.
JOE KERNEN: This is great. It’s good to see you again. It wasn’t that long ago when I saw you.
VICE PRESIDENT PENCE: You too, Joe.
JOE KERNEN: But to agree again to do this, I’m very gratified. Thank you, Mr. Vice President, for being here. I really appreciate it. We’ll kick it right off with, for lack of a better term, the economic state of the union. In your view, two and a half years into the Trump presidency.
VICE PRESIDENT PENCE: Well, the American economy is booming. It’s absolutely undeniable. Since Election Day 2016, more than 6 million jobs created by businesses large and small. Unemployment is at a 50-year low. Wages are rising at their fastest pace in more than a decade. And, I mean, one fact after another. And as we travel around the country, the enthusiasm, the confidence. I think, you know, a soaring stock market, improving the pension and retirement of working Americans.
Vice President Pence on jobs
It’s all evidence of the success of the agenda that President Trump campaigned on and, working with our allies on Capitol Hill in our first two years, we were able to deliver on, to cut taxes, roll back regulation, unleash American energy, and fight to open markets and fight to create new fair trading relationships with nations around the world. It’s all been a part of the President’s vision. We’ve been able to implement it, and America is prospering as a result.
JOE KERNEN: We had a rate cut yesterday, another one, another quarter point. The second one.
VICE PRESIDENT PENCE: We did.
JOE KERNEN: The President I think was happy that it was cut a quarter point but still unhappy reportedly with Fed Chair Jay Powell. Is that fair to say that?
VICE PRESIDENT PENCE: I think that’s very fair to say that.
JOE KERNEN: I also heard today that the Fed Chairman’s job is safe, for now. Is that what you’re led to believe; he’s not looking for ways, perhaps, to replace Jay Powell at some point in the future?
VICE PRESIDENT PENCE: Well, look, I think President Trump was expressing yesterday his frustration with what in our first two years in office was a severe monetary tightening. During a time when the American economy is growing and a time when there was very little evidence of inflation, we saw the Federal Reserve raise interest rates seven different times.And while the second rate cut yesterday was welcome, and it may well be followed by another rate cut before the end of the year, I think the President’s message to the Federal Reserve is that we ought to have a monetary policy in the United States that supports growth and also levels the playing field with our competitive partners.
Vice President Pence on the Federal Reserve
I mean, you essentially have zero interest rates in Europe today, and yet we’re still recovering from seven different rate increases in our first two years. So the President wants to see more bold action. I mean, as you see the economy continuing to expand, as you see the fact that, once again, no evidence of deflation. And we’re virtually at full employment in the country.
This is a time that our monetary policy ought to be bold, it ought to be decisive, it ought to be making capital available, and that will support even more economic growth. I mean, for all that we’ve done, more than 6 million new jobs, unemployment at a 50-year low, the lowest unemployment ever recorded for African Americans and Hispanic Americans, unemployment rate for women is at a 65-year low.
I mean, one statistic after another, that’s honestly just what President Trump calls a good start. The economy is growing at 2.5 percent right now, which is significantly higher than the average for eight years under the last administration. But the President really does believe that more regulatory relief, Tax Cuts 2.0, and the kind of monetary policy, the kind of trade deals, the kind of energy policies that we’ve begun to advance can take this economy to even all new heights for the American people.
JOE KERNEN: The President even broached the possibility of zero rates here or even negative rates here. Do you think that would be a positive for the United States? Are you a proponent of the Fed going that far?
On monetary policy
VICE PRESIDENT PENCE: Well, I support the President in his call for monetary policy that levels the playing field for our economy with other economies around the world. I mean, it is remarkable to think about the growth in our economy. I mean, the global economy is slowing, there’s no question, in certain quarters, and we went through a period of severe monetary tightening. But, despite all of that, the American economy is booming and soaring. And I think the President’s view and his own philosophy on these policies is that we ought to — whether it be trade, whether it be monetary policy, we ought to be where our competitors are.
The cost of capital ought to be — for our businesses and families ought to be what it is for people around the world. Because even though it’s not right now, our economy is soaring. We level the playing field, and we can reach all new heights for working families and businesses large and small.
JOE KERNEN: If someone were to push back and say in very good times that’s when you sort of reload the ability to cut rates in the future at some point, or that if the economy was so strong, we wouldn’t be asking for interest rate cuts. Would you say that it’s more inflation that is determining what the Fed does? A lot of people say it makes no sense to cut rates if the economy is that strong.
VICE PRESIDENT PENCE: Well, I’m not an economist, and I know you play one on TV —
JOE KERNEN: Yeah, no, I don’t.
On the global economy
VICE PRESIDENT PENCE: Back in the day, in the Congress we had some good debates about policies at the Federal Reserve, and the Federal Reserve has a dual mandate: Full employment and making sure to protect against inflation. And when your economy is essentially at full employment and there is no evidence of inflation, then it seems, I think, the President’s view, it seems that our view overall is that we ought to be doing everything that we can to make sure that the cost of capital in this country is on a level playing field with our competitors.
JOE KERNEN: Globally you can see that there is evidence of a slowdown, globally, at this point. Europe, 16 trillion in negative rates, sovereign rates. That would, to many people, be seen as maybe problematic or indicative of something that isn’t right or something that we need to worry about. FedEx had a rough quarter yesterday, and stock was down significantly, and blaming a lot of different things, the global slowdown, talking about the trade war to some extent. When the yield curve inverted and you look at the global bond market and yet at the same time you have new all-time highs in stocks, which market is correct about forecasting the future of global growth, the stock market, or should we be worried about what the bond market is telling us?
Vice President Pence on markets
VICE PRESIDENT PENCE: Well, I would leave that to the experts. I would just tell you our view is that whether it be the slowdown that we see in Europe, what China is dealing with, this is a result of their policies. I mean, it’s been remarkable for me. I’ve had the chance to travel around the world representing the United States and I’ve spent time with the President, with foreign leaders. I’ve heard one foreign leader after another congratulate the President on America’s economic success, on the incredible growth that’s happening in the American economy over the last two and a half years.
And our message to our trading partners around the world is: Look in the mirror. Look at your tax rates, look at your regulatory structures, look at your energy policies. I mean, you have, you know, Germany basically announcing that they’re going to abandon, you know, coal-burning power plants and ban nuclear plants. And the cost of energy now is driving down the German economy, which is such an enormous weight in the European economy. So our view is that they ought to be, and I think many are, looking at the United States, seeing the success that we’re having.
On job policy
They ought to be emulating our policies. And, frankly, they ought to be opening up their markets to U.S. goods. That’s the President’s strong stand on trade, Joe. So, once again, it’s just about the same as the monetary policy. It’s all built on the President’s principle of our relationships with our trading partners ought to be reciprocal; meaning that free and fair trade means we’ll give you the same access to our market that we had to your market.
And whether it be the European Union, whether it be Japan, where there may be a trade deal come together next week with Japan, or ongoing negotiations with China. For the President it’s all about saying — it’s all about saying to our trading partners: If you’re going to have access to the most prosperous nation in the history of the world, then our people, our businesses, have every right to expect the same access to your market.
JOE KERNEN: Do you or the President concede that the trade war that we’re involved with, whatever you want to call it, skirmish, I think we’ve upgraded to a war finally, but the trade war, is that taking away from global growth? Is that part of the problem, the uncertainty that it instills in corporations around the world so it can even affect Europe, so the slowdown in Europe, slowdown in China, global slowdown suddenly coming onto our shores? Is it part of — is that the reason for it? At least partly?
VICE PRESIDENT PENCE: Well, I just think it really depends on what part of the world that you’re talking about. I mean, you look at decades of socialist policies, welfare state policies.
JOE KERNEN: Europe.
VICE PRESIDENT PENCE: In Europe. High taxes, regulation. You’ve seen some of the popular protests in France have all been about high taxes that have been imposed. You know, I — it’s hard for me to —
JOE KERNEN: But China — the President, at some point says that, yes, China is hurting. He knows he’s hurting China. So then that’s almost admitting that you’re hurting global growth or you know you’re admitting —
On trade deficits
VICE PRESIDENT PENCE: But when it comes to China, it’s a whole different ball game. We run $500 billion trade deficits with China, and we estimate that we lose almost as much in intellectual property theft, every single year. I mean, what the President is doing with China is defending the American economy, defending America’s interests. And the strong stand that he’s taken we believe is having an impact on China’s economy. There’s no question about it. But that being said, discussions are ongoing. Deputies are in town, I’m told, next week.
Principals will be meeting again, Secretary Mnuchin and the U.S. trade representative, with Chinese officials next month. And we’re talking. But the era of economic surrender is over. And for too long one administration after another, Republican and Democrat administrations, were willing to accept extraordinary disadvantages to American workers and American jobs in the name of trade with China. And those days are over. I mean — and we’re going to continue to stand strong. You know, the President has a great relationship with President Xi.
I’ve had discussions with President Xi where I’ve confirmed that, I’ve sensed that same rapport that they have. But the American people can be confident President Trump is going to continue to stand strong, not just to reset the trading relationship, to have China open their markets to the United States, but also to have China finally embrace the international rules of commerce to protect intellectual property and forced technology transfer, all the things that have been working against America’s interest and, frankly, the interest of economies around the world. We remain hopeful, but —
JOE KERNEN: It’s a lot of stuff.
Vice President Pence on Chinese theft
VICE PRESIDENT PENCE: You know, the question now is whether or not China wants to do a deal, I think. And if we have a sense China wants to do a deal, we just don’t know if they want to do it yet. So they’ll be here. We’ll be talking. We’ll be exploring it. But I promise you, President Trump, in our negotiations with China, with Japan, with the European Union, with the UK, once they complete Brexit, it’s all going to put American jobs and American workers first.
JOE KERNEN: What is the best we can hope for? You were tough in a speech. You said that China has an arsenal of policies inconsistent with free and fair trade tariffs, quotas, currency manipulation, forced tech transfer, IP theft, industrial subsidies handed out like candy. Are we going to fix all this? Is it possible we get anywhere on all those things?
VICE PRESIDENT PENCE: I’ve been in the Oval Office where the President has made it very, very clear to Chinese officials at the very highest level of these negotiations that the structural issues are central, that China — look, we supported China joining the World Trade Organization. And the belief was that by letting them into the World Trade Organization, that we would see China move away from these kind of economic practices; and, frankly, we also hoped that we would see them embrace more of the liberties that we cherish.
Where you have a flourishing free enterprise economy around the world, through the history of the world, invariably you see individual rights grow.The truth of the matter is, China has not been willing to embrace the international rules of commerce. In fact, they’ve abused the rules of commerce to their advantage and taken advantage of America and other economies for far too long. And also the truth is, frankly, they’ve gone in many ways in the opposite direction on the issue of liberties and their conduct. So the President has taken a strong stand.
And, honestly, Joe, it’s quite in contrast with people that are seeking the Democrat nomination for president. I heard where my predecessor, Joe Biden, did an interview where he scoffed at the idea that China was a competitor. It’s really remarkable. But that’s what got us where we are today with China. And President Trump sees clearly that China has been taking advantage of its position in the World Trade Organization for far too long.
We’re going to take a strong stand, and we’re going to continue — and I promise you this, the President is going to continue to stand firm until either China decides to embrace the kind of reforms that will respect those international rules and reset our trading relationship. Or, as the President said, we believe we’re in a very strong position, and we’ll continue to use access to the most powerful economy in the world to protect American jobs and American workers.
On auto manufacturing
JOE KERNEN: USMCA, on track? Will the Dems give the President a win, or will they insist that enforceability is not where it needs to be, so they’ll keep pushing it down? How do you handicap it by the end of the year?
VICE PRESIDENT PENCE: The USMCA is not only the largest trade deal in American history, but if Congress passes it, puts it on the President’s desk, it will also be the most advanced trade deal in history. Not only will we bring together the United States and Mexico and Canada with reforms that we think will put American jobs first, but we really do believe that through the negotiations that we ended kind of a maybe unintended incentive in NAFTA to move jobs south of the border.
I saw the impact in my own home state of Indiana, where I saw entire communities shuttered, GM plants closed in Madison County, Indiana. I mean, we witnessed this in the midwest. We think the changes in this that require a certain number of — percentage of automotive parts be constructed at essentially what is the American wage ends that incentive to go south of the border. But there’s something in this for everybody.
Vice President Pence on NAFTA and trade
You know, I’ve had discussions with Speaker Pelosi, the President talked to Speaker Pelosi and Senator Schumer again this weekend on this subject, among others. We continue to engage in good faith, and we’re absolutely determined to move the USMCA through the Congress, to the President’s desk, and complete it. But ultimately it comes down to a decision by Speaker Nancy Pelosi. And we’re encouraged that she’s been working closely with our U.S. trade representative, we’ve been working on that enabling legislation, and we’re seeing more and more Democrats in the House of Representatives speaking out on this issue.
But at the end of the day, we’re just continuing to call on Speaker Nancy Pelosi, put the USMCA on the floor. Because we really believe if Speaker Pelosi puts the USMCA on the floor of the House, it will pass; we will pass it in the Senate, and it will be a huge win for the American economy and for American workers.
JOE KERNEN: Vice President, Iran seems to be getting bolder, brasher as time goes by. The latest attack, Secretary Pompeo called it an act of war because it’s an attack on the global economy. Do you agree with that? Or is there any — in this country, any inclination that we should have another military involvement somewhere, and in this case it would be for the Saudis? Or is it going to be the Saudis take care of it on their own terms and we’ll support it, but we’re probably — the American public is probably loathe to get into another conflict in the Middle East?
On Saudi Arabia
VICE PRESIDENT PENCE: The attack on the Saudi Arabian oil facilities last Saturday was the largest attack on oil infrastructure in history. It was an act of war. And we do know from the Saudis on the initial examination that the weapons were Iranian weapons. And we’re engaged in organizing an international investigation to determine where those weapons were fired from.
JOE KERNEN: Where they’re fired from. Iranian weapons, not — at this point not saying where they’re fired from.
VICE PRESIDENT PENCE: Well, whether they came from the Houthis that the Iranians sponsor in Yemen or they actually came from Iran is going to be a subject of careful investigation. The President has directed our National Security team. I talked to the Secretary of State this morning on my way to New York, we’ll be meeting. Our National Security team will be meeting tomorrow to continue to review the facts. And the President has basically said let’s get to the bottom of what happened. We’ve organized an international investigation into what happened. The President announced additional sanctions that we’ll be imposing on Iran for — whether it was their surrogates in Yemen who fired these missiles and drones or whether they fired them themselves, we’re imposing punishing new sanctions on Iran to hold them accountable.
On the UN and Iran
We will be limiting the number of visas for Iranian officials that can come to the UN General Assembly. But the President will take all this into account. He’ll review the facts, and he’ll make a decision about next steps. But the American people can be confident that the United States of America is going to defend our interest in the region, and we’re going to stand with our allies.
JOE KERNEN: How do you see the Democratic field shaping up at this point? And who do you think the likely nominee is, if you had to pick right now?
VICE PRESIDENT PENCE: Well, we — I have to tell you, it’s — we’re ready for any one of them. I mean, there’s like 20 or 30 of them still running right now.
JOE KERNEN: Any predictions on the GOP ticket?
VICE PRESIDENT PENCE: I would say yes.
JOE KERNEN: I’ve heard the President say that.
VICE PRESIDENT PENCE: Yeah, absolutely.
JOE KERNEN: They still talk about, you know, whether you’re going to — I’ve heard the President say you are absolutely, positively on the ticket.
VICE PRESIDENT PENCE: Yes, I’m very honored by that. I was honored when he called me and asked me to run in 2016, and I’m honored to run again. When we look at the other side, I’ve got to tell you, you know, it’s not so much who, it’s what they stand for. I never thought I’d live to see the day that one of the two major political parties in the United States of America would essentially be dominated by socialist thinking —
JOE KERNEN: Democratic socialists. But it’s kind of like sort of splitting hairs now.
VICE PRESIDENT PENCE: Yeah. I hear the “democratic socialist” — there are Democrats who are socialists. I served in Congress with Bernie Sanders. He’s a socialist, and he’s proud of it. And I think, you know, whoever their nominee is, when you look at their policies like Medicare for All and the Green New Deal, their plan is to raise taxes, increase regulations, grow government. It would crush the economy that we just talked about at the beginning of this program.
JOE KERNEN: It’s growing — it’s democratic socialism, and I wrote it carefully because I don’t want to make anyone mad. But it is gaining with a large segment of the population, and I’m wondering whether that’s reversible and I’m wondering whether you think there’s some inherent flaws in the way capitalism is operating in today’s world that even has, for example, the business roundtable saying that there’s more than just shareholders, there’s stakeholders. Secretary Mnuchin, by the way, said he wouldn’t have signed it. We had people come on in the morning, some would sign it, some wouldn’t. Do we need a reset, a software upgrade, in capitalism?
On free markets
VICE PRESIDENT PENCE: Well, no, we need to explain what free markets and free enterprise have done for the free world. I mean, it’s not going to be enough for us just to win the next election, we’ve got to win the next generation, and to see whether it be the squad on Capitol Hill, whether it be leftist policies dominating the Democratic party. We’ve just simply got to go out and talk about what free enterprise and free markets have meant, which is not only the most prosperous nation in the history of the world, the most generous nation in the history of the world, but also the cleanest environment in the history of the world, the highest labor standards in the history of the world.
All of that’s been driven by not only an economic system but a nation that is grounded in freedom. And I have to tell you, as I travel around the country, I think the American people know this, and they know it was freedom, not socialism that created the most prosperous nation in the history of the world.
It was freedom, not socialism that ended slavery, won two world wars and has made America the beacon of hope for all the world. I mean, when the President said in his State of the Union address, you know, America will never be a socialist country, there was not only a roar of approval in the United States Congress, but around the country. As I’ve repeated that line, people invariably go to their feet. I mean, we look at places like Venezuela, we look at Cuba, we look at the former Soviet Union. We know what happens in socialist countries.
Vice President Pence on economic views
You talk about slowdown, the social welfare states of Europe today are struggling under the weight of high taxes, high regulation, and socialist policies that have dominated Europe for far too long. You know, Margaret Thatcher probably said it best. She said: The problem with socialism is you eventually run out of other people’s money. But the other side is actually campaigning on this bonanza of promises where everything is free.
And I think that’s why we have to answer that with a message about freedom and about what freedom has created and can create. But the great news, you talk about criticisms of capitalism broadly, I mean, look at it, you have a businessman turned President. He comes in, he puts into practice basically commonsense principles to promote free enterprise and free market growth. And not only, as I said, 6 million new jobs, but look at what’s happening with wages.
In fact, I think it probably means the most to the President and me that wages are not only rising at their fastest pace in ten years, but they’re actually rising most rapidly among blue-collar working Americans. I mean, it’s really a remarkable thing. Ivanka Trump has headed up an effort with Secretary Ross, the administration now, we literally have 750 companies around the country that have committed 14 million apprenticeships and internships to train people in vocational skills and career and technical skills so that people can take advantage of the jobs and opportunities today.
On job training
There are more job openings in America today than there are people looking for work. Capitalism is working. And the left loves to talk about the income gap in America. I just heard the other day the income gap is actually closing because of the policies that President Trump has been advancing. And so that’s a story we’ve got to tell, and we will tell that. I get very excited about getting out across this country in the next year and a half. Because back in 2016 we were just talking about what President Trump was going to do for America to make America great again.
Now we can point to a track record, rebuilding our military, reviving our economy, more than 150 principled conservatives confirmed to our federal courts at every level, an energy renaissance, negotiating and opening markets to America around the world. Negotiating new free and fair trade deals. That’s a record of success I’m incredibly excited to carry to the American people. And that’s a message about keeping America great.
JOE KERNEN: It says zero over there. No one said anything to me yet. I’m talking about the time. We have another couple minutes? I’ll see whether it’s okay. I think — what’s that? Okay. You were a budget hawk in Congress. There are those that say the tax cuts didn’t work because it didn’t generate the revenue. I disagree. The revenue has been flat. It’s the spending that’s been the issue.
Vice President Pence on spending
VICE PRESIDENT PENCE: Right.
JOE KERNEN: So the spending might have to be cut, but a lot of that was military spending, which the President said he was going to do anyway. Where could the spending be cut to try to rein in the deficit, and are you at this point? I mean, when you see it at a trillion dollars already, you know, we’re not even finished with the year, what would you propose? And are you bothered by that to the extent that you would have been when you were in Congress?
VICE PRESIDENT PENCE: Well, I was — well, first, let’s remember the last administration doubled the national debt. The last administration came in and doubled the national debt at a time that they were also cutting military spending. When we took office, Joe — and I — I’m very proud to be the father of the United States Marine pilot, and very soon I’m going to be the father-in-law of a Navy pilot.
On the air force
But when we took office, I’m told that the Air Force actually had a significant portion of their aircraft grounded to use these planes as spare parts to keep other planes in the air. That’s how much the budget cuts in our military had impacted America’s national defense. So the President came in and he said: We’re going to do two things out of the gate. First we’re going to get the American economy growing again. Because you know what? You’re never going to cut your way back to a balanced budget.
It’s just not going to happen. The truth is an economy that’s growing at less than 2 percent is never going to generate the revenues to ever pay off the national debt, to ever balance the budget. So the President said one word: Growth. So we worked on delivering on the President’s promise to cut taxes for individuals and businesses, to roll back regulation at a record level, to unleash American energy. This year we became, for the first time in 75 years, a net exporter of oil. I mean, we have an energy renaissance going on in America.
Vice President Pence conclusion
He puts all those things into effect. The economy has taken off, significant — didn’t grow by more than 2 percent on average for the last eight years. We’re at 2.5 right now and rolling forward. But the other priority the President says, we’ve got to rebuild our military. I mean, this is a president that said we have to put our national defense first as a priority, and — but to do that involved negotiations given the filibuster rules in the Senate.
We had to negotiate with Democrats to work to get a commensurate amount of domestic spending, but the President said we’ll make the deal because we’ve got to fund our military. And we made the largest investments in our national defense, largest increases in our national defense since the days of Ronald Reagan. And I’m incredibly proud of that.
That’s the first priority. So national defense and growth, and we think now that we’re seeing to those things and we’re seeing that renewed American strength in our economy, in our national security, that lays the foundation for us to be able to deal with the long-term issues of debt and deficits.
JOE KERNEN: They reset the clock. But I think it would be pushing it. It’s running down. If I were to go to double overtime, I know I’d get in trouble. Even though you’re from Indiana, Hoosiers, but we’re going to have to end it there. But I want to once again thank you for coming today. I really appreciate it.
VICE PRESIDENT PENCE: Thank you, Joe.