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June 14, 2007

Interview with Rudy Giuliani

Bloomberg

(Editor's Note: this interview took place June 13 with Bloomberg's Peter Cook in New York.)

COOK: Right now, here in our New York studios, we are joined by the frontrunner - at least according to the latest Bloomberg-L.A. Times poll - for the Republican presidential nomination, our continuing series of conversations with the candidates running for president.

We're joined by the former mayor of New York City, Rudy Giuliani, who joins me here on the set.

Mr. Mayor, thank you for the time today.

GIULIANI: Thank you for having me.

COOK: I appreciate it very much.

And wanted to begin by asking you about the 12 commitments you unveiled yesterday in New Hampshire, your 12 commitments to the American people. Want to focus, if we can, on some of those commitments?

GIULIANI: Sure. Absolutely.

COOK: ... as they relate specifically to business and the economy, and perhaps some of the other issues, as well. I wanted to start first on tax policy.

GIULIANI: Right.

COOK: You commit to lower taxes, and you also commit to reform the tax code. Tell us exactly. Are you talking about simply extending the president's tax cuts that are set to expire, or are you talking about going even further than the president?

GIULIANI: Well, I'm - we're certainly talking about extending the level of a tax cut to avoid what the Democrats want to do, which is a 24 percent, 25 percent tax increase.

So, we'd certainly want to keep taxes at the low level they're at now, and then look at a few others to see if we could either reduce them or eliminate them.

The death tax, for example, is a tax that should be eliminated - the inheritance tax. A very strange thing is going to happen with it. In 2010, it's going to go to zero. And then it's going to go to 55 percent in 2011. Kind of absurd to have it at zero, and then go to 55 percent.

We'll take a look at the corporate tax rates to make sure we're competitive, because they have to remain low. There you have to look at what are other countries doing, because we don't want businesses to move out of the United States because they're going to have much more favorable treatment in Bermuda or Ireland, or someplace else.

So, the commitment is to keep the tax rates low, and if we can get them lower, to do that. And we're going to go into more detail about that, probably in the next three or four weeks.

And then, reforming the tax code means to simplify it again, to do what Ronald Reagan did. Ronald Reagan, in the 1980s, did a good job of simplifying our tax code. And since then, it's kind of re-grown to the old level that it's been at.

So, we're going to look at various ways to simplify it. And that - probably, we'll be working on that all summer.

COOK: As you know, President Bush has tried to simplify the tax code. He appointed a blue ribbon bipartisan panel to look at this issue, come back with recommendations, yet this issue hasn't moved at all.

Why are you more convinced that you can be more successful here than President Bush?

GIULIANI: Because I was successful doing exactly the same thing in New York City. New York City never lowered any taxes - maybe one here or there, a little one.

I did 23 tax reductions, lowered taxes by over $9 billion, took the income tax rate, dropped it by 24 percent or 25 percent and was collecting 40 percent more in revenues from the 25 percent lower income tax rate.

This is something I'm very good at. It's something I've done before, in an atmosphere where actually it was harder to do than in Washington. In New York City we cut 23 different taxes - first mayor ever in history to do that. And we were collecting more money from the lower taxes than from the higher taxes.

So, this is something that I've done in the past. It's something Ronald Reagan did successfully. It's something President Kennedy did successfully, something President Bush has done successfully and not gotten the credit for. And we would continue it and build on it.

COOK: On the trade front, as well. That's part of your commitments. You commit to specifically expand America's involvement in ...

GIULIANI: Absolutely.

COOK: ... the global economy.

GIULIANI: Critical.

COOK: From your perspective - there are some people out there questioning whether globalization has truly benefited all American workers across the board.

Your sense right now. Do you think globalization has been a good thing? Has it been fair to American workers?

GIULIANI: Globalization is one of the best things for our future. It's something we have to embrace.

In fact, when I first wrote those 12 commitments, I think I used the term embrace globalization. But I wasn't sure people would exactly know what that meant, embracing globalization. So, we said, expand our involvement in globalization.

This is great news for America, the people who are coming out of poverty in China and in India. And really, it's a difference between a Republican president who is an optimist and a Democratic president who's got his head in the sand and wants to just protect our prior inefficiencies. They want to have extra taxes and more protection.

Here's the way I look at 20 to 30 million coming out of poverty in China and India - 20 or 30 million more customers, more people we can sell things to. More people where we can take the value-added that America has and build on that.

This shouldn't - for a country like ours, that's an optimistic, entrepreneurial country, we should be cheering globalization. This is a great thing for America. And we've got to
take advantage of it. And we need leaders who can show us how to take advantage of it.

I have another commitment on energy independence. Energy independence - if we can make that a major focus of American policy for the next five to 10 years, there's a great industry for us to sell to China and India.

They need energy independence. We should be able to figure out how to produce it. And then we can sell it to them. And yes, we can buy things from them.

But if we can figure out these industries we can sell to them, or processes we can sell to them, it'll benefit us, it'll benefit them and it'll be one of the great ways in which we grow.

COOK: What would you say to those Americans who have lost jobs that have been outsourced to overseas because of globalization?

GIULIANI: I would say, if you elect a Democrat, you're going to have more Americans who will lose jobs, and there will be more outsourcing. If you raise taxes by 24 percent or 25 percent, if you do nothing about regulations, how many more jobs are going to go?

I mean, how many more are going to go to Ireland, where taxes are lower? How many more are going to go to Bermuda, where the insurance industry has gone, because taxes are lower, where the burdens are less? How many more are going to go to China, to India?

You need a Republican president who understands the free market, how to deal with it, how to find new jobs for us. That's what I did in New York. New York, for years, was losing jobs.

When I came into office, we had lost 420,000 jobs in the couple of years before I came into office. By the time I left, we had gained 500,000 jobs. Unemployment went from 10 percent to 5.5 percent. And it came about, not by protectionism - it came about by attracting new industries to New York. That's what America has to do.

With people who have lost their jobs, we should be helping them. We should help them transition. Not - we shouldn't be helping the way the Democrats want to help them, by looking in the rearview mirror, by trying to go back.

COOK: There are some Republicans up on Capitol Hill talking much the same way.

GIULIANI: Well, you don't have to be a Democrat to be wrong. You can be a Republican sometimes and be wrong.

But looking in the rearview mirror is not the way to help American workers. It's looking forward.

What are the new jobs you can do? How can we train them for it? What are the new industries? What are the things we can sell to this emerging market? America, when it has a positive spirit, it grows. When it gets into this protectionism thing, we really decline.

COOK: Let me pick up on the energy commitment that you made in New Hampshire the other day. You talk about an Apollo-type project to try and reduce America's dependence on foreign oil.

From Rudy Giuliani's perspective, does that mean, for example, asking the auto industry to sacrifice by committing to higher fuel economy standards?

GIULIANI: No, what it would - yes, you could that. I mean, that's part of what should be done.

COOK: Part of what you'll be asking for?

GIULIANI: But that isn't part of what the - that isn't part of what the core or the philosophy - that's sort of the negative way Democrats approach things. Who can we tax? Who can we burden more? Who can we - here's the way you do energy independence.

You take ethanol, and you get it where Brazil has ethanol. You take carbon sequestration and you make it happen, so you can have clean coal. We have more coal in the United States than they have oil deposits in Saudi Arabia.

You take nuclear power, and you start to use it. We haven't licensed a nuclear power plant in 30 years. France is 85 percent nuclear. China is going to build 40 nuclear power plants. We should be doing that.

We should be figuring out what to do with solar and wind power, so you can preserve the energy, so you can deliver it on a consistent basis. We should be doing more exploration for oil, taking advantage of oil in the United States, Canada and Mexico,
on the shelf. We should build more refineries.

If we do that, we can go sell that. We can go sell that to China, and we can go sell that to India, because we'll be at the head of the energy independence industry.

Sure, if you want more - higher standards, fine. That's great. But you're not going to sell that to the rest of the world. That's a footnote to what is an aggressive, major policy.

COOK: For a free market philosophy Republican, what about the notion that the federal government shouldn't be stepping in here and subsidizing things like ethanol right now, because the market itself should determine whether or not ethanol succeeds.

GIULIANI: Well, I am ...

COOK: ... that's not happening.

GIULIANI: I am a free market Republican. I am against subsidies, in most cases. But I also realized, you know, in 1959, when America was behind the Soviets in getting a man on the moon, the federal government had to step in and take a leadership role there.

This is an area where the federal government has to step in. And as soon as it can step out, or where it isn't necessary, you keep it out.

But it's in the national - this has gotten beyond even just the economy, and it's gotten beyond globalization. It's a national security problem now, a national security issue, that America be energy independent.

And I would do everything I could to stimulate the private sector to do this. But where it couldn't, I would take them the extra way.

We have to be energy independent. No ifs, no ands, no buts. And we need someone as president, like me, who gets things done and doesn't just talk about things.

COOK: Another related issue - immigration. One of your commitments here is to identify all those people in the country illegally right now.

You've called the compromise in the U.S. Senate, I think, a Washington mess. I'm not sure we've heard clearly what you would do with the 12 million illegal immigrants here in the country already, other than identify them.

What would you do?

GIULIANI: Well, what I would do, first of all, is to ensure that we end illegal immigration by building a fence, building a technological fence, having a border stat program so we could use our border patrol to deploy people to stop people from coming in the country illegally.

That's a basic to get the rest done. You can't get the rest done. You won't get the confidence in the American people unless you accomplish that.

Then, in order to accomplish that, you also have a secure, tamper-proof card that everyone who comes into this country as a foreigner has to have. They're in a database. Credit card companies keep more information than this, so this is not technologically impossible.

If you had the borders secure, if you had no more illegal immigration, if you a really good, tamper-proof ID card and a database, then what you do with the people that are here is, you'd ask them to come forward. And you'd say, OK, sign up.

COOK: You'd give them a path to citizenship?

GIULIANI: No. Didn't say that yet.

First, we get them to sign up. Get them to sign up, fingerprint, photographed, biometrically identified, pay taxes, pay your fair share. Don't be a burden to others. Pay your fair share.

The people who didn't sign up, you would search down and you'd throw out, because they're the ones where you're going to find the terrorists and the drug dealers and everyone else.

The people that are working, if they stay here, if they work, if they were productive, at some point, if you wanted to make them citizens, you'd have them earn it by paying penalties, and you'd have them demonstrate they can read, write and speak English.

But to make all that happen - and this is the reason the bill is such a mess - to make all that happen, you've got to have border security. You have to secure your borders.

And the reality is that the legislation Congress was talking about a week ago, it makes the border less secure, which they didn't tell you. There's going to be less fence, less border patrol.

If you just operated on current law, you could do a better job of securing the border than what they were going to do. Plus, they didn't have a single tamper-proof ID card. They had six. And they didn't mandate recording exits of people. It was discretionary, so you would never know who was in the country.

So, they didn't do any of the basics that I was talking about. It was sort of like, let's all compromise, say we compromised, but nobody steps back and says, my goodness, this is going to make things worse. It's not going to make things better. That's why we need leadership in Washington. And we need leadership in Washington from people who don't come from Washington.

COOK: Let me ask you about some other issues, if I could.

Iraq - you've supported the president. You've said the United States cannot lose in Iraq.

I want to ask you, if you were to become president - or even before that. If General Petraeus comes back in September and says, we can win this thing, but it's going to take more U.S. troops, could you support the notion of adding even more U.S. troops to
Iraq?

GIULIANI: If that - if he came back and he said, we've had success. It's working, the strategy is working. We need more troops to make it work in order to get Iraq to a situation where Iraq is stable. And Iraq isn't - really, the ultimate goal here is, Iraq is an ally of the United States, a reliable one in the war against terror, rather than a headquarters for terrorism.

Of course I'd look at that, and I'd consider that. What do we have General Petraeus there for but - we have great confidence in him.

COOK: You know there would be significant resistance to the notion of sending any more Americans there.

GIULIANI: Hey, you know, leadership is about sometimes doing the things you know are right, and then it's your job to educate the public, as opposed to just, you know, taking a CNN poll or a Bloomberg poll or a Fox poll and let that run the country. I mean,
there's been too much of that.

We have too many politicians who are poll-driven to excess. Polls are important. You've got to know what the public is thinking, but you can't let them drive you completely.

If Abraham Lincoln were driven by polls, he'd have pulled out of the Civil War in 1863, but I guess they didn't have polls then, so ...

COOK: A couple of other business-related issues, not necessarily from your commitments or from the campaign trail, but the notion of executive pay.

A survey recently showed that, last year, the average American CEO, S&P 500 company, earned about $10 million a year. Is that appropriate? Is that too much money for an American executive?

GIULIANI: This is where I am absolutely a free market Republican, or, I think, an American, who says that's a private decision. That's up to the stockholders and the owners of the company.

I mean, they have to decide that's too much, that that CEO was too unproductive ...

COOK: Has it gotten out of hand? I mean...Is that what Americans deserve in those jobs?

GIULIANI: Stockholders don't deserve that. Owners don't deserve that. They're the ones who own the company. They're the ones who - the last thing in the world we need is the federal government deciding what the pay of people in private companies should be.

What do we want to become, the Soviet Union? I mean, that's not - that's not the proper role for a government in a free economy. The proper role for government in a free economy is to create a level playing field. It's not legislate what somebody's salary should be in a private company.

If it's a government company, then the government legislates the salary. If it's a private company, then the owners of the company decide. And the owners of the company are the stockholders.

So, let's improve corporate governance. I think that's great. Let's make things more transparent. The federal government shouldn't be setting wages and prices.

COOK: One particular aspect of your biography, you resonate your stint here in New York as the U.S. attorney for the Southern District of New York. You handled some of the biggest high-profile, insider trading cases at that time.

Recently in the news - you've probably seen it in the newspapers, reported here by Bloomberg - insider trading has come back, to some extent, as a headline story.

Why do you think that is? Do you think, for any reason, it's because regulators, the cops on the beat, haven't been doing the job that Rudy Giuliani did?

GIULIANI: I can't say that. I can't say that. It's always been cyclical. Even when I was - I was the U.S. attorney and a Justice Department official for a long time. And then it would go up, and it would go down.

And unfortunately and tragically - I think I once said this eroded - I can't remember exactly when it was, but it's almost something that's always going to be with us.

You know, you're going to have periods of regulation and cracking down. People are going to stop. Then they forget. Then you have to do it again.

And I don't know if that - if we're in one of those cycles right now, but I would not attribute that to lax regulation or lax - I have a sense that the SEC and the U.S. attorneys are pretty darn aggressive.

COOK: Yes. I want to ask you about your own business. You've become a businessperson since you left the mayor's job - Giuliani Partners, a consulting firm. You had an investment bank. You're also partner in a law firm right now.

GIULIANI: Bracewell Giuliani.

COOK: Bracewell Giuliani. We'll get the name in there.

There are some people out there, as you know, who have suggested that perhaps there are conflicts of interest. You running for president right now, the various business interests there, the clients that you have in those jobs, that you can't do both at the same time.

How do you respond to that?

GIULIANI: Well, I'm basically out of both. I mean, I don't - I spend most of my time now running. As we get closer and closer, we'll even be further out of it. A couple of ...

COOK: Does that mean a formal severing of your relationship with ...

GIULIANI: No, it means that I will not be involved in the day-to-day work of those companies.

But there are no conflicts. I mean, both businesses are very honest, very honorable businesses. They do their work. Giuliani Partners is basically a - it's a consulting business that does a lot of high-level security work. Some really great professionals
from the FBI are part of it, as well as people that worked with me when I was in government.

They do work all over the country, all over the world. They are high-level security experts. They have their own level of expertise, and they do a great job.

Bracewell Giuliani is just a - it's a very, very well known national, and now international, law firm. And they're lawyers.

COOK: Is it fair for people to judge you on the basis of the clients that those companies have?

GIULIANI: No, of course not. They do their work. Some of the people you represent in a law firm are people that have troubles and problems. You've got to straighten them out. It's like judging a doctor necessarily by the patients that they have. Doctors are there to cure people. Lawyers are there to handle legal problems.

If the doctor or the lawyer is doing it unethically, then that's something you should judge him on. But if the doctor or the lawyer is doing their job in an ethical way, fulfilling their professional obligations, then it isn't the same standard as you would have, you know, politically.

A lot of the people in my law firm are Democrats. There was an article a couple of weeks ago. It may have been that the law firm donated more money to the Democrats than the Republicans. I don't remember. Or some kind of equal amount. They thought it was really strange.

Well, the law firm has to reflect the general ...

COOK: Did you fire everyone?

GIULIANI: No, of course not. Some of them are Democrats. God bless them. You know, law firms should have some Democrats and some Republicans. It's not a political party.

Now, the Republican Party isn't going to have any Democrats, and the Democratic Party's not - that's a different kind of organization.

COOK: A couple of minutes left here. Just want to get your thoughts on the race, where it stands right now.

I told you our latest Bloomberg-L.A. Times poll has you in the lead among Republicans that we surveyed nationally, 27 percent of the support.

Fred Thompson, who's not even officially in the race, had 21 percent.
Does that worry you?

GIULIANI: Not at all. I think it's great. I think the more, the merrier. There are 10 candidates. We'll be 11. And from my perspective, if it's 13, 14 or 15, it'd be even better.

The reality is, I believe that each one of us has a unique message. Whether it's me or John McCain or someone else, we have a unique message. The Republicans have to decide which one of us they like best.

I'm not running against any Republican. I'm running with the 12 commitments that I made, the experience that I've had.

I think, of the people running in this race, Republican and Democrat, I have the most executive experience, or at least the most executive experience in a situation that is similar to being president - not the same, by any means - but being mayor of New York, third or fourth biggest government, a very complex job.

I had it during two very difficult periods. Sometimes you get to govern in good times. Sometimes you get to govern in really difficult times.

I took over the city of New York when it was the crime capital of America, where our economy was totally in trouble, where we had double-digit unemployment, major deficits. I turned both the crime situation and the economy and welfare around.

And then I had, of course, September 11 to have to deal with. So, people can judge me based on the experience that I've had to deal with something like being president.

And then the ideas that I have, which are laid out in those 12 commitments, and a few more that we'll put out over the summer.

COOK: Right now, as you know, there are a lot of Republicans - not a lot of Republicans - but there are some Republicans out there who say that, if they look at the field of candidates, there is no way they can support a Republican who is pro-choice.

How do you get around that? You've been on the campaign trail. How do you get around that central issue?

GIULIANI: I get around that by saying, look, Ronald Reagan has the answer to that. I worked for Ronald Reagan. We all respect Ronald Reagan.

Ronald Reagan used to say, my 80 percent friend is not my 20 percent enemy. You're never going to find a candidate that you fully agree with. So far, every one of the candidates in the Republican Party - probably true in the Democrat, I haven't paid attention - there's something wrong with them. They're not the perfect candidate.

Fred Thompson will come in. Fred Thompson won't be the perfect candidate. He'll be a real good candidate, but he won't be the perfect candidate.

Somebody will agree with eight or nine things. They won't agree with one or two things. Somebody has more executive experience. Somebody has more experience as a fiscal conservative.

Somebody has this, somebody has - so, you've got to say to yourself, do I agree with this person on the big things, on the most important things that are important to me, important to the future of the country?

You have to do some analysis of what kind of chance do they have of winning, because none of us Republicans want to turn this country over to a Democrat. And then you've got to make a choice.
And I'm very, very much at peace with the idea the Republican Party will make a really good choice. I hope it's me. But I'm really at peace with they'll make a really good choice.

COOK: Republican presidential candidate Rudy Giuliani. We very much appreciate all your time this evening. Thanks for joining us here on Bloomberg.

GIULIANI: Thank you very much.

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