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Vice President Mike Pence On Why The Fed Should Drop Rates [Full CNBC Transcript]

CNBC Transcript: Vice President Mike Pence Speaks with CNBC’s Eamon Javers Today

Vice President Mike Pence
Image source: CNBC Video Screenshot

WHEN: Today, Friday, May 3, 2019

WHERE: CNBC’s “Squawk on the Street

The following is the unofficial transcript of a CNBC interview with Vice President Mike Pence and CNBC’s Eamon Javers on CNBC’s “Squawk on the Street” (M-F 9AM – 11AM) today, Friday, May 3rd. The following is a link to video of the interview on CNBC.com:

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CARL QUINTANILLA: Special interview this morning, the Vice President of the United States, Mike Pence, sitting down with Eamon Javers in Washington.

EAMON JAVERS: Thank you so much Mr. Vice president, thank you so much for letting us here in your office today.

VICE PRESIDENT MIKE PENCE: Hi, Eamon.

EAMON JAVERS: So let’s start with the jobs report. A monster number this morning. This is a red hot economy. Give me your sense of whether the administration thinks this can continue, how long can it continue?

VICE PRESIDENT MIKE PENCE: Well, I guarantee you President Trump believes we’re just getting started in this economy. And frankly it was back in 2016, the President said, look, “You let people keep more of what they earn, you cut business taxes across this country, roll back federal red tape, unleash energy, fight for trade deals that put jobs and American workers first and this economy would come roaring back.” And here we are, April number 263,000 jobs created. We’re coming up on 6 million jobs created since election day, and the unemployment rate, unemployment rate at a nearly 50-year low. This economy is roaring. And I think maybe most meaningful to the President and me is the fact that when we have seen wage growth over the last year, the most rapid wage growth in these numbers has been among working Americans, like the people I spent time with in Deerborn at the Ford factory, like the people I was just with in Norfolk. Working Americans are winning in the Trump economy. And I couldn’t be more proud to be part of the effort.

EAMON JAVERS: So it is a hot economy. The Dow has been on a tear – with the exception of yesterday the Dow has been on a tear this whole year. Isn’t this when you really want to be raising interest rates ultimately to keep the economy from overheating, to help savers, to get things under control?

VICE PRESIDENT MIKE PENCE: Well, not at all. In fact, I think the President suggested the opposite. This might be a time for us to consider about lowering interest rates. But we just don’t see any inflation in this economy at all. But, you know, back when I was in Congress, we had a whole debate about the dual mandate of the Federal Reserve and it might be time for us to consider that again.

EAMON JAVERS: Consider what?

VICE PRESIDENT MIKE PENCE: The fact that the Fed looks at full employment and monetary policy and inflation. And instead, by just looking at inflation, you would make clear there’s no inflation happening here, the economy is roaring. This is exactly the time, not only to not raise interest rates, but we ought to consider cutting them.

EAMON JAVERS: So you would like a single mandate for the Fed, just to focus on employment.

VICE PRESIDENT MIKE PENCE: It’s not something the President and I have talked about, but back during my days in Congress, we considered it. Just having the Fed just focus again on monetary policy and recognize that their job is to essentially manage that and watch inflation because you just – Eamon, you just don’t see any inflation in this economy right now. And the fact that wages are growing, the fact that we are seeing jobs being created all over the country in businesses large and small should be an encouragement to every American and I hope also to the people that operate our monetary policies as well.

EAMON JAVERS: Well, Herman Cain, Stephen Moore, you have had two of the President’s picks now for the Federal Reserve board flame out. Is the President just picking the wrong people or what’s going on here?

VICE PRESIDENT MIKE PENCE: I think the President is very interested in bringing fresh ideas to the Federal Reserve board. And I think as you see him make nominations in the future, he’s going to be bringing people in that will bring kind of a renewed and fresh perspective. That’s what both of those men represented. There is a process that we go through here in Washington, D.C., respect Steve Moore’s decision to withdraw, but what the President is really looking for is people that understand the dynamic approach to this economy that he’s been putting into practice since the first days of this administration. And remember, it really is remarkable when you think about –

EAMON JAVERS: So, is it political loyalty?

VICE PRESIDENT MIKE PENCE: Just real quick. Eamon, you think it was early 2017, Larry Summers, the top economic adviser for the Obama administration, said we would never get to 3% growth. He talked about you have to believe in the tooth fairy for that. Well no, you just had to believe in President Trump’s agenda for this economy. But if you cut taxes, if you get that business corporate rate down to a competitive level globally just like we did, if you cut federal regulations, if you unleash American energy and if you fight for the kind of trade deals that we have been able to negotiate with South Korea, that are being negotiated as we speak with China, the USMCA with Canada and Mexico, all of that is coming together to create this dynamic economy and we’re just getting started.

EAMON JAVERS: So what is the President looking for the Fed board? Is it political loyalty to him personally? Is it a commitment to low interest rates? Is it a commitment to shake things up there? What does he want?

VICE PRESIDENT MIKE PENCE: I think the President is looking for – I think he’s looking for men and women to be appointed to the board of the Federal Reserve who are as fiercely committed to the free market as he is. The belief that this economy can expand at a rate we haven’t seen in many, many years.

EAMON JAVERS: So that is low interest rates.

VICE PRESIDENT MIKE PENCE: Look, we just came off – absolutely is part of it. But it is just simply recognizing – remember how many times, Eamon, we heard about the new normal in the last administration? An administration that the most powerful economy in the history of the world grew by less than 2% for eight years. And now the first quarter of this year, 3.2% economic growth when you know the first quarter is always the toughest. The reality is this is a President who has a boundless confidence in the American people, he has a boundless confidence in the ability of this economy to exceed all expectations and he’s looking for men and women on the Federal Reserve board who share that passion.

EAMON JAVERS: So you have two big trade deals hanging in the balance right now. First is China. Are we going to see a deal signed next week?

VICE PRESIDENT MIKE PENCE: Well, our team just got back. We had a briefing here at the White House yesterday. We’re going to be welcoming the Vice Premier next week and those negotiations are ongoing. And I think President Trump remains very hopeful. He has a very good relationship with President Xi. But what he has made clear to President Xi, what I have made clear in my interactions traveling through the Asia Pacific last year, is that things have to change. While we hear one of the latest candidates for President say that – on the Democrat side say that China doesn’t represent a competition of the United States. Eamon, you know they’re half of our international trade deficit. And force technology transfers and intellectual property theft are a reality. President Trump has made it clear that things have to change with China on the structural issues as well as the trade imbalance and will continue to stand firm on those.

EAMON JAVERS: One of those structural issues is hacking. Chinese hacking of American companies. There was a report this week that the President is willing to drop his demand, that the Chinese stop hacking American companies. Is that true?

VICE PRESIDENT MIKE PENCE: I haven’t seen that report. What I can tell you is –

EAMON JAVERS: Is he going to demand that they stop hacking American companies as part of this deal?

VICE PRESIDENT MIKE PENCE: Well, we have made it very clear across the board that things have to change with China. Whether it be the debt diplomacy, through the one belt, one road policy that they’re advancing, whether it be freedom of navigation, particularly in the South China Sea where we have asserted America’s interests there in new and renewed ways, or whether it be domestic political interference. All of that is a backdrop to these trade negotiations. But what we want is a better relationship, a more honest, a more level relationship with China across the board. And President Trump believes that by beginning, by resetting our trading relationship, by literally bringing China up to the standard that other nations around the world live up to with regard to intellectual property and force technology transfers that we will begin a process of addressing all those issues.

EAMON JAVERS: So, let my tick through a couple of other topics here. You’ve got the USMCA, you’ve got Republican Senators including Chuck Grassley saying you have to drop tariffs in order to get USMCA through Congress. Do you think that’s the right approach?

VICE PRESIDENT MIKE PENCE: We’re dealing with members Congress, productive meetings yesterday on just this issue. Look, the USMCA is a win for American jobs and it’s a win American workers.

EAMON JAVERS: Do you have the votes?

VICE PRESIDENT MIKE PENCE: We’re working it. Look, I have every confidence, as the President does, that as Speaker Pelosi puts the USMCA on the floor, it will pass. Look, we’re going to work with Democrats in Congress. We’re going to address issues raised by Republicans as we move forward on this. But make no mistake about it, I’m a guy that comes from the Midwest. I remember when NAFTA was signed into law and it was a real education for me through my career, where I always—just as the President is someone that believes in free trade, I always had a bias or reflexive bias for free trade, but I saw the way NAFTA hollowed out communities in the state of Indiana. We saw jobs hitting south of the border. The President made it clear NAFTA had to change. We renegotiated the deal in a way that puts American jobs and American workers first. And we have every confidence going forward that if Speaker Pelosi will schedule the USMCA for the floor, it will pass. We’ll address the issues in the Senate and we’ll put even -- even greater momentum into this growing and expanding American economy.

EAMON JAVERS: On China, is it a possibility that we get to a deal—there’s a big signing ceremony, we see the two Presidents and yet there are still some American tariffs remaining in place afterward? Or are all the tariffs going to be pulled out?

VICE PRESIDENT MIKE PENCE: Well, I think the whole issue of enforcement is part of what is being discussed right now, Eamon. Whether or not the, you know, President’s imposed –

EAMON JAVERS: Is that a yes or a no?

VICE PRESIDENT MIKE PENCE: Well, the President’s two favorite words are we’ll see.

EAMON JAVERS: We’ll see.

VICE PRESIDENT MIKE PENCE: But, you know, we put $250 billion in tariffs on. The President believes we’re in a strong position. We could put more tariffs on if we’re not able to reach an agreement. But the manner in which tariffs would come off is going to be a part of an enforcement mechanism and all of that is a subject of negotiations as we talk.

EAMON JAVERS: Let’s talk about Venezuela for a minute. Because the administration has been saying all this week, with all the chaos we have seen there, that all options are on the table. Does that mean an American military option is on the table in Venezuela? And do you believe the American people would support the use of American military forces in Venezuela?

VICE PRESIDENT MIKE PENCE: Venezuela was once the second most prosperous nation in this hemisphere. And because of dictatorship and oppression and socialism under Nicolas Maduro, now 9 out of 10 people in Venezuela live in poverty. 3 million people have fled the deprivation of that country. My wife and I met with refugees during visits to Colombia, during visits to Brazil. And it’s -- the poverty and suffering in that country at the hands of the Dictator Nicolas Maduro is unspeakable. And now with the violence that we saw on television this week, four people lost their lives --

EAMON JAVERS: Is that a reason to use U.S. military force? Is U.S. military force on the table here, too?

VICE PRESIDENT MIKE PENCE: Well, look, all options have been on the table now for two years. I mean in my first trip to South America, President Trump had already made it clear that we reserved all options in dealing with what literally is a failed state in Venezuela. Look, we hope for -- we hope for a peaceful transition of power. I’ve met with President Juan Guaido, the legitimate President of Venezuela, who was recognized by the National Assembly, the Constitutional National Assembly. One of the things that we bristled at this week is the suggestion there was a coup under way in Venezuela. The National Assembly was duly elected by the people. Juan Guaido was named President under their constitution. His efforts this week are all part of a process of the legitimate President of Venezuela taking the reins of control. We’ve marshaled diplomatic pressure. Now, we were the first country on Earth to recognize Juan Guaido as the legitimate President. I had the privilege of calling him the night before and telling him of the President’s decision. The next day he would take his oath. More than 54 nations have joined us in this cause. We’ve put unprecedented sanctions on individuals in the Maduro regime, on enterprises in Venezuela. And, as I said, President Trump hopes for a peaceful transition of power and we are going to continue to engage nations around the world diplomatically and we are going to continue to use the levers of this economy and economic sanctions -- until Nicolas Maduro goes and Juan Guaido is established as the President of Venezuela.

EAMON JAVERS: Your predecessor, Vice President Joe Biden, got into the presidential race this week. He says that your tax cuts for the rich, he says, haven’t worked and that people don’t notice them in their daily lives. Is he right about that? And how do you think the 2020 campaign is going to go when it comes to taxes and the economy? How are you going to push back on it?

VICE PRESIDENT MIKE PENCE: Well, I don’t often quote "The Washington Post," but I think they gave Joe Biden’s statement four Pinocchio’s. I mean the truth is, the jobs report this morning: 263,000 jobs created, the lowest unemployment rate in nearly 50 years, tells a different tale. But, most significantly--

EAMON JAVERS: He says it is going to be a battle for the soul of America. Do you think that’s right? Are you going to be battling for the soul of America as well?

VICE PRESIDENT MIKE PENCE: I think, look, I think the choice that we face in this country today is the choice between freedom and socialism, increasingly. President Trump has been advocating an agenda that’s built on the principles of freedom in the marketplace, lower taxes, less regulation, more access to energy, better fair-trade deals. But increasingly, whether it be Joe Biden, whether it be Bernie Sanders, whether it be Elizabeth Warren, and others in their party, they’re advocating a socialist agenda of more government, higher taxes and the same tired policies that created the malaise of the last administration where we saw less than 2% economic growth. Look, we really believe that you look at what is happening in this economy, and that we really believe that’s a great story to tell and I can’t wait to get out on the campaign trail, whoever the Democrats nominate and take our case to the American people.

EAMON JAVERS: Alright, Mr. Vice President, we’ll leave it there. Thanks so much for your time. We appreciate it.

VICE PRESIDENT MIKE PENCE: Thank you, Eamon.

EAMON JAVERS: And guys, back at headquarters, we’ll toss it back to you.