Joseph Robinette Biden Jr. on his Iowa campaign, medicare and taxes

CNBC Digital Video: Former United States Vice President And Democratic Presidential Candidate Joseph Robinette Biden Jr. Sits Down With CNBC Editor At Large John Harwood

Joseph Robinette Biden Jr.

Image source: CNBC Video Screenshot

WHERE: CNBC.com’s Speakeasy with John Harwood

Former Vice President Joseph Robinette Biden Jr., who has been on the campaign trail in Iowa this week, sat down with CNBC’s John Harwood on Thursday to discuss a range of topics, including trade, health care, taxes and President Donald Trump’s standing among world leaders. Biden has lagged behind Democratic presidential rivals Mayor Pete Buttigieg, and Sens. Elizabeth Warren and Bernie Sanders in recent polls of voters in Iowa, which will hold the first-in-the-nation nominating contest in February. Yet he has consistently led the field in national polling averages. A transcript from Speakeasy with John Harwood featuring Joseph Robinette Biden Jr. follows.

Subscribe to the Speakeasy with John Harwood podcast on Apple Podcasts or wherever else you listen.

The full interview Democratic Presidential Candidate Joseph Robinette Biden Jr.

All references must be sourced to CNBC.com.

John Harwood: Mr. Vice President, thanks for joining us.

Joseph Robinette Biden Jr.: Thanks for being out here.

John Harwood: How’s that bus tour? Had a wild exchange this morning.

Joseph Robinette Biden Jr.: Well, that was actually a little bit of fun. The fact is that we have a great bus tour. We have about 660 miles. We’re going in day six. We’ve had a couple thousand people show up. They’re enthusiastic. It was interesting the response of the crowd when that fellow spoke up.

John Harwood: Let me ask you a little bit about how you get your program passed. You’ve made the argument that Trump’s an aberration. If you beat him, you can then bring things back to normal, implement your middle-class economic agenda in the way that we’ve become used to. We’re now in a situation where Republican senators are repeating what is known to be Russian propaganda, including propaganda about you. How do you bring that back to normal?

Joseph Robinette Biden Jr.: Well, I don’t hold grudges, for real. You’ve watched me a long time. I think a lot of Republicans in the Senate are really under enormous pressure. When you have a Republican party and that old joke, this ain’t your father’s Republican party, saying that a poll showing they think he’s better than Abraham Lincoln, you know something’s wrong. And so I think there’s going to be a lot of people who are going to be prepared to deal with things that they know we should be talking about.

John Harwood: But to the point about not your father’s Republican party, some of the things on your tax and spending agenda are things that Republicans blocked when you were the vice president, before Trump.

Joseph Robinette Biden Jr.: Yes, I agree. But now we’ve had Trump. There’s two ways people get inspired, John. They get inspired by inspirational people like John Kennedy and they get inspired by very bad people, bad presidents like Donald Trump. And what people have now seen is that his tax policy has been a disaster for the middle-class, disaster for them, and that there is plenty of room to be able to do things that make a lot of sense. That’s why – look, I have always been at the view that the tax policy is not about punishing people.

It’s about giving everybody a shot, giving everybody an equal prospect. And so when I call for – for example, there’s overwhelming evidence now that the idea that the capital gains tax is promoting growth is just not the case. And so I think, for example, we should charge people the same tax for their capital gains as their tax rate is.

I think we should raise the tax rate back to, for example, I take it back to where it was before it was reduced. It could go higher, but at 39.5%, 40% basically if you have that as the capital gains, that raises, I brought along, I’m not going to bore you with it, but you’ve seen it, I brought along a graph that shows much money each of these things raise.

John Harwood: I have seen that graph.

Joseph Robinette Biden Jr.: But I think they’re all realistic now. I think that the possibility of saying to people, “Look, we ought to start rewarding work as much as we do well.” And you have a significant number of Republicans who aren’t multimillionaires thinking that makes a lot of sense.

John Harwood: Let me go back, though, to the divisions. A few years ago after the Affordable Care Act passed, I interviewed President Obama and asked him if he was concerned that we’re getting divided, not just by party and ideology, but also by race. He said, “No, people are going to say that the Affordable Care Act benefits white and black alike and that is a way that’s going to bridge that divide.” It didn’t happen. Do you think it will be easier for you to do that than it was for him because you’re a white man?

Joseph Robinette Biden Jr.: No. John, I think it did happen. Look at the 2018 election. I went into 24 states of over 65 candidates on healthcare. The thing about Barack was, I used to always say to him, “We ought to take a victory lap on what happened in Obamacare.”

He said, “We don’t have time.” Everything but locusts landed on his desk. It wasn’t until Republicans started taking it away that all of a sudden people said, “Whoa, I didn’t know that’s where I got that from.” And look what we did. We won back 41 seats, Republican seats in purple and red areas. Because people – you didn’t hear any Republicans out there saying, “I’m going to take away your preexisting condition coverage.” Because they figured it out. The one thing that Trump has done, he sort of pulled the band aid off and said, “This is who I am. This is what we’ve done.”

Whether it’s, for example, the idea that we’re in a position where there is no minimum tax on corporations that don’t pay anything, make billions and billions of dollars. Where I come from in Delaware, a lot of Republicans do, they think, “Whoa, that doesn’t work. That’s not fair.” Other corporations don’t think it is fair. So there’s a lot of things that have been exposed now.

John Harwood: Let me ask you about another aspect of the divide. What we’ve seen is a geographic divide economically. And more diverse, better educated, more digitally focused cities are doing better, higher incomes. Places like Chickasaw County here in Iowa are falling behind, lesser levels of education and more and more levels of cultural resentment, which has been to the benefit of the Republican party. What do you do about that?

Joseph Robinette Biden Jr.: Well, that’s also shifted too. The president has said, Trump said he’s going to take care of the forgotten man. He got elected and immediately forgot them. Look what Chickasaw County out here now. Basically, a conservative area in the past, but now all of a sudden they’re realizing his foreign policy is killing them, killing them. His failure to invest in any education is killing them. Being able to bring teachers, the attitude toward rural hospitals is killing them.

John Harwood: But we’ve seen farmers say, “I’m sticking with the president. He’s on my side. He’s giving us aid to compensate.”

Joseph Robinette Biden Jr.: Well, by the way, there are going to be people stick with them. Remember, we lost by about 172,000 votes. Okay? So you don’t have to win back, you don’t have to fundamentally change anything. But you’ve got to let people know that all the meetings I’ve had, I’ve talked about the incredible opportunity of rural America leading America through the 21st century, for real.

We’re the only country in the world – I know you know this, I don’t mean to sound like I’m being – but that has been able to take grave crises and turn them into real opportunities.

Global warming – agriculture is going to be the epicenter of the first, and I predict to you, the first area of zero net, zero carbon. Because we are going to change the way in which the technology’s changing, where farmers can make a lot of money not just growing and selling their crop, but with crop cover, with dealing with absorbing carbon. With setting up – for example, I know is not going to sound good on television, but you know there’s an awful lot of chicken manure in Delaware because it was a big area.

There’s an awful lot of hog manure and cattle. Well guess what? We’ve learned now how to pelletize that. Take out the methane, use it for energy and be able to sell this pure stuff that is not damaging the environment abroad. We’re going to see little factories springing up all over this area. Or for example, ethanol. Ethanol – the salaries ethanol plants are not 15 bucks an hour, $45 an hour. They’ve generated significant economic income.

John Harwood: Let me ask you about one specific farm issue.

Joseph Robinette Biden Jr.: Sure.

John Harwood: Farm exports have been hurt by the trade war. He’s had subsidies to compensate. If you become president, do those tariffs come off on day one?

Joseph Robinette Biden Jr.: Those tariffs come off in terms of farmers, but other tariffs may go on in terms of the violation of the stealing of intellectual property, the violating WTO – the World Trade Organization.

John Harwood: So for all the people saying that the tariffs are creating uncertainty and harming the economy, you think some of them are justified?

Joseph Robinette Biden Jr.: Well, for example, steel dumping is justified. It’s justified. The excess of steel, they dump it at a lower cost. It is in fact designed to drive down our steel market and our steel production. But the idea of us making the farmer pay for what they’ve worked like hell to do, provide and have a market in China, makes no sense. It’s not about the deficit. What it’s about is what they’re doing unfairly to change world trade rules.

And that’s why, John, I think, look, we make up 25% of the world’s economy. When we were prepared to bring along the other 40 to 48% of our allies with us, China has to listen. But this time, and I argue – well, you know my position – that we have to have labor and environmentalist at the table, at the table. And then what happens is we can begin to once again set the rules of fair trade internationally.

John Harwood: On the divide we’re talking about, Sanders and Warren have made a case for closing the divide with large universal programs that everybody benefits from. Given how popular Medicare and social security as universal programs are, why are they wrong?

Joseph Robinette Biden Jr.: Well because they’re not being honest about how much it will cost. If you take a look at where the democratic party is and where the American people are, they’re not supporting Medicare for all. First of all, it’s going to take their own admission four to 10 years for it to happen, number one.

It’s going to cost between 30 trillion and $40 trillion over 10 years. Additionally, it’s not realistic, it’s going to raise taxes on middle-class people.

It’s the exact opposite of the thing we have to do. I have a really bold plan. I’m taking what Obamacare, adding a public option to it, meaning Medicare for people who want to buy into that, or if they’re already eligible for Medicaid, they automatically get enrolled.

I’m further subsidizing the plans that exist under Obamacare, so the largest deduction you’d have to pay for a copay would be $1,000 in a gold plan and you’re allowed to keep your insurance if you like it.

John Harwood: Nancy Pelosi says Medicare for all is not an idea that she’s in favor of. But you’re saying it’s not a good idea even if you could pass it?

Joseph Robinette Biden Jr.: Well, I think it’s not a necessary idea. Theoretically, it makes sense on the merits. But the fact is there’s no way to get it done without a phenomenal – our entire budget for one year, every single thing doesn’t add up to what it would cost for Medicare for one year.

So we’ve got to be – look here’s what I’ve always thought, John. And you’ve interviewed me a lot, I know. It’s about whether or not we can do something big that can get done and benefit people. The one thing I don’t like about the Medicare for all, there’s about 160 million people who’ve negotiated and taking pay cuts to get better insurance coverage with their companies, and they like it.

John Harwood: Do you think it is a problem – economically, politically, even morally – for Democrats to be in a position of offering lots of free stuff?

Joseph Robinette Biden Jr.: I think there are important things we have to offer for free for people who need basic healthcare, basic education, basic needs that relate to how they can live their lives. I think for many people that has to be free. Look, he’s just cut back on food stamps, for God’s sake, going into Christmas.

John Harwood: Right. But you’ve seen the objection. People say, “Oh those Democrats, they’re just promising this and that.”

Joseph Robinette Biden Jr.: Well, but I think, here’s what I’ve seen, John. And I’ve seen – and the reactions with Republicans and Independents as well Democrats is there is certain things that you have to right the market a little bit here. And the market is that if you have all of the tax breaks, essentially all the tax breaks, all of the benefits flowing through the top one 10th of 1% – there’s never been as great a concentration of wealth, including going back to the great depression.

Ever. And so, one of the things that worries me most about that, John, is not just the political – the economic impact on people who are – the middle class is getting killed. The middle class right now is in a position where more than half of them don’t think the children will ever have the same standard of living they have.

John Harwood: But this is where the Sanders and Warren wealth tax comes in. It polls pretty well. Critics, Republicans, also some prominent Democrats say two things about it, two objections. One, it’s not workable. And two, it’s punitive. Do you agree with both of those objections?

Joseph Robinette Biden Jr.: Parts of the plan, those objections apply. But here’s the deal: my view is you have to reform the entire tax code. Not just have a single tax on a single group of people. For example, if in fact we’re able to – and I think we can get it passed – make you pay on capital gains – clipping coupons, your money making money – the same rates you pay in your regular taxes. That raises about $200 billion. If, in fact, you eliminate a thing called stepped up basis, which is not an inheritance tax. It’s a tax that is ten seconds before the person dies and leaves the non-tax – that’s about $40 billion.

John Harwood: That’s one of the things that you guys tried and couldn’t do under Obama.

Joseph Robinette Biden Jr.: No, but we can now because people – look, I’m going to be a little short here, but you know, once the carny show comes through with the guy with the pea in the shell, three shells and there’s no pea under any shell, any one of them – the second time it comes around, they kind of figure it out. They know that there are a number of things that don’t make any sense in the tax code, punish the working class, the middle-class and benefit unduly people who, in fact, don’t need those tax cuts. And here’s the point, John.

It is a political dynamic that allows the demagogues to go out and spread and split the country in two. It’s not just we need a middle class – I know the middle class joe and all that stuff – it’s not just being fair. It’s taking away the argument he’s used so well. “The reason why you’re not having your job is not paying as much because of all those immigrants. The reason why is …” and so on. We’ve got to end it. And there’s a way to do it. It’s within our wheelhouse to be able to do it.

John Harwood: Treasury Secretary Mnuchin today said that he opposed a financial transaction tax, which some in the race of supported, because it would destroy financial markets. Is that why you’ve rejected that idea?

Joseph Robinette Biden Jr.: No. I still think we should do that. That doesn’t raise the kind of money. I think we should have a financial transaction tax. But what I focused on what I think I could get done, get done quickly and pay for everything I’m talking about. Because look, the president has increased with his profligate tax cut to the very wealthy the deficit by 1 trillion, 900 billion dollars. It can’t be sustained. It can’t be sustained.

The argument I use when he passed it though, when I was against it, I was asked to go to the House and speak in the steps of the Capitol and what I pointed out was it’s all designed to be able to justify doing away with the entire safety net. “The reason why we have to cut the safety net now is we have this terrible deficit.” When they controlled the Congress before ’18, what was the first thing the budget committee do? They move to increase taxes on Medicare by over $500 billion.

John Harwood: But now, here’s what some Democrats are saying. They’re saying that we’ve seen that politically deficits don’t matter all that much. Economically, it’s actually helped Trump’s economy in the short-term. Given the experience – and that Trump promised a deficit-neutral tax cut, didn’t deliver it, hasn’t hurt him. Given all that, would it be okay with you to increase spending more than the amount you could raise taxes to pay for it?

Joseph Robinette Biden Jr.: It depends on the circumstance we find ourselves when we get elected. Look what we had to do. We, in order to be able to get out of the financial recession, which was the greatest recession, sort of a depression in American history, the President asked me to chair the recovery act, which had $900 billion in it, and we did it. Most even conservative economists acknowledged it probably saved us from a depression. But what we did at the same time was we were able to invest it in things that in fact grew the economy at the same time.

That’s the exact opposite of what Trump has done. What he has done hasn’t grown the economy. It hasn’t grown the economy. And so, there are circumstances where you have to spend in order to generate economic growth, but there has to be a way that you can catch up to that. Otherwise, you end up in a situation where you have to make terrible, terrible choices.

John Harwood: Do you still favor the balanced budget amendment that you voted for in 1995?

Joseph Robinette Biden Jr.: No, because we’re in a different place now. The balanced budget amendment in the middle of it is basically going to be, we’re going to maybe – I hope it’s not true, but we’re likely to inherit a recession, at least a significant economic slowdown. That doesn’t make sense. But I do think –

John Harwood: Do you think that vote was a mistake?

Joseph Robinette Biden Jr.: No, not then. Everything’s context. One of the reasons I like giving an interview with you is you know the context. I’m not being a wise guy. I’m not being a wise guy. Doesn’t mean you agree or disagree. But you know the context. 1995 was a very different place than we find ourselves today. And so, this is about how do we grow the economy. For example, it makes a lot of sense that we say that okay, why is it if you give a charitable contribution – I won’t say you, I mean you editorially – someone in the 20% tax bracket gets to reduce, gets to withdraw, take a 20% break for that. Well, somebody who is in the 40% tax bracket, they in fact get to deduct 40% of it. Well, why is that? What does that do? I limit, for example, no tax break that you get. No deduction can you take that’s more than what 28%.

John Harwood: Another thing Obama tried to do, couldn’t get done.

Joseph Robinette Biden Jr.: But we’ll get it done. Because things have changed.

John Harwood: Right. A couple of economic points quickly, cause I know our time is short. Senator Warren came out today with a new proposal on limiting mega mergers. Do you – looking back on your time in the Obama administration, do you think you guys were too slack on antitrust enforcement, and that concentration among big corporations is a big economic problem?

Joseph Robinette Biden Jr.: It is a big economic problem. And one of the things that I’ve said along the way here is I would do as President is set up within the Justice Department an entire new entity to go back and look at the mega mergers that have occurred and those that are being proposed to occur.

Whether or not it’s in the telecom industry, whether it’s in – whatever it is. There’s a lot of concentration of power. And make a judgment whether or not it made sense for that to happen. And so, one of the things that always happens from one administration to the next, even with the same party is you go back and you look at the consequences and what was done.

I think that there’s too much concentration of power. And I don’t disagree with Elizabeth’s point – generic point – how we go about making that judgment remains to be seen. I don’t think you go about making judgment by picking a particular company. I think you talk about what happened when we concentrated the power.

John Harwood: Do you think you guys should have done more in the Obama administration?

Joseph Robinette Biden Jr.: Look, remember, everything landed on the President’s plate but locusts. And so, we finally got to the place – all kidding aside – we finally got to the place where we got not only the car out of the ditch and kept from going over the cliff, we put new tires on it. We began to tune the engine.

It was running 40 miles an hour. We were ready to make it run faster. And we lost. The Democrats lost the election. And so we’re faced with a different problem now as to how do we go back and regain the momentum that we’d gotten going. There’s a lot of things you can go back in every administration and say, “Well, maybe would have done something differently.” But at the moment, there wasn’t much else that could be done at that time.

John Harwood: President Trump has been very strong in ripping Fed chair Powell. Do you think Powell is doing a good job, and is he the kind of person you would keep or put on the Fed?

Joseph Robinette Biden Jr.: I’m not going to get into the personalities, but I do say this: the President should not be trying to pressure the Fed. We did not do that. That’s not what you – that’s supposed to be an independent entity out here. It’s just like how he pressures the military and intervenes in the chain of command. And it’s his way of abusing power across the board.  And it’s a big mistake. A big mistake, and I would not do that.

John Harwood: You’ve got an ad out today that says the world’s laughing at President Trump. Very strong ad on the wake of this recent NATO meeting. Do you think – and President Trump responded not directly to the ad, but he said, “All we found over there was deep respect for the United States,” in the meeting. Do you think he actually believes that, or do you think that privately, he fears that he’s being mocked, ridiculed, that he’s not respected?

Joseph Robinette Biden Jr.: How could he not know that? How could he not know that? He turned around and he called the Prime Minister of Canada two faced. He turned around – the idea he doesn’t know that. I mean, look, this President thinks if he says the lie long enough and often enough and repeats it enough, somehow people will believe it. Look, the reason why is – I’m not happy that the President of the United States got mocked. But what it says is we lack the respect of the rest of the world that we had in spades before.

John Harwood: Well, here’s the related question then. If he does know, and the question is does he care? And I ask for this reason. First of all, you may remember John Kerry who endorsed you today, got mocked in 2004 as being too French. A couple of the people in those videos where Emmanuel Macron and Justin Trudeau. Do you think as an elite, non-elite matter, he doesn’t care?

Joseph Robinette Biden Jr.: I don’t think it’s about being elite. I think it’s about being smart or not so smart. I think it’s about being mean spirited or not mean spirited. It’s about coddling Russia is trying to break up Europe and NATO or sticking with our friends.

John Harwood: Well that’s the point I was getting to, which is that another reason not to care. Those people in that video were leaders of NATO. Vladimir Putin wants NATO weakened and divided. Nancy Pelosi today when she was announcing the drafting of articles of impeachment said that in essence, the Russia 2016 scandal and the Ukraine scandal are different pieces of the same story, that all roads lead to Putin. Do you see it that way yourself?

Joseph Robinette Biden Jr.: I do, in Europe. Absolutely, positively. Putin has had – I know Putin. I’ve had private time with Putin. I’ve spent time with him. Looked in his eyes, as they say. This is a guy who has one overarching desire: to break up NATO and to have America pull away from Europe, the Euro Atlantic Alliance.

Because that’s the one thing he cannot penetrate if it’s strong. But if you have 28 nations all going their own way, he becomes significantly more powerful. And what happens when you live next door to the bear and you don’t have anybody protecting you and doesn’t have that shotgun out to make sure the bear doesn’t get you? Then, in fact, you begin to make accommodations.

John Harwood: And why do you think President Trump wants to help him?

Joseph Robinette Biden Jr.: I don’t think the President of the United States today has any notion of geopolitical concerns. I don’t think he – look, this is the guy who said – and I thought at first it was kind of a joke, but it wasn’t. Remember he said, seriously, a couple of months into his administration, “You know this job’s harder than running a real estate empire.”

He knows nothing about foreign policy. And he knows nothing about nuclear deterrent, he knows nothing. I mean he has demonstrated – and look what has happened. You know, I actually, privately, encouraged a number of generals, senior state department people, foreign policy experts to stay in the administration. Don’t leave. Look what’s happened.

John Harwood: But is your judgment, then that it’s ignorance, that he doesn’t understand geopolitics, as opposed to he is purposely helping Russia and Putin because he’s compromised in some way?

Joseph Robinette Biden Jr.: All I know is the results the same. I can’t read his mind. He has done things that seem to me to be completely contrary to reality. When he stands before the whole world at a G 20 meeting and says that I believe Vladimir Putin did not interfere in our elections and these 18 intelligence agencies that work for us, in fact, do. They think he did, but I think they’re wrong. What is that about?

John Harwood: That’s the question.

Joseph Robinette Biden Jr.: I don’t know. But the result is the same. It has drastically weakened our standing around the world. Poll came out not long ago, Gallup and Pew showing that we ranked just below China in respect and just above Russia. What’s going on? Look, when we are not leading – we’ve led the world by the example, not just of our power, but the power of our example. And when he – there’s three things I’ve learned.

I’ve learned Vladimir Putin doesn’t want me to be president. That’s why he’s spending a lot of money on these bots trying to tell any lies about me. I’ve learned that Kim Jong-un thinks I am a rabid dog, should be beaten to death with a stick, and he gets a love letter from Trump.

I learned that Donald Trump doesn’t want me to be the nominee. I cannot – this President is the most unusual politician I’ve ever worked with. And he doesn’t seem to have any sense of who we are. He’s ripping the soul out of this country. I mean, he really is. I sometimes sit back and wonder, “Whoa, I don’t know whether” – well, I shouldn’t speculate because I don’t know, to be honest.

John Harwood: Mr. Vice President, thanks so much.

Joseph Robinette Biden Jr.: Thank you, John. Really appreciate it.

Know more about Russia than your friends:

Get our free ebook on how the Soviet Union became Putin's Russia.

Q3 2019 hedge fund letters, conferences and more



About the Author

Jacob Wolinsky
Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Prior to ValueWalk, Jacob was VP of Business Development at SumZero. Prior to SumZero, Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver