CNBC Transcript: CNBC’s Jim Cramer interviews U.S. Senator Elizabeth Warren from CNBC Institutional Investor Delivering Alpha Conference
Q2 2020 hedge fund letters, conferences and more
WHEN: Today, Wednesday, September 30th
Interview with U.S. Senator Elizabeth Warren
Jim Cramer: Senator Warren is always fabulous to see you. I know you have thoughts some of these big issues. I want to get right to. I want to get right to it before we get to the substance can we just get to what I regard as being the blather, any reflections on last night since. At one point, the President did invoke I've learned my lesson here and Boca name that I didn't think was correct.
Senator Warren: So, you know, my reaction last night is Donald Trump demonstrated again why he should not be President of the United States of America. And look, you didn't have to watch the whole thing. All you had to do was just see that little clip, when he was asked to denounce white racism. Right, white supremacy. And what did he say he told the proud boys to stand by. That should do it for every person in this country. That is not the America that we want to be the America we want to be is an America that lifts up all of us that creates opportunity for all of us. Donald Trump just made it clear that's not who he is. And just in case that didn't seal the deal. His closer. That sounded a lot like to me that he was encouraging his supporters to go out and engage in voter intimidation, to keep American citizens from voting and getting their votes counted. That one really should have done it. So, you know, in that sense, to me, really short debate, two clips right there where Donald Trump made it clear that he cannot be trusted. As the leader of our nation.
Cramer: Okay, understood. And I think that there's an American way. And I think that we all deal with the American ways so now let me get to something that you are the expert on. I am struggling with your views, because your views actually are very similar to what I regard is Ronald Reagan's views, actually when it comes to the disparity of wealth between CEOs and workers but I need to know do you think that it's possible, like, Marc Benioff from Salesforce says that business can be the greatest force for social change.
Senator Warren: I believe that we can make change. But let's be clear about this. We live in a democracy and the whole premise behind that is it's one person, one vote. And that's how we're going to create a set of rules that work for all of us right it's that simple. But notice I could hear you before I came on and what were you talking about you're talking about Donald Trump's taxes. Right. And you were doing this fine lawyerly conversation about. Did he evade or avoid right did he stay on this side of the line, or that side of the line, frankly, Jim, it's the wrong question. The question is, how did we end up with a tax system that lets Donald Trump claim to be earning millions and millions and millions and millions of dollars. And it's a baby. Here are the loopholes that Donald Trump and people just like Donald Trump can slice through. How did we end up in an America where the average nurse pays what 15, 18 $20,000 in taxes the average teacher pays that kind of money in taxes that workers across this nation, literally, they paid 10s of thousands of dollars in taxes. People have quite moderate incomes middle class America, but Donald Trump can pay $750 in taxes. The problem here is that the system itself is broken and you gotta ask why and you want to know why. The reason is because of the Donald Trump's of the world. The people who have used their money and used their influence to get Congress to keep rewriting those laws, you know it's not like a bunch of lawmakers woke up one day and said, Gosh, we can help up nurses and teachers and and and and people who stopped grocery store shelves, or we could help out real estate developers, I know, let's give everything to the real estate developers and take it all away from everyone else. That's what's wrong with the system. It is the capture of government by the rich and powerful to make themselves richer and more powerful.
Cramer: Senator Warren you're there. Is there a way to actually break the stranglehold you're you are fabulous professor, and you understood the code. You know how hard the code is what happens if you took a regular approach and just said you know what the code is no good. And what we're going to do is have everybody pay the same tax on everything, real estate stock, it doesn't matter. It's simple we make the code, two pages, America becomes a richer wealthier and absolutely more distributed, a distributed country. And I think you and I would agree that that's the way that should be the American way.
Senator Warren: I'm all for rewriting the tax code, are you kidding, I mean, let's go. But the point is, we've got to break the influence of rich folks who make their voices heard, not a little bit, not a medium sized amount, not even a huge amount. They make their voices heard in Washington louder than anything else, you know, what was the one legislative achievement of Donald Trump, and the republicans do remember the one thing they managed to get through Congress, a trillion dollar tax cut that went largely to millionaires and billionaires and giant corporations and remember all those promises they made about what it was going to do for the economy and so you remember what the one thing actually did that you can measure is that it drove down revenues for the government to be able to run everything else. And, and that's the thing. Jim about this. It's not just that Donald Trump doesn't pay taxes, it's somebody else has to pay to keep this country going. Somebody has to pay for the roads and bridges. Somebody has to pay for the military. Somebody has to pay to keep our country working and nurses pay a big share teachers pay a big share grocery store clerks pay a big share and Donald Trump, just pays a tiny little bit. And that's because why money,
Cramer: Do you still believe strongly in your idea that there should be a levy on accumulated wealth and your two cents on the dollar 2% on the porch is about 50 million to half a percent about 1 billion is that a way to get at it.
Senator Warren: Sure. It's one of the ways we can do. Come on, Jim, people have been paying wealth taxes across this country forever. They're just usually called property taxes. And all I'm saying is for the top one 10th of 1% this tiny little fraction at the top, to say you know what, when you pay your wealth tax, it's not all just real estate for you. Let's include the stock portfolios and the diamonds and the rimbrant and give us just two cents, three cents if you're a billionaire on the dollar. And that will produce enough money because ultimately it's who's gonna pay that would give us enough money to provide child care for every baby in this country age zero to five universal pre K, it would give us enough money to pump billions of dollars into K 12 enough money to cancel student loan debt enough money to put $50 billion into historically black colleges and universities and enough money to make four years at a public institution tuition free for every kid who wants to get an education, technical school two year college four year college in other words, what it means to sense and invest in a whole generation of young people, we could build such a future in this country.
Cramer: Well let me push back in a realistic way, but you're talking about a Jeff Bezos paying huge amount you're talking about a Steve Ballmer pay huge amount you're talking about very powerful people. Mark Zuckerberg paying huge amount. These are people who are going to fight you tooth and nail they have incredible resources, what do you do, do you just decide, you know what I am going to beat these guys. Senator Warren, they have unlimited firepower.
Senator Warren: Wow, did you hear what he just said, This is about power. And you've just said, Be realistic in this democracy in 2020 boy folks in Washington, need to listen to Jeff Bezos because he's rich and not listen to the school teacher or the nurse or the grocery store clerk, because after all, they're not. That is not how democracy is supposed to work. And I'll tell you this, when you know that
Cramer: you don't. I mean, you understand that. Look, I, I want the school teachers I want to go back to the senator wittings day when I was doing. He was my professor, where we want to do guaranteed income for all these people with no taxes i mean i think that these people would should even that was Nixon's plan I mean, he'll think about the people I'm talking about, you know, Nixon favored higher taxes for the rich and lower taxes for the poor, or for the working poor Reagan favored higher taxes for the rich and lower taxes for the working poor. What the hell happened in our country that two of the most, I mean you can't you're supposed to mention Nixon but you know both of those presidents favored a better redistribution that we have now, how'd that happen.
Senator Warren: Well partly Citizens United. It's corruption in Washington. It's the influence of money and understand it absolutely is it's about money for campaign contributions, but it is so much more. It is about the lobbyists, it's about the bought and paid for think tanks. It's about the experts who are taking money from the rich folks and from the industries. It's about these industry groups. It's about the fact that big businesses and billionaires have figured out, they're gonna make more return on their money by investing in twisting the rules in Washington to help them. And to help them keep more of their money, help them deregulate so that they can externalize their costs. They figured that out and they are just pushing them. The pedal to the metal on this. But I tell you Jim I’m not giving up.
Cramer: I know you're not, I know you favorite breaking up tech little lightning round here, what do we do with alphabet, Google.
Senator Warren: Got to break it got to break these guys up. And the reason for this understand on every one of them. The very best part of what we can make work in this economy is when you've got markets that are working. And that means you got to have competition. So these guys who engage in these anti-competitive practices, the guys who engage in monopolistic practices, the guys who crush or buy up their competitors and just keep getting bigger, understand this. It's not only what they're doing. It's what they're doing to the rest of the market. It means we'll lose the vibrancy in the market, it means we lose the creativity, you've got a great idea, but you're going to go up against Amazon, you've got a terrific notion but you're going to be up against Google Good luck to you. And that's the whole point. that's the role of government, it's to blow the whistle and say these guys when they get too big when they get too dominant in market. Nope, can't do that. Got to break them apart, and get more competition going Cramer: ok well how about the banks, I mean we're hearing, we'll get there isn't a day that goes by that we don't read about a giant fine, which of course is paid by the shareholders senator, we read about how they may not be able to find the limited pool of black talent at these banks I mean we're, which of course is wrong. I don't understand how the banks, stay this size when they obviously can’t Avoid chicanery.
Senator Warren: No and what you are exactly right. Part of this lay, again, at the feet of the bank regulators who are far more interested in watching out for the banks and helping them make sure that they get plenty of profits. But part of this is laid truly at the feet of our willingness to let the giants call the shots in Washington. And that's true whether you're talking about banking or you're talking about tech, or you're talking about big AG. It's the power and the money of these giants who are here. Who are saying, “no, no, no. We like business as usual.” You know, every time someone talks about nothing ever happens in Washington, you know, except that giant tax cut that Trump got through, and they use words like gridlock. Understand, this isn’t about gridlock. This is about the system works great for those giants. Because nobody's in there to say we're going to enforce the antitrust laws, or we're going to toughen the antitrust laws, or we're going to stitch up those tax loopholes. And that's what we got to do.
Cramer: Okay, so let's think about this for a second. You ran for President. Everything you articulated was right there. I know a huge number of young people, I don't know as many older people – I know a huge number of young people who swear by you. Why did you not win the nomination?
Senator Warren: Well, I wish I knew the answer to that one, but I lost. But look, I'm not sorry I ran because the things I argued for are still out there. The problems we have are still every bit as big as they were. Indeed, with this COVID-19, it has even gotten bigger. Inequality in this country, I talked about it every day when I was out on the trail. But look what we see now. Communities of color hit disproportionately hard by COVID-19. Just peel back that layer just a little bit and what do people start to understand finally? This has to do with generations of systemic racism, and it has to do with a black white wealth gap, a health gap, an entrepreneurship opportunity gap, an education gap, a housing gap. Racism that has pervaded the system and kept us from being the America that we should be.
Cramer: And Senator, you left one out, of which I agree with all those, but you left one out. Gender diversity, okay. How about this statistic that I got from – I'm familiar with because I used to own it. We are number 17 in the world in the percentage of female board members. How pathetic is that given the fact that women run 40% of the household spend -- of their finances, but almost 100% of their buying. How did this number occur? Why is that number occuring?
Senator Warren: So look, we know the data on this. And that is folks who've got power, don't give it up easy Jim. If you're part of the club, you keep that power close and that means we have a lot of white men who are holding on to the power they've got and they don't plan to share it. They don't plan to share it with women, they don't plan to share it with African Americans, they don't plan to share it with Native Americans, they don't plan to share it with Latinos. That's the way this works. But here's the thing, Jim, there’s more votes –
Cramer: But here’s what confuses me. I know you and you understand markets. The most highest-rated, meaning the highest PE multiple stock, in the food group is McCormick, which also has the greatest diversity in the boardroom of any company in the food group. Now, is that not cut and dried? That if you want to do well, you become diverse. So what are these people missing? I didn't call them clowns out of respect of last night’s debate. Why is it that these people at these boards don't look at McCormick and say, “hey you know what? They're the most diverse. Most women, most Latino, most African American and they are doing better than everyone else.” Why can't people see that? You and I see it.
Senator Warren: You know Jim, I'm just going to underline your point because I think you're so right on this. I think that the evidence showed coming out of the 2008 crash that companies that had more than one woman on their board, companies that had women in well placed positions in the U.S. and around the world, those companies did better. They did better in terms of not crashing so hard and making it out faster on the other side. It is the reminder that you don't pull together a diverse team out of some notion of trying to engage in charity for someone. You pull together a diverse team, because a diverse team is what will make you strong. It is what will make you profitable. It is what will make your country -- your company robust and make your country strong. So, you do it out of – but that's not how these guys look at it. You know, sometimes it takes getting a little bit out of your comfort zone, running the risk of making a mistake. And a lot of folks don't want to do that. Not the guys who already had the power.
Cramer: You have proposed something that is so brilliant. Small business equity fund. A fund to close the gap, create 100,000 new minority businesses, your price tag is only 7 billion. Senator Warren why isn't that done right now?
Senator Warren: No kidding.
Cramer: Let’s get it done.
Senator Warren: Let me just lay it down so I'm sure everybody's following on this. So, what the data show is a lot of people talk about that Black-owned businesses need access to be able to borrow more money. But when you look at the comparisons with Black-owned businesses and white-owned businesses, what you see is it is no. They need some seed money, they need some equity to get them started and to cushion them in the early parts of getting those businesses launched. And that equity usually comes from accumulated family wealth. And where does that come from? It comes from homeownership. So, watch what happens here, Jim. For decades, decades in America, African Americans were just largely cut out the opportunity to buy homes. It was redlining. And cut out of the federally insured mortgages. And that wasn't just an idea. It was literally the law of the United States into the mid-1960s. So, as white families were building up more wealth through their homes, and building up more intergenerational wealth – that is you know if grandma and grandpa could stay in the home until they died, they pass it on to the grandchildren or when they sold it there be a little more for the next generation -- that becomes the spur to be able to start a successful small business. African Americans just got cut out of that. For $7 billion, we could close that gap and African Americans, people of color who have been cut out for generations, would have the same kind of opportunity not just to start a small business but to start it and help it succeed.
Cramer: Who's fighting that, Senator Warren? Who is fighting something that I think, again, is the American way? Which is equal opportunity, it's in the Constitution. You know the Constitution better than anyone who ran for President because you were a tremendous professor of law. I don't get who could be against something that is deeply ingrained within the Constitution.
Senator Warren: Mitch McConnell, Donald Trump, every single sitting Republican senator that enables Mitch McConnell and Donald Trump. And I'll tell you exactly how. Every proposal, like that, that I put on the table and others put on the table, cannot get a vote in a Republican controlled Senate. I can't even get it out there for a floor debate to talk about what it would mean, and to be able to bring in Republicans and Democrats to vote for it. Mitch McConnell refuses to bring an idea like that, a bill like that and so many others, to the floor for a vote, and it goes back to what we talked about earlier. Why? Because he is there to serve the interests of the richest and most powerful. And if you put $7 billion of taxpayer money into equalizing entrepreneurial opportunity for people of color and for whites – that’s $7 billion – that's going to have to come out of maybe their taxes. And they don't want any part of it. And besides that, they don't want the competition. They like things the way they are.
Cramer: I want to leave a constructive note. Once again, what companies do the best? Take a company like Constellation Brands. They own Modelo and they own Corona. What do they do? They set up a fund for Latinos who have good ideas for any beverage. There. Why do they do it? Do they do it just because they are kind? Well, they happen to be kind, but they do it because they make more money for shareholders. How do we in a constructive way – you and me – get this done? How do we tell the tale that if you are more diverse, if you help minorities, if you invest in the community, you are going to have a higher stock price? That is true, Senator Warren. How do we get it out?
Senator Warren: So, I love it. You keep talking about it, but understand this, Jim. Our responsibility is to change our government so it isn't just working for the rich and the powerful. We want to build opportunity in this nation. Opportunity for everyone. Not opportunity that is different depending on the color of your skin, or your gender, or who you love. We want to build opportunity. That's what builds the best America. And the way we do that is we build opportunity by making these kinds of investments. By understanding how racism and sexism and anti-Muslim attitudes have kept people from having those chances. It is the job of our government to say we're all going to pitch in a little so every kid gets a chance to build a future in this nation.
Cramer: Senator Warren, I want to thank you so much. I think a lot of what you talked about is called again, I use the term American way, because that's how we grew up. That's what we learned. Somehow it got a little off track, but I know that you have strong convictions and a lot of these ideas. I'm sure there's pushback from hedge fund managers, pushback from the people at these big tech companies, but I think these must be discussed and never forget If you want your stock price higher be diverse. Thank you so much, Senator Warren. Always great to talk to you.
Senator Warren: Always great talking to you, Jim. Take care.
