Leon Panetta discusses John Kerry

Published: July 27, 2004

Here's my very simple question: What does John Kerry stand for? Maybe our next guest has an answer. This is Leon Panetta, former Clinton White House chief of staff. Mr. Panetta, I have a high regard for you. I just want you to know that. I'm just asking an honest question. What exactly does Mr. Kerry stand for?

Mr. LEON PANETTA (Former Clinton White House Chief of Staff): Well, I think he stands for trying to bring leadership and decision-making to the issues that we confront abroad as well as here at home. I mean, you know, there are two great issues, as far as I'm concerned. One is obviously national security and how we deal with Iraq. The other issue is how we deal with the deficit here at home. And I think on both of those, Kerry's indicated that he wants to confront those two issues, which is something, very frankly, I think we need to do if we're going to protect the lives of our children.

JIM CRAMER, co-host: Right. Well, Mr. Panetta, some of us are old enough to remember the 1968 election, where Nixon said, 'Look, elect me. I got a plan for Vietnam. Don't ask me. I got the plan, though.' It worked because you didn't have to put the challenger's feet to the fire. How much of what Kerry's strategy is to say, 'Hey, listen, just elect me. It'll be good'?

Mr. PANETTA: Well, I think, you know, a lot of it is obviously having confidence in whoever you elect to make the right decisions. On Iraq, a lot of this rests with the president and with events in Iraq. If that continues to be shaky, then obviously it plays to Kerry's benefit no matter what he says, no matter what his plan is. On the economy, obviously if the economy is sputtering along, that, too plays to Kerry's benefit.

KUDLOW: All right. Mr. Panetta, last night, Clinton, Gore, Carter, everybody told us how bad things are in the country. This morning, the Consumer Confidence Survey was published. It's the highest in two years, based on improving job conditions, so my question, sir, is, aren't things improving? Didn't the Bush tax cuts promote economic growth, and how does the Kerry campaign try to bad-mouth an economy when the public can see clearly that things are getting much better?

Mr. PANETTA: I don't know why you guys keep forgetting about the mortgage that's out there and the fact that we're running a $500 billion deficit. I mean, that was what conservatives really cared about when I was in the Congress, which is how to balance the budget. With that kind of debt, there's no way we're going to have a strong economic recovery because interest rates are going to continue to be pushed up and we're going to lack the resources to deal either with defense or domestic needs. I mean, he's making a terrible mistake. The president hasn't vetoed one spending bill in the Congress, for goodness sakes.

CRAMER: Well, Mr...

Mr. PANETTA: I think that tells you a lot about what's happening with our economy.

CRAMER: Well, I completely agree with that, Mr. Panetta. I think that the problem I have with it is is that I'm a guy from the markets. I'm a guy who stands for making money in the markets, not just the stock market, but the bond market, and frankly, I would have thought at a certain point that the bond market would have gone haywire. But here we are, 4.6 on the 10-year. I thought that given the budget deficit, we'd be at 6.6. That was wrong.

Mr. PANETTA: Well, you better read The Wall Street Journal because they're saying that Japan and those that are buying our bonds and our securities are beginning to drop off because they're worried about what's going to happen here in terms of our ability to meet our debts. That's the kind of trouble we're in when we borrow from foreign investors in our economy when we run these huge deficits and when we fail to, frankly, bring any fiscal discipline to our economy. That's a major problem, as far as I'm concerned. We should have learned the lessons of the '80s and '90s, that you need to balance the budget.

KUDLOW: Mr. Panetta, I am actually prepared to agree with you, sir, that President Bush should have been vetoing some excess spending bills. I'm going to concede that point in good faith. I've made it many times. But I do want to ask you this: Insofar as Mr. Kerry's program to reduce the budget deficit, there's an article out by a former Clinton economist named Leonard Burman--he's now working at the Urban Institute --who has added up the Kerry numbers on taxes, on health care, on education and so forth, and he says that the Kerry plan will actually increase the deficit by $1.2 trillion. What is your response to this?

Mr. PANETTA: Well, I'm sure you're going to see all kinds of views as to what the numbers add up to. All I know is that John Kerry is saying that he wants to pay for his initiatives. On health care, he's saying we ought to get rid of the tax cut for those above $200,000. That will pay for the health-care provisions. On other things, he's basically saying we've got to be able to cut back in order to pay for initiatives. I don't hear George Bush saying that at all. He doesn't talk about paying for anything. We're borrowing for defense, we've borrowed to provide the tax cuts, we're borrowing for spending generally. When is he going to be concerned about what's happening with the deficit?

CRAMER: All right. Mr. Panetta, just--I don't want to leave it on too contentious a note. I caught the replay of Clinton--it was too late for me on the original--and he's gotten to be a better speaker, hasn't he?

Mr. PANETTA: Who's that?

CRAMER: Clinton. He was a better speaker last night than when he was president. Just my view.

Mr. PANETTA: Listen, when you're relaxed, and he's relaxed...

CRAMER: Yeah.

Mr. PANETTA: ...he's going to be a better speaker.

CRAMER: Yeah. I got a feeling when there's not a lot on the line, you can really give a stem-winder.

KUDLOW: Leon, one last point, very quickly. As you've undoubtedly heard, in the stock market, many analysts are sending charts around that say when Kerry's polls go up, stock market prices go down, and they're worried about higher capital gains. You cut the capital gains tax. Why raise it now?

CRAMER: Yeah.

KUDLOW: What's your response? The stock market seems to be very much hostile to Kerry.

Mr. PANETTA: You know, I know the guys in the stock market. I was on the New York exchange and on the board, and I dealt with a lot of people there. You know, one thing I find about the stock exchange is no matter who's president, they always manage to find a way to make money, so I'm not worried about the stock exchange boys.

CRAMER: There you go. All right. That's Leon Panetta, former chief of staff of the Clinton White House. Good to see you, sir. Enjoy the next couple of days.