I recently sat down with George W. Bush to discuss his new book. With the greatest respect to the former president, he and I disagreed on a number of issues, and let each other know about it. In particular, the stock market's scorecard of his two terms, the collapsing dollar, and Too-Big-to-Fail Bailout Nation. We'll feature portions of the interview tonight and tomorrow night on CNBC's Kudlow Report at 7pm ET.
LARRY KUDLOW, host: President Bush, welcome back to THE KUDLOW REPORT, sir.
President GEORGE W. BUSH: Thank you, sir.
KUDLOW: You know, reading your book, and particularly the last chapter, the reference point on the financial crisis, you talk a lot about the stock market as a judge of the policies--TARP and so forth--and I wanted to start there, in the broader sense. When you took office, the Dow Jones was 10,600. As time passed and we hit the height of the Bush boom, you went to 14,160-something on the Dow Jones.
Pres. BUSH: Mm-hmm.
KUDLOW: By the end of your term, you were down to 8300 as we were still enmeshed in the financial crisis and the recession. Just let me ask you, is that a fair report card? Is the stock market a fair report card on the vagaries of the Bush presidency?
Pres. BUSH: No, I don't think so. No, I don't think so. I think that the fairest report card is for people to analyze the situations in which I found myself, the economic situations, and what my administration did about them. So, for example, a country was into recession right after I was sworn in, a dot-com bust had taken place. Then the attacks of September the 11th, and then of course the great financial meltdown in the--the fundamental question facing any presidency is how do you deal with the hand you're dealt? And in my book I walk through the different decisions I made to put economic growth in place and/or to make sure the economy didn't completely fail.
KUDLOW: Well, that 14,160-some was an all-time high, and that did occur on your watch. But now you've gone from 8300 when you left office, now we're at 11,177 as of today. Now, what does that tell you?
Pres. BUSH: It tells me you pay a lot of attention to the stock market. I don't.
KUDLOW: Stocks reflect the whole economic situation and many times the health of the country.
Pres. BUSH: Well, no, I understand. Understand. But when I was president, I didn't sit around saying, `I hope the stock market goes up.' I was sitting around saying, `How do we create an environment in which people are willing to take risks and small businesses are willing to expand so people can work?' And the cornerstone of my economic policies, when I first got elected, was cutting taxes on everybody on who paid taxes. And what's interesting, and I don't think a lot of Americans understand this fact, is that, one, most new jobs are created by small businesses; two, most small businesses pay tax at the individual income tax, or many small businesses pay tax there.
KUDLOW: Mm-hmm.
Pres. BUSH: And therefore if you lower taxes, it gives small businesses more money to invest.
KUDLOW: Do you think...
Off-Screen Voice: Sorry to interrupt. One second. (Unintelligible)(Network difficulties)
KUDLOW: All right, so now we're at 11 thou--we're over 11,000, 11,100-something, as of today. And it looks like that does show some economic progress. I want to get your take on that. There's a big rebound from where you left it and where it is today.
Pres. BUSH: First of all, just so you know, I didn't really use the stock market as a gauge to whether or not my economic policies were successful. I thought--I mean, I focused on jobs. I wanted people working. And to the extent that Americans aren't working, we ought to be concerned. And, you know, hopefully look, and I'm not an economist. If I were an economist, I would have three hands, `On the one hand, on the other hand, and on the third hand.' But I was a person that was concerned about creating an environment in which people were willing to take risk so that jobs would grow, and I believe the tax cuts that Congress passed and I signed helped stimulate growth in the midst of a recession and after--right after the recession, right after an enemy attack, which hurt our economy.
KUDLOW: I want to get back to the tax cuts, of course, later, but let me just stay, if you will, with the stock market theme and narrow it down. We had this week the GM IPO, which is a gigantic front page story.
Pres. BUSH: Yeah.
KUDLOW: OK, now, you had started that off, in terms of the government bailout, with $13 billion, I believe, for GM and Chrysler right at the end of your administration.
Pres. BUSH: Right.
KUDLOW: The total bailout became $50 billion. Now, supposedly the new GM sends an IPO out, and it's very well-subscribed. I want to ask you what your thought--what does this GM IPO say about bailout nation, about companies coming back from the abyss, and about government intervention?
Pres. BUSH: Well, as you mentioned, the last chapter in my book deals with a financial meltdown. One of the decisions I had to make was whether or not we had to let GM fail a--right at the end of my presidency, and obviously it'd be at the beginning of the--of my successor's presidency. I--we put in place what resembled debtor and possession financing; in other words, they made kind of a bankruptcy plan. And, you know, I've--in my book, I say that the government ought to unwind its positions as quickly as possible, its positions in the private sector. And to the extent the government is unwinding its position I think that's very positive. You know, I--look, the truth of the matter is, I didn't want to have to make these decisions, and I have always-I was a free--I am a free market person. But I hope the reader understands that I really was convinced that had we not taken the measures we took that the economy was going to--was to fail.
KUDLOW: How do you think that looks to average people around the country, Main Street people? I mean, for example...
Pres. BUSH: I think it looks terrible, and...
KUDLOW: ...GM bailed out, $50 billion.
Pres. BUSH: Yeah.
KUDLOW: But, wait, it's even more than that, sir. The five banks, the big Wall Street banks that did the underwriting of the GM IPO...
Pres. BUSH: Yeah.
KUDLOW: ...themselves were bailed out by the tune of 135 billion, and on the underwriting, they rake in reportedly 125 million.
Pres. BUSH: Yeah.
KUDLOW: Now, that sounds like a rigged game of crony capitalism.
Pres. BUSH: Yeah, well, first...
KUDLOW: How do you think the average tea party mainstream voter thinks about that?
Pres. BUSH: I probably--listen, I'm sure they were perplexed as to why a free market person would use their money to, you know, to give to these Wall Street firms to prevent the collapse. If I had to do it over again under the same circumstances, I would have. Secondly, just one fact, as you rattled off those facts, Lawrence, and that is that the TARP money, the first tranche of TARP was paid back to the Treasury with a--with a decent rate of return. In other words, we structured it, the TARP, which admittedly is now a four-letter word in American society in more ways than one...
KUDLOW: Mm-hmm.
Pres. BUSH: ...in such a way that the taxpayers would receive a pretty good return, and that's what did take place. I can't prove to you a depression was going to happen, but I can tell you one didn't happen, and I believe it's because of the government intervention. I'm not going to second guess what my successor has done, the policies that took place after I left office. That'll be up for historians and for the pundits such as yourself to analyze. And I've made it clear, and I want to make it clear on this show that I do not want to second guess and/or criticize the person who replaced me, President Obama.
KUDLOW: I understand. I'm going to respect that boundary, but I do...
Pres. BUSH: Well, you're trying to soap--rope me into--hook lining about the current moment...
KUDLOW: No, absolutely...
Pres. BUSH: ...which implicitly would lead to either praise or criticism.
KUDLOW: Well, I don't know. Implicitly, I'm trying to figure out how this TARP story is going to play out, short, long term. You make it very clear in the book that you believe that TARP saved us...
Pres. BUSH: I do.
KUDLOW: ...saved us from depression.
Pres. BUSH: I do.
KUDLOW: And that's your point of view.
Pres. BUSH: Yeah.
KUDLOW: I want to ask you, in the inner councils of your administration, was there anybody who was saying, `Hang on, Mr. President, maybe we should go through a preplanned bankruptcy of some of these large banks,' or, `Hang on, Mr. President, we're setting precedents of government involvement and intervention that we've never had in this country before'?
Pres. BUSH: Yeah, of course there was that discussion, and I--and sometimes I led it. On the other hand, when you're the president of the United States or the secretary of the Treasury or members of the White House staff and it looks as if this economy is going to crater, because the crater markets were frozen, you don't have--there's not a lot of time for theoretical debate.
KUDLOW: Mm-hmm.
Pres. BUSH: And I was deeply concerned about the very people you mentioned, how would they, you know, how they--aren't they going to be confused about the decisions made? My judgment was, at the time, had we not moved, those very people that were questioning the decision would be harmed by, you know, the economic disaster. And, you know, that's the nature of the presidency, and that's what I try to describe in the book. I want to put you in my place. And I'm confident there are Americans say, `I wouldn't have done it, what George W. Bush did,' and that's to be fully expected.
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