tv Power Lunch CNBC July 16, 2014 1:00pm-2:01pm EDT
from td ameritrade. hi, everybody. welcome to a special delivering alpha edition of power lunch. i'm sue herrera here in the engelwood cliffs studio. the next big speaker at the cnbc conference in new york city is new jersey governor chris christie who i would like to say is always entertaining and very informative. we're all standing by the pierre hotel on 60th street. guys, good to see you. bring us up to date. >> it's been one heck of a very interesting morning. it continues this afternoon.
right now in the room across the way, governor christie is about to speak and be interviewed by our john harwood later in the day nelson peltz and scott walper is back. we have special guests as well. and so, hello to john, kate, josh. three big themes from delivering alpha that i want to bring you up to date on. number one, treasury secretary jack lew there should be a corporate tax rate. maybe 28% as the basic rate for corporate earnings which would bring us back down more in line with some of our economic rivals. an hour ago, retire hedge fund manag
manager druckenmiller said the mr. fed is putting the economy at risk. if you like someone other things, actaviss is up. citigroup that made news earlier this week with its settlement with justice department is down 4.5%. kate you led the questioning with one of the guys who has never been on television before, ken griffin of citadel. you hit him with the day's breaking news which andrew ross sorkin broke on the bid, the offer for time warner by fox. what did he think? >> that's right. he likes the deal.
he thinks it's going to get done. let's listen to what he had to say. >> it's a great deal. time warner great assets. hbo, warner studios, content is king. both those assets have great content. deal makes a lot of sense for fox. makes a lot of sense for time warner shareholders. >> so there you have it. he likes the deal. i think he's the only person on one of our panels who owns shares of both stocks. he thinks we'll probably see more consolidation in that space. i talked to him about high frequency trading which has been a big issue. you guys have had a lot of discussion about it. his response to some of the issues was interesting. i hit him some examples from flash point the michael lewis book. i asked him about payment for order flow. he said that replaced old recy procam relationships that were on wall street.
he said payment for order flow has replaced old reciprocal wall street relationships made brokerages more competitive. 80% of the order we execute are within the bid as spread. ing -- interesting points. what do you guys think? >> were you buying what he was selling? >> ken is one of the biggest operators in the hft space. and when you say i'm executing in between the spread, there's a large spread there. especially if you're trading in thousandth of a cent. if 80% of the time i step up by thousandth of a cent rather than buying it on the bid, i buy a thousandth of a cent i head i am in between the spread to ken's point but not providing much benefit there. >> josh? >> i think there's no question that the proliferation of electronic trading has been good for investors. i don't think the typical viewer
of this show really believes they are competing with it is dale for a fraction of a penny. there are efficiencies that this trading brought. i agree with john also that there are ways to use language and make it sound like you're fairly participating when in reality it's not quite that fair and i think that splitting the difference between the two is really one of the hardest things you can do in media. really hard to explains to subtleties. >> rhetorically speaking he set up this scenario where either you have specialists on the floor and soft dollars versus high frequency trading. there's no doubt technology and speed have made discussions better in general. the question is, is the current market set up while legal is it fair? is payment forward fair? should every single investor whether they are paying extra money or not have access? >> the bigger question has it ever truly been fair? he talked about internal san diego which was the system 15
years ago. >> which was a forerunner to dart pools. >> sure. every broker dealer had its own market making. the small guys did it with smaller guys. the bigger guys did it with bigger stocks. you can say that was completely above board. then we had the specialists scandal on the american stock alex change. we can't say it has ever been completely fair. we're talking about degrees of fairness. >> let's get your reaction to a couple of stock picks that were put out by lee cooperman, larry robbins and others today. lee cooperman had a couple of energy picks, larry robins who used to work with lee, national oil embargo among his choices. how do you react to those? >> i thought larry's presentation was forceful. a lot of people are talking about the problem with where the fed is and rates and moral hazard and what larry is basically saying look i'm not
here to talk policy. this is what corporations should do given the environment that we're in. >> he said borrow at these low rates. borrow long. >> he says lever. >> i thought this was interesting. we had debate today about the fed, some foes, some allies in terms of what yellen is doing. robbins took this neutral position and said get in while the getting is good and take advantage of the low legs. >> this will not continue forever. if you can bioremarks he made the case, monsanto borrowed 50 year bonds at 6%. buy back in that stock. don't just look at that this year, look at what that does to earnings in 2025. that's a pragmatic way of looking at it without having a strong political opinion. >> apple did that when they set the bar and got the low tick for their borrow which shareholders have to be delighted about. part of that went directly to them in terms of share buy
backs. another part went out to them in dividends rather than repatriating and paying tax on a kbhink of money that would go out of apple. this was a much smarter way to go. 21st century is doing it too. >> share buy backs came in with criticism from drukenmiller. he said companies are borrowing to buy back shares not to invest in their businesses. >> the other side of that coin, tyler, we want cap x, we want hiring. we had cap x booms too and they didn't work out quite so well. the best example 1990 and 2000 when every company thought they were great investors of their own capital and ended up demolishing a lot. there isn't one black or white answer. the answer for a company like ibm is both. buy back but fund the future. >> drukenmiller's criticism is also an aspect of this activist
corporate defender. the activist wants buy back the thing that larry robbins is encourages. at the same time many are saying this is short term. not going to work. >> lee and larry robbinsing liked that one. when you get two voerkts two thumbs up -- >> the larger portion of that business is relatively boring. run-of-the-mill sales for testing and diagnose northwestics and some experimentation but then cutting-edge pieces of the business that both investors make the case are not be appreciated by the street right now. they deserve a much higher multiple for some of the more cutting laboratory stuff they have. we'll see if the market decides to agree and takes prices higher. >> lee cooperman loved energy over and over again and he's been with sandrich for a long time. i like that. to discussion on those two areas you'll do well even if you buy
related stocks. >> he put citi on his buy list which is an interesting choice. >> bank of america, i was very pleased this morning when i saw the numbers, when the actual numbers were more like 40 cents versus 25 or 30 which was my break even for cents per share on the earnings. when it came in around 40 after you figure back in that fine, i thought it was a great report. it turned out not to be. >> single nice thing about the company all he said is when you buy something this out of favor -- >> that's thing. they are part of a cyclical downturn. a lot of people think it's a good time to get in. >> citi, he likes citi stocks. >> thank you, guys, josh and kate. sue, back to you. >> great conversation. much more to come. news alert on general motors. phil lebeau joins us with the details.
>> we have data that shows all of these recall headlines over the last three months have not scared away buyers. q2 data shows worldwide sales climbed a half a percent. they didn't drop. it actually climbed powered by the u.s. 7%. china up 8%. chevy and buick brands is what's driving sales in china. adding cadillac 51% in china in the first half of this year. global sales for cadillac up 14%. this news comes one day before mary barra is set to testify in washington. her third visit to capitol hill to talk about the ignition switch recall crisis. she turned down a request this time, however, to meet with victims. she did that the first time she went to capitol hill. if you look at shares of general motors over the last three months and moved higher, think about this, gm right now has sold 4.92 million vehicles. there's an outside chance gm could sell 10 million vehicles worldwide this year.
>> an amazing stat despite the headwinds they have going against them. now to morgan. >> check out tesla as we're staying with the auto theme. moving to session loss. it said will name the model 3 as it attempts to hit a wider consumer audience. the vehicle will go on sale in 2007 and compete with vw. price are set to start at $35,000. stock trading down half a percentage point. sue, back to you. a developing story, andrew ross sorkin breaking the news, reporting rupert murdoch's 21st century fox made an $80 billion take over offer for time warner. time warner rejecting it. let's look at the parties concerned. time warner is up 16.75%. other media stocks hitting new all time highs. viacom and comcast the parent of
cnbc and nbc. walt disney down a percent on the day. julie boorstin live in los angeles with what other media companies could be buy out targets giving us that drop and how the companies behind the deals we've been seeing recently are faring. >> that's absolutely right. the big question what are the other media assets in play. the time warner/fox deal happened cnbc would be sold and draw interest from cbs and disney, neither have a cable news network and both have expressed interest in cnn in the past. the promise of more consolidation and the spotlight this shines on the valve cable channels is sending discovery and cnet works, scripps network interactive and viacom stocks trading higher. last week the ceo predicted content consolidation in solution to mega mergers. these few cables that aren't
owned by media giants promise retransmission fees. sources at media potential buyers holding back deals looks like high evaluation. and uni vision has melt with viacom and time warner among others. the viacom supertoday because it's controlled by redstone unlikely to break up or sell. the unanswered -- >> we need to go to governor christie who is speaking right now. >> we opened that issue again? >> i'll campaign for terry branston who is running for o r governor. we'll be sleeping in new jersey tomorrow night. >> i know you haven't decided and if you have i wouldn't
expect you to announce it here. >> that's good. [ laughter ] >> knowing what you know right now are you leaning towards it? are you thinking it's likely to happen? >> this is another way of asking the question, isn't it? [ laughter ] >> yes. >> are you leaning? >> yeah. it's another way to ask the question. no i'm not leaning. i'm not leaning in any way. i'm not giving it a lot of thought. i'm chairman of the republican governor's association. my job is to elect as many republican governors as i can. i don't have a 527 or a super p.a.c. or a c 4. >> we're in the second half of 2014. if you're going to do it -- >> i'm aware. listen, let's face it the folks who are leaning or actually doing stuff right now are oftentimes who folks don't know that well. i suffer from a lot of things, that's not one of them. [ laughter ] i'm in no rush to make those decisions. i got a pretty busy day job as governor of new jersey and i've got, you know, a busy job
politically as chairman of the rga. 37 governor races across the country. >> when do you have to decide? >> end of this year beginning of next. zion my own. whether i would tell you or anybody else at that point i'm not so sure about the timing of that. that's more of a political judgment than it is a core judgment about whether you really want to do that or not. i've been clear. i certainly will consider it but whether i do it or not is something i honestly don't know yet. i think people say that all the time. and folks are fairly cynical. oh, yeah he knows what he's going to do. i don't know what i'm going to do. if you have four relatively younger children like we have from 20 to 11, there's a lot to consider in doing this on a personal level. putting aside the politics. so, you know, we'll decide. i'll decide coming year. >> let's talk about your party
and what you or any presidential candidate faces if they decide to lead that party nationally. pew research center did a study and on the republican side you have a split between "your business" republicans who are all the people in this room, and your populace or tea party republicans, these guys have the money, the populace group has more votes. when you look attitudes on issues there are stark divisions. populists say international trade is bad for the country. business republicans say it's good. populists say don't even think about cutting social security. business republicans say of course we have to do that. immigration, populists say it's bad. homosexuality the populist wing says not okay. people in this room, business republicans say it's okay. how to you knit those together? >> carefully.
[ laughter ] [ applause ] listen, i think the only way to knit them together is to be yourself. every time you try to go towards one side of the party or another and the democrats have the same problems. just on different topics but the same problems. there's always divides inside any vibrant political movement. the way to do is just be yourself. say here's what i believe in. and, you know, try to convince people if what they are looking for is a candidate that they agree 100% of the time what they need to do is go home and look in the mirror. they are it. you are the only person you agree with 100% of the time on these issues. don't try to be that. if you try to do that they will perceive you as a phoney and the reason they do that it's because you are. so you shouldn't look in their eyes and tell her i want to tell her what she wants to hear and
pray to god she forgets when do i the opposite. own up to what your position are. say what they are. if that's not good enough to win then you don't want a governor under those circumstances anyway because you have to remember who you pretended to be yesterday and that's not the way to govern. it's complicated enough without trying to figure that out too. [ applause ] >> we know and we're beginning to feel again that we can make an economy produce high stock values, high corporate profits, do very well for the people who are best off in the country, the most educated. but if you were elected president, what do you do to raise the living standards of average people in this country, what's the right approach for that? >> first off, the premise of the question if i were elected president pre-supposes i would actually run. it's another way to get me into
that topic. >> forget the president part. >> i would say say listen there are certain principles that help to create a vibrant economy. and i think things that we're not doing at the moment. first off, we have a wretched tax system on the individual and corporate levels. including my state which disincentivize growth and job creation and which make us less competitive with the rest of the world. the fact is we need to get "around the table" and redo this tax system which i think is one of the real wet blankets on our economy. secondly, you need go through regulatory reform. in new jersey, we've eliminated a third of the regulations that existed and put into place by my predecessor, by governor corzine. i hear from businesses across our state what a relief that has
been for them and how much easier it is to conduct business and our water and air is cleaner and there's nothing awful happening in new jersey because we've decided to do regulation in a common sense way. we need to look at that federally as well if you want a vibrant growing economy in that direction. third is improving our educational system. the fact is we've gone from 20th to 30th in math. we've now gone from 10 toth 20th in reading amongst the industrialized nations. if you think we can continue that trend and still be the smartest, most competitive, most cutting-edge economy in the world, then you're wrong. >> that's why you support common core. >> listen, what i support is to try to change something that's much more important than common core. the most important factor besides a family to successful education is the teacher in front of the classroom. more than anything else is what
is the training and experience and effectiveness of that person standing in front of the classroom. and we have an educational system in this country that puts the comfort of adults ahead of the potential of children. what we care more about we don't want to disturb anybody. we don't want to hurt anybody's feelings. we don't want to say anything bad. that's crazy. there are ineffective teachers that are protected by a tenure system that's the essence of anti-competition. we're for competition every where else in the world but not for compete shine the k to 12 classrooms in america. and we expect that from duce good results. it doesn't. so from my perspective what's the curriculum in the classroom and those other issues you first need to get to having a competitive educational system that rewards good teachers. we should have merit pay across this country and get paid more if they are good and shouldn't
have a system that allows bad teachers to be guaranteed a job for life. and if anybody in this room ran their business this way they wouldn't be in this room. and so the fact is that if we like success around our country that's based upon competitiveness and real vigorous back and forth that happens in that kind of circumstance, then we need to say we can manage our k-12 system. >> let me ask you about the macro division between two parties. essentially what you hear from republicans in washington is government needs to do less, needs to spend less, we need to borrow less, get out of the way. from democrats you say we need as hillary clinton in a speech recently said the building blocks of the 21st century
economy. more infrastructure, mo more science, more education and training. >> the difference between republicans and democrats are democrats believe that the government are the people who should be doing those things that mrs. clinton mentioned and republicans believe that the private-sector is the place that's better to do that. that's the fundamental core disagreement. now having run a government for five years, i agree with my party. even more. than i did before. >> do you see her as a big spending democratic liberal who wants to grow government. >> no, i think you said that. [ laughter ] >> right. >> do you say that? >> no, no. listen i'm not going to get into talking about the secretary and characterizing her in anyway. let her speak for herself. my view is she said those things. then all of you out there who get to vote and judge elected officials can judge what you
think that makes her. >> you think we need less government. >> what i think is we need less government being intrusive in our lives in every way that it is. now, there are absolute fundamental roles for government which is protecting the health, safety and welfare of its citizens. so i believe in a strong and vigorous national defense, i believe that government has an appropriate role in regulating different activities that go on in the country. but i think what's happened there's a divide between the two parties where who can do most of that best. it's not that republicans don't believe government doesn't have a role, of course we believe government has a role. >> do you think it's wrong the government need to spend more money on infrastructure, education and science? >> i would say this. i for certain believe it's wrong for government say it need to spend more money on education. we spend $17,700 per pupil on k through 12 education.
we do not have a spending problem in education in new jersey. we have a quality problem in many parts of our state. >> what about infrastructure science -- >> infrastructure is something that's uniquely governmental role. now the question is, you know, i look back on this, in this administration and say they squandered the stimulus that they did on things that were for their constituencies rather than building infrastructure. with all the money they spent they did very little infrastructure spending and now complaining we need to do more infrastructure spending. where were you back in 2009 when we were allowing the government to spend all this money in the midst of a financial crisis and wind up spending it on public sector union friends which is what they did. now it makes the choice much harder because you spent all that money already. now you want to spend more. where is this money coming from exactly? we do need at some point to take a deep breath and say there's a
bottom. do i think infrastructure is something the government need to invest in and needs to partner with folks on? absolutely do i. but the way you laid out the things that secretary clinton said is a rather simplistic silo approach to this which only the government can do it. which the government is not the only one who can do it. >> a lot of people in your party when obama came in and took the actions that he took, said we're going to have huge inflation, we're going to have people aren't going to lend us money any more, the economy will crater. we're going to become greece. that hasn't happened. the economy is recovering. stock market is up. do you guys -- is there a point at which you say all those chicken little warnings that our party was making were just wrong? >> no. i think that what we've had is, is the -- >> were they wrong. >> hold on you asked me a
question let me answer. if you don't think it's responsive you can come. john, you know how this work. we've done this before. [ laughter ] what we've had is the most stagnant, limp, absolutely unimpressive recovery post a recession that we've seen in the country in decades. and so, you know, the fact is that america still has one of the largest if not the largest and best economy in the world. but, talk to people on the streets every day in new jersey, ask them if they feel we've recovered. i would tell you that the majority of my citizens don't. and so, you know, if the job of the president was merely to avoid catastrophe, congratulations. but i don't think that's what the only job of the president in attempting to steward an economic recovery is and so whether you judge it a failure or success or whether you judge some of the predictions by
republicans to be failure or a success is something that historians can look at. what we know is what has hit us today which is that a large number of our citizens in my state and across the country or unimpressed. >> what makes you feel that job growth has been slower. >> some. you're the guy in charge and you have some responsibility for it. i haven't been able to put in a lot of policies i wanted to put into effect because i have a democratic legislature that passed in this context of what we're talking about, four income tax increases in the last five years. i vetoed all of them. so forget about -- why aren't you cutting taxes. like i'm the guy at the gate trying to keep the barbarians away. a week and a half ago i vetoed
another significant income tax increase. because they have to continue to feed the beast of their patrons in the public sector unions. >> you don't have a new jersey miracle to talk about. an economic success. >> the miracle in new jersey is that every day we get up and still like each other. [ laughter ] that's a miracle in new jersey. but, you know, there's great stuff. i said a few years ago the new jersey come back has begun, and that got morphed somehow the new jersey calls it a come back. i never said it happened. the come back has certainly begun. when i came into office unemployment was 10%. it's now down below 7. we created in the state 145,000 new private-sector jobs since february of 2010. taxes haven't been increased in our state for five years for the
first time in 25 years. now everything is within context, right. if you're dealing in a blue state like new jersey, high cost, high tax state and can keep things stable for 4 1/2 years, i'm fairly content with what i've been able to do. >> let me ask you about other things that the obama administration has done. they get criticism on their left but also some from the tea party right who say the obama administration bailed out wall street, people who did things wrong, and they haven't prosecuted people. people ought to go to jail for some of the stuff that happened. do you agree with that >> having spent seven years as the chief federal prosecutor in new jersey, i understand that these things are a lot more nuanced than that. i don't know everything that the prosecutors in the justice department know about what their investigations uncovered and i'm not going one of those guys to sit here and be, you know, a
monday morning quarterback on that stuff because i know how complicated it is. i did it for seven years. easiest thing in the world to dump on them. >> don't fault them? >> don't know, john. i can't give them credit or fault them. what i know as a former prosecutor is that the greatest thing about that job is only you know what you know. right? so that's your job as a prosecutor to ferret out facts and if you believe there are facts beyond a reasonable doubt to bring charges against someone then you do it. it's irresponsible of me to sit here and critique them when i don't know what they knew. and it's very difficult to do the kind of work that they are talking about. the white collar criminal investigations that you have to do in the circumstance you're talking about with the financial crisis, very complicated job.
>> do you like the financial settlements they got from the companies or do you see that as a shakedown by the administration? >> where you stand depends where you sit. if you're paying it, you know, i guess you would think at times that there's an element of a shakedown to it. from the government perspective you're saying this is one of the ways we hold you responsible for bad conduct. and so i think we always have to be vigilante about there being an appropriate balance. >> do you think they struck a decent balance? >> again, john, i don't know what they knew. so how did they reach the numbers they reached. were they based on fact or just pick them out of a hat. was it based upon a vigorous negotiation or did somebody have a gun to someone's head. authors things that happen in our system, inside the conference rooms of the u.s. attorney's offices across the country and main justice. i won't sit here and opine on things that i know involve facts
that are beyond the knowledge that i have. i hated it when politicians did that when i was making judgments as u.s. attorney and i'm sure as hell not going to do the same thing that i hated when i was on the inside and now i'm on the outside. >> one of the things that we have started to hear a lot in your party especially from the populace wing of the party is critiques of crony capitalism, the system like some on the left say is sort of rigged and people have inside deals with washington and what has come to stand as the emblem of that an issue in the upset of eric cantor in virginia is the question of the export/import bank which eric cantor supported and the populace wing of the republican party said that's cronyism, heaping boeing make deals, they can make deals themselves. do you agree with them? >> i think those issues are much more complicated than a lot of
people want to make them out to be. the fact is that the government, i think, does have a role in trying to make our country has competitive as we can be with the folks around the world. >> many of whom have programs like that in those other countries. >> of course. right. so the fact is we got to decide how we want to compete and on what basis we want to compete. i don't disagree with folks who say there are times when that goes overboard and that's with the congress is supposed to be vigilante about. if they believe that's the case they are the voice of the people then they need to step in and do something about it. and, if the people don't library what the congress is doing then they step in and kick some people out. >> you do think we need an export/import bank. >> that's not what i said. i think we need have those type of programs that the president and congress believe make us more competitive. we need have more free trade agreements around the world.
we ought to be encouraging more trade around the world because when america trades with other countries in a free way america usually does much better because of the ingenuity. i'm the governor of new jersey. i don't spend a lot of time focusing on the export/import bank. if i run for president i'll spend for time on it. >> i don't believe you're not ill-informed. >> you can't imagine how ill-informed i am. [ laughter ] [ applause ] the fact is if and when there's a time that comes that i need to be telling people in this country what my view is on those issues i will. until that time i think it's quite frankly immature to be
expressing a lot of those opinions just because i'm sitting up here in front of this room and you ask. you can ask whatever you like. i don't have to answer. if i don't think my answer will be smart and stand the test of time you can be damn sure i'm not going to answer because you have this type and you'll use it. >> let me ask about a new jersey specific issue. >> i hope i'm informed on that. >> i think you'll be. i was reading an article this morning in national review which said you were an alleged free marketeer but what you did on tesla and not having your motor-vehicle commission change a rule to prevent them from selling directly to consumers showed the power of special interest in new jersey, auto dealers and you were not a free market -- >> that's complete crap. here's what it shows. the legislature passed a law and previous governor signed a law requiring in new jersey that if
you're going to sell automobiles you must do it through a dealership. now, tesla comes in with their new model to sell direct and i give tesla a year to sell direct. operating completely outside of the law. and i just say to them, listen you need to get together with the legislature, i'm not going to step in and enforce this law vigorously right now because i'll give you time to work with the legislature to get a law to my desk to selleck directly. for a year they don't do anything. you know after a while, you know, i take an oath to enforce the laws. not just the ones i like but all of them. >> your motor-vehicle commission did change the regulation. >> we didn't change the regulation we enforced a regulation that already existed based upon a statute. the fact is we looked the other way for a year, to allow tesla to do what they were doing. i couldn't look away any longer. i just can't pick and choose the laws i like to enforce and
don't. i gave them a reasonable period of time to operate the way they were operating and to go to the legislature to get it changed. >> they say you opposed them at the expense of new jersey consumers. >> what would you expect the home say? thanks? [ laughter ] listen, you know, elan is unhappy because in new jersey there's a law that says he can't do what he did. i don't like the law either. i didn't vote for it. i didn't sign it. i don't like it. but i don't get to just ignore the laws i don't like. so i love "the national review." i'm a subscriber. i read it all the time. but they are just dead wrong on this. and the fact is that's a problem with all due respect to some of you national guys who parachute in to a state specific issue, listen to a particular interest group that's in your ear and say i figured it out. well like i said about the other stuff -- >> do you say sometimes the press gets things wrong
>> as much as it pains me to say that, john, yes. and the thing is it's a mirror -- it's an absolute mirror example of what i was saying why i won't talk about some of the issues you're asking me about. i know i don't know enough to give a cogent, intelligent answer. elan musk has a view. get the law changed. now there's a law sitting on my desk now that will let them do something but in the same token makes our state even more anti-competitive from an automobile manufacturer's perspective. that's the kind of stuff you wind up getting put on your desk and then you have to make decisions about how you balance it and what you do. anybody looks at new jersey with the drop of regulations and says i'm someone not in favor of free markets is someone that has a personal interest in it like
elan does and he's wrong. >> at the risk of walking into that certainty trap, the fact that your state is not going to make the contribution, you said you're not going to make the contribution to the system does that suggest the achievement which you've been hailing as a major step forward has actually unravelled and is not an achievement because you don't have a funded pension program. >> no. first of all not making a pension payment. what i'm doing i'm making the pension payment we can afford to make and pension payment that takes care of all current employees. all current employees who were making an increased pension payment themselves we're making the payment for them. what i can't afford to do is pay for the sins of my predecessors. >> why not increase the revenues. >> new jersey is already the second highest tax state in america and i have to make a balanced judgment between the
benefit of making an increased pension benefit versus the harm that will to be done by taking our top income tax rate to 10.75%. >> isn't the price of solving the problem. >> no. the price of solving that problem is because -- let me tell you. the taxes that the legislature put in front of me would give us about a billion and a half more in revenue. the pension payment ultimately to be based on the current program has to go not to 2.25 billion which is what this payment would be but to 5 billion. what tax will i raise the next year and the next year. we can't afford it. way to solve the problem is to further reform these pensions and make them less costly and that's what we have to do and that's with the achievement of the pension reform of 2011 was and continues to be because our payment for current employees is going down. it's the legacy part that's the problem and now we got to figure out a way to fix the legacy part.
i'm going around the state advocating for it and i hope the legislature does the right thing. otherwise we'll be detroit. >> let me ask you, though, a style question. you have a reputation, burnished by this appearance of being straight talking, blunt, problem solver. but we can also listen to you say the legislature is the one who missed up, tesla, state economists are the ones who overestimated revenue, past governors are the ones that created the pension problem. it sounds as if like you're passing off responsibility to others having run in 2009 and saying hey you sit in the big chair it's on you. >> it is on me. >> aren't you ducking responsibility? >> no, i'm not ducking responsibility. i'm telling you the truth. you may not like it. the truth is i didn't sign the law that prevented tesla from doing it. the previous governor did it.
i didn't dig the hole in the pension system. in made more payments in to the pension sim at $2.9 billion than any other governor in new jersey history. in fact in 15 years before i got here they made about 20% of that amount in terms of payments. that's a fact. that's not ducking responsibility because i'm the one now trying to solve it. that's taking responsibility. i don't have an obligation to suck things in that i didn't do. i have an obligation to solve it. but i'm not going to take responsibility of every part of stupid stuff my predecessors did. that's being blunt too. normally what people in my position do say well my distinguished predecessor probably had other judgments he had to make in that regard so i can't question what he did there. >> the way obama has dealt with bush? [ laughter ] >> i think he's starting to understand the job is more complicated than he thought it was when he first ran for it.
[ laughter ] i'm completely taking responsibility for being the guy in the chair who has got to try to solve the problems. but two things. that does not mean i'm going to take responsibility for every dumb thing that people before me did to help create the problem. i'm not a dictator as much as i would love to be. >> i can tell you would love. >> i would. you know. by the way, so would everybody in this room, right. as president bush said one time, dictatorships are not necessarily a bad thing. the fact is you would love to able to solve your problems by dictating the solutions to the problems. that's not our system. so, i'm not the only one responsible. legislature has a responsibility in this regard as well to act in a way that's going to help to solve these problems. part of my job is to attempt to persuade them through the gentle, calm and kind manner that i have. [ laughter ] that's what we're going to try
to do. >> one dumb thing that everybody the whole world knows about that happened on your watch was the bridge closure. >> right. >> i was talking yesterday to an aide to one of the most powerful republicans in washington. he said here's what i want to know. when you are a senior aide to an important politician like that, you develop a sense of what's okay with them and what isn't. and most staffers do not go rogue and do things they know their boss would disapprove of. he said the issue isn't whether christie knew about the lane closures it's how did he run an administration where people very close to him thought that that was okay to do. >> the key part of that brilliant aide's analysis who probably has never run anything in his or her life is when he or she said most aides don't do
that. key part of that. most aides. the whole point is that when someone goes rogue as was also said in there, that means you're doing something that isn't acceptable. someone went rogue on my watch. now, listen. i'm accountable for that. and if you haven't watched what's been going on in the last six months i think there's bean decent amount of accountability thrown my way and i've accepted. but it does not mean -- this is the normal washington and that's why i'm glad to hear it's from a washington aide because this is the way they play all the time. when something like this happens first thing is they want to put you in fist-a-cuffs acuffs, he . now when i turn over every e-mail, every text message everyone gets to look at it and it's become clear in six months
he didn't know. they okay, we stay to that equation we lose. let's shift it he didn't know but he created an atmosphere where this type of thing was permissible. bull. i didn't. in fact, the atmosphere we created over time has allowed for more bipartisan accomplishments than you've seen in any state capital cross this country. i kept to agreements and they kept to. so the point is someone went rogue. i am very unhappy about that and extraordinarily disappointed and saddened by it. i'm ultimately accountable for it. but don't give me this garbage about he created an atmosphere. >> why isn't it a straight line from tough guy are you stupid, you keep on walking on the, you
know, jersey shore to time for some traffic problems. >> i don't see where the straight line is. no, i don't see it. you may, i don't. >> but the straight line -- >> because -- i'll hit you if you don't do something for me. if that was the straight line there would be many more times than the tail end of a fourth year of an administration. contrast that with fact we passed bipartisan tax reform, bipartisan pension reform, four budgets without closing the government down in very difficult economic times which had to be done with a democratic legislature. if in fact you think what that directness leads to if you don't do what i want i'll punch you. then why would they ever make a deal with me? ever. they are co-equal branch of government. what's led to is clear, direct leadership that people understand where i stand and who i am. and that's why the people of new jersey don't believe that i had anything to do with this because they know me.
they've gotten to know me over the years. the fact is, though, when you have an organization of 65,000 employees, that there are going to be times when people do things that are monumentally stupid and inexplicable to the person at the top. this is one of those moments. i can't explain it. i wish i could. i can't. my job then is to take decisive action in the aftermath. we terminated the people who were involved with it. we put together a private group to go and look at what happened here. give me suggestions on how to change the structure of my office. i implemented those. tho then to fully cooperate with any authority that's looking at the conduct. which we've done. you're a responsible leader that's all you can do. beyond that, if that disqualifies you from being perceived as an effective leader the if you people left who did not have one of these experiences will soon be
disqualified too because they will have it. so i wished it never happened. believe me i wished it never happened. the fact is what happened happened. i took responsibility for it. tried to fix the problem as best as i can. i'll make sure that anything else like that happens rogue. ask any of the people in this room who run a big organization one of the things that leave you awake at night there's a lot of people acting in your name and you have no idea what you're doing. one of the risks of leadership. you have to suck it up and take it. >> as we let you go, are your running? [ laughter ] >> such a great question. [ laughter ] you know, let me give you a different answer. because, you know, you were obnoxious to ask again. i'll give you and answer. the fact is that you should be
weary of people, in my opinion, to be overanxious to make that decision before they are able to. that seems to me ambition before wisdom and i don't you think you want that from the person sitting in the oval person. what you want from that person is wisdom and strength and determination and a sense inside them that they are there for a reason. not just for the title. and i think anybody who at the moment has decided hey, i'm the guy, you know, be careful of that person, i think. so i'm going to be very deliberate about this. i got lots of people in my ear all the time telling me i got to do this. a lot of those people were in my ear in 2010 and 2011 telling me i had to do it. what they learned do i what i want to do. do i what's best for me first, for my family second, for my state third. and for my country fourth.
that's the order of responsibility i have now. you got to be responsible for yourself first. you are not responsible for yourself you can't be responsible for anybody else. you got to care for your family. i took an oath of office and elected twice. my responsibility is to them because they gave me a job and to my country because i'm an american and i care about the country and make a decision that's based on all four of those factors but not a moment before i have to. and so everyone will keep asking and by the way, it's pretty nice to be asked. you know, because if you really stink they don't ask. you know. if you're really awful no one is asking. you know, i had some of my predecessors that were never asked, i can guarantee you, man. never asked. so, you know, people come to me all the time, gees, gosh, it's a burden people bother you all the
time. it's an awful burden to be asked if you want to be leader of the free world. terrible to be thought of that way. it's enormously flattering. answering it by the way i am i don't want to leave you or anybody else that i'm not flattered by the question. i am. but being flattered is not enough of a reason to run. and so i'm going to take this seriously. i'll think about it. if i decide to do it i'll do it like i do everything. as hard and as direct and as much of myself as i possibly can muster up in doing that job. and pursuing it. if i don't you can come to the conclusion i didn't because i didn't feel it was good for me, my family, my state or my country. and that's the way the decision will be made. so when we get together next time and you ask me again i may be at the point i can decide. if i'm not i'll come up with another answer. >> guys, we can agree governor
christie is worth every single penny we paid him. [ applause ] >> thanks, john. that was the full jersey from a jersey guy, governor chris christie, alternately humor jourks defiant, a little defensive at times. always outspoken and forthright. he said among other things that he is thinking about running for president but won't make any decision until he's doggone good and ready and that probably won't be until the end of this inquiry or the beginning of next year. he put out a full throat defense of his conduct with respect to the bridgegate lane closures on the george washington bridge. let's talk a little bit about what governor christie just said.
and robert hunkeler he oversees $17 billion in assets including more than $13 billion from pensions. bob, since the governor just talked about pensions and the struggles he's had in trying to wrestle burdens to the ground, how do you react to what he said, what he's done, and to the challenges you face? >> well, tyler, of course we focus on the corporate pension world not on the public world. >> sure. >> corporate pension plans have also been under-funded now for quite some time. but i think the laws that have been enacted over the years have made pension plans, corporate pension plans a lot safer than they once were. the average plan is funded around 85% and there are plans in place to bring these funding levels up to full funding.
so i think the corporate world has addressed the issue and sees a path towards full funding. >> richard, we're very tight on time. you're a new jersey guy. >> i am. >> how did doe >> i thought he did just swell. >> you think he should run? >> i think he has some hearts and minds he needs to win elsewhere around the country before he makes that decision. >> richard thank you very much very much. sorry we had to abbreviate the segment. governor christie ran a little long. bob thank you as well. folks, thank you for watching this hour of "power lunch." i hope you agree it was a very, very interesting performance from governor chris christie. "street signs" will continue right after this short break. for sue herrera, thanks for watching.
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