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Larry Kudlow: The gloves are off in the GOP race for president. With sights set on the surging new Republican frontrunner, check out this poll from ace pollster, Scott Rasmussen. Newt Gingrich now leads the field nationally with 38%. That’s a 21 point lead over Mitt Romney who’s down at 17%. Herman Cain and Ron Paul are tied for third at 8%. Paul, out with a new blistering web ad today, targeting Gingrich. Please take a listen.
Newt Gingrich: If you want to put people in jail, let’s look at the politicians who created the environment, the politicians who profited from the environment, the politicians who profited from the environment.
Male News Anchor 1: Newt Gingrich is on the defense for taking 1.5 million bucks.
Male News Anchor 2: After he left Congress, Freddie Mac gave Gingrich at least 1.6 million dollars.
Female News Anchor: 1.6 million dollars, some of it just before the housing market collapsed.
Larry Kudlow: We welcome back to the show Congressman Ron Paul, Republican from Texas, and, of course, presidential candidate. First of all, Mr. Paul, welcome, and let me ask you, sir: you’re web ad criticizing Newt Gingrich has gone completely viral, it’s running everywhere. Let me begin with this: what message are you sending in this?
Ron Paul: Well, I think the message is, it’s another politician who flip-flops around and is on both sides of so many issues. I think the one issue that I talked about in there – or actually I didn’t talk about, other people did the talking – was the issue of Fannie Mae and Freddie Mac. Because you yourself know I’ve been very much involved in the housing bubble and what was going on and how I tried to get rid of that line of credit to the treasury, which was the moral hazard involved that helped build that housing bubble. And then now, to think that an individual like Newt has actually gotten a lot of that money, as far as I’m concerned, that’s tax payers’ money. I mean, they went into debt, we had to bail them out, and they’re still going into debt and they’re still getting bailed out. So, one way or the other, getting $30,000 a month adding up to over a million dollars, I think, is a big issue and not too many people have been talking about it.
Larry Kudlow: Congressman, do you think Newt Gingrich was selling influence, is that what this is about? Selling influence for Freddie Mac, selling influence for the pharmaceutical and the drug companies?
Ron Paul: Well, he has influence, and he says he’s selling advice. So it’s very influential. And, in some ways, I don’t come down really hard on lobbying and petitioning, I see this as a principle that we have to protect. But when you’re coming from the inside, you have expertise and you have this experience and you get a lot of money for it, and it’s coming from the government. That sort of makes me perk up, and I would think it would make the American people perk up on this, too, and wonder about this. And I don’t why he should get a pass on it.
Larry Kudlow: Your ad also includes the famous ad with Newt sitting next to Nancy Pelosi talking about climate change. Now, Newt has apologized for that, he said it’s the dumbest thing he’s ever done. Are you ready to forgive him for that?
Ron Paul: Well, I’m a pretty forgiving person, I think that one is probably more capable of me forgiving. But I want to hear a real apology to the American people for the money he got out of Fannie Mae and Freddie Mac. I would have to be a little bit more cautious before I give him a blanket-forgiveness on that one.
Larry Kudlow: Alright. Well, let me ask you, the Manchester Union Leader endorsed Newt up in New Hampshire. They called him a true conservative. Do you disagree with that?
Ron Paul: Well, you know, when you define words, there’s some subjectivity in that, but I think most of us agree what a conservative is. No, I wouldn’t consider him from my viewpoint as being a conservative. Of course, I’m more libertarian conservative, and I don’t see him as a civil libertarian, and he certainly doesn’t want to contemplate anything about our military expenditure. So he’s a great distance from me. But I wouldn’t put him into the category of being conservative. You know, in the Congress we have the tough votes or the controversial votes where there’ll be a conservative group, sometimes it is 20, 30, 40 or 50. No, we wouldn’t have ever seen him in that group and the policies that he endorsed over the years when he was speaker, generally expanded government. I can’t recall how much we ever shrunk from government when he was in charge of what kind of bills would come to the floor.
Larry Kudlow: As you move towards the Iowa caucuses in roughly one month, are you going to keep up the flip-flop criticism attack on Newt? Will there be additional ads, are you going to run TV ads, are you going to incorporate this in your campaign speech?
Ron Paul: Well, it remains to be seen, those plans haven’t been laid out. Quite frankly, I don’t get too excited about doing that, I have to really be motivated to point these things out because I’d rather be able to just say what I believe in and not need to do this. But, in many ways, I put some blame on the coverage of this campaign in general, overall, in that just think how little these things were pointed out about Fannie Mae and Freddie Mac with Newt; that wasn’t in the media. At the same time, how much energy has been spent on Herman Cain. So I thought there was a gross distortion in there. So I just assumed I wouldn’t have to do anything, I don’t enjoy doing, that is why I verbally don’t like. But if I think it’s necessary, and if I’m trying to get the truth out about what’s happening in the government on economic policy, we need to get the truth out about what people are saying and whether or not people can depend on what they’ll do in the future.
Larry Kudlow: 2 current events that I haven’t heard any of the candidates weigh in on: – yesterday, as you know, the Federal Reserve lowered the borrowing cost of their dollar swaps with Europe. Do you worry about that, do you think the Fed is getting involved in the European mess?
Ron Paul: Big time. I think this might even end up being a bigger bail out than 2008 and 2009, and there were a lot of dollars there extended. Because of that 15, 16 trillion dollars that we were finally able to identify, a third of it went to Europe. So we’re very much involved even earlier on, and now this time it’s blatant, it’s bigger, it’s all the sovereign debt, it’s the banks that are involved, and it’s these swap arrangements and these credit swaps that could come into effect. So I think they’re very, very concerned. But the whole irony of this is, they’re placing the dependency on the dollar to bail out everybody. And I’ve argued that that’s not possible, and I’m amazed that the world still says, “Well, it looks like we’ll have to use the dollar to bail out Europe”. But there’s an economic limit to this and I think we’re reaching it. So I think the euphoria of yesterday will quickly pass.
Larry Kudlow: Alright, just quickly. I interviewed Richard Fisher, who you know is the President of the Dallas Fed, and in the grand scheme of things, a relatively hard-money guy. I asked him what I asked you: is the Fed now getting itself involved in the European thicket He said, “No, absolutely not”. Is there credibility here, who’s right and who’s wrong, Mr. Paul?
Ron Paul: Well, he’s on the inside track, I would hope that he won’t be deceiving us. But I can’t imagine … I mean, what were they doing, what were they talking about yesterday, and [about] being available? And Bernanke even said 2, 3 weeks ago, “We are available, we are watching it carefully and, if necessary, we will protect the markets, we will see that the liquidity is there”. Liquidity means they will inflate, they will make the loans, and they will do whatever is necessary. I’d listen to his arguments, but I’d have a hard time believing the Fed isn’t very much involved. Which means the dollar is very much involved, which means middle class America is very much vulnerable because they’re going to further devalue the dollar. And I think you can expect a lot more price inflation next year.
Larry Kudlow: Alright, I’ll leave it there. Congressman Ron Paul. Sir, good luck on the campaign trail, we appreciate you coming back on.
Ron Paul: Thank you, Larry.
Larry Kudlow: Alright, again, many thanks to Congressman Paul.