In an interview on CNBC'S Squawkbox, a panel grilled Ted Cruz on the state of the economy. Cruz answered each question succinctly, showing a deep understanding of how the economy works --- and what it will take to get back on track.
The interview also displayed a stark difference between the two Republican candidates leading the field.
"Honestly, everybody is playing this except for Ted Cruz, and it is the victimhood card," Glenn said Tuesday on The Glenn Beck Program. "Donald Trump is saying we're a victim of China. . . where Ted Cruz is saying, 'I'm going to get the government and the tax burden out of the way for the American people because the American people can do this.'"
The Squawkbox panel asked Cruz detailed questions, demanding explanations and specifics --- and Cruz delivered every single time.
"The fed has, for those with assets, has driven up stock prices, driven up assets values, but that's not built on anything real. It's not built on an increase in the intrinsic value of those assets. It's just based on playing games with money, which means a crash will be coming," Cruz said. "It's far better, if you want to drive up the economy and jobs, it's far better to reduce the burdens on small businesses, where you're creating a whole lot more jobs and we're producing more. That's actually growth. I want asset values to go up because there's more production because it's actually worth more."
While some of the candidates whine about corruption and a rigged system or apologize for America, recommending a European style of government, there is one candidate who believes in the American people. That candidate is Ted Cruz.
Co-host Stu Burguiere also had a tip for journalists interviewing Donald Trump.
"End a lot of questions with, 'Can you explain this?' and see what [Trump] comes up with. Because he can't explain any of it because he doesn't know. He'll go back to China and everything else. Hold him to it. Make him explain those specifics. That would be really helpful," Stu said.
Below is a rush transcript of this segment, it might contain errors:
GLENN: There was an interview -- there was an interview with Ted Cruz on CNBC, where he was talking about, you know, the -- the basis points in Germany and the VIX and stuff that most people don't even know.
Can you explain some of these things? Can you explain what's happening to the economy, what's happening to the global economy and how to fix it?
PAT: The VIX. Yeah, you rub it on your chest when your nose is all stuffy and --
GLENN: Does anybody know what that is? Yeah, volatility. Okay. Good. It's the spread of volatility and what the market thinks.
PAT: You're telling me it's not a vapor rub?
STU: Well, it's also a vapor rub.
GLENN: Yes, yes.
STU: You're both right.
GLENN: You're both right. Yes. Okay. Thank you so much for that, Stu.
So let's listen to some of these answers from Ted Cruz because it goes to the credibility of who can handle the economy without nationalizing the banks? Who understands what's coming and how to fix it?
TED: The problem with using monetary policy, it's a very ineffective way to juice the system because you create bubbles. So you're right: The fed has, for those with assets, has driven up stock prices, driven up assets values. But that's not built on anything real. It's not built on an increase in the intrinsic value of those assets. It's just based on playing games with money, which means a crash will be coming. It's far better, if you want to drive up the economy and jobs, it's far better to reduce the burdens on small businesses, where you're creating a whole lot more jobs and we're producing more. That's actually growth. I want asset values to go up because there's more production because it's actually worth more.
PAT: Now, you tell me that Donald Trump could have had that conversation. There's no possible way. All he would have said was, "We're losing to everybody. We're losing to Mexico. We're losing to China. We're losing to Taiwan. We're losing to Japan. We're losing to everybody." That's all he would have said.
GLENN: Because, honestly, everybody is playing this except for Ted Cruz. And it is the -- the victimhood card.
GLENN: Donald Trump is saying we're a victim of -- of China. And, really, of ourselves because we have bad negotiating tactics against China. And I'll make China, I'll make Mexico pay. Where Ted Cruz is saying, "I'm going to get the government and the tax burden out of the way for the American people because the American people can do this. They've just been told they didn't build this. They've been told that, you know, they have to do their patriotic duty and pay higher taxes. They're not victims here. They just need to get the government under control, and they're going to be able to do it."
And I think that's -- that is the biggest difference. Who is a victim? And who says, "Yes, we can. We're going to do this. We can do this?"
PAT: He also shows that he understands how the system works. He understands what makes the economy run, the inner workings of it, what the fed has to do with it. He knows all that stuff. And he proves it again with this.
JOE: Growth around the world. Economic growth --
TED: Yep. Yep.
JOE: -- almost cures all ills. It cures the sentiment that we have right now, the feeling that people aren't getting ahead. Helps you pay down deficit. Helps everything.
JOE: But we're in a weird world right now. I checked for you this morning, the German tenure (phonetic) is at 15 basis points. Japan, there are negative interest rates. So it's not just the anemic recovery in this country, it's a global phenomenon that we've really never seen the likes of, and I don't know how to explain it. I wonder if you know how to explain the cause and the cure.
TED: Well, Joe, you're preaching to the choir. And I wish that more of the presidential candidates would focus on growth. Because you're right, growth is foundational. My number one priority as president will be economic growth. Every other problem we've got, whether it's unemployment, whether it's the debt and the deficit, whether it is strengthening and preserving Social Security or Medicare or whether it is rebuilding our military and keeping us safe, you got to have growth to make it work.
And we have been trapped in stagnation for the last seven years. And if we don't turn that around, nothing else gets fixed. And it's driven by a number of factors. You know, historically since World War II, our economy has grown on average about 3.3 percent a year. And yet from 2008 to today, it's averaged only 1.2 percent a year.
If we stay at this level of stagnant growth, one in 2 percent GDP growth, these problems are not solvable. And that's why we need an economic agenda. My economic agenda is focused very directly on growth. Because if you get back to historic levels, 3, 4, 5 percent growth, suddenly the federal budget numbers turn around dramatically. It is by far the biggest factor impacting the federal money.
GLENN: You know, here's the amazing thing, I spent -- last week I spent seven hours with him. And we were at my house and in between tapings of stuff they were cutting, we talked about this. And for the first time, I was overcome with security that, we're going to make it. We're going to make it. He is so rooted in the facts of how an economy works, that he was like, "Glenn, I'm telling you, we have $19 trillion in debt, but we have a 17-trillion-dollar economy."
Do you know what the rate of growth was under Ronald Reagan?
PAT: Yeah, it was -- I think we talked about this the other day. It was like seven.
GLENN: 7 percent.
PAT: 7 percent.
GLENN: He's like, "If we can just get us up to 5 percent, it changes everything. You don't have to worry about it. You have the money to pay that debt down." He said, "The problem is, we're at this growth of 1 percent." And he said, "We've got to stop that." And the way to do that is to get rid of regulation and to change tax policy. And here he is on his tax policy.
TED: My tax plan is simple, it is a simple flat tax. For a typical family of four, first $36,000 you earn, you pay nothing. Zero income tax, zero payroll tax, nothing. Above $36,000, each marginal dollar, you pay a simple flat tax of 10 percent. No longer is a hedge fund billionaire paying a lower effective tax rate than his secretary. Everyone pays the exact same.
Another difference, by the way, no longer do you have any differential rates between ordinary income and dividends or cap gains. Short-term and long-term cap gains, it doesn't matter. Everything is 10 percent, which means people actually allocate capital based on where it's efficient, rather than what the tax laws say because the tax laws are neutral to everything.
And then on the business side, on the business side, we abolish the corporate tax. As you know, we have the most punitive corporate income tax of any developed country in the world. We abolish the Obama taxes. We abolish the payroll taxes, which are the single biggest tax most working Americans pay. And we abolish the death tax, which is a tremendously unfair and punitive tax on farmers, on ranchers, on small businesses. And we replace all of those with a simple 16 percent business flat tax. And the effect is an incredible catalyst for job creation and wages going up and bringing jobs back to America. That's my priority: High-priced jobs coming back to America, wages going up for everyone.
GLENN: Okay. He goes into the tax plan. Now, why will this actually work? Listen to this. 726.
PAT: Yeah. Okay.
TED: The problem is the history of the fed has not been very good in terms of being smarter than the market and I think trying to guess what's happening in the market. I think we're far better having a rules-based monetary policy, ideally with some tie to gold so that you just have stable dollars. So that you know that when you're investing a dollar today, you know that the dollar is going to keep a consistent worth, rather than fluctuate wildly.
VOICE: I guess my point -- and then back to Joe's point about the growth stagnation around the globe. What explains that?
TED: Well, some of it is, many countries in the globe have followed the pattern of the United States of hammering small businesses with taxes and regulation, and you end up with a spiral. That gives an incredible --
JOE: They might have led the way, Senator. I don't know if they followed us.
TED: You're right. You're right.
JOE: Europe, you know, they invented structural --
TED: Well, now Bernie Sanders tells us how wonderful Sweden is.
VOICE: Don't get me -- we've been talking about that today, the -- the notion that there's big sum of money and greedy corporations and greedy rich people pull out of that. They don't generate any of that wealth or any of that growth or any of those jobs or any of those tax receipts. All they do is take.
But 51 percent of the country in polls is buying into that. What have we done wrong?
TED: So, Joe, you're telling me, you don't believe it when Hillary Clinton said, "Don't let anybody tell you businesses create jobs?"
JOE: No. That's another one. Or, "You didn't build this." I don't believe that one either.
TED: The catalyst of our economy is small businesses. Two-thirds of all new jobs come from small businesses.
TED: If you want to have the stagnation we have, it's very simple, you do what we've done the last seven years, you slam small businesses with crushing taxes. You know, yesterday I was in Buffalo, New York.
GLENN: Now, listen to this.
TED: I met with Charlie, the butcher. He's got seven restaurants. By the way, an incredible sandwich, the Beef on Weck, I highly recommend it.
And I remember visiting with Charlie, great example of a small business man. And he was talking about the effect of a $15 minimum wage here in New York State.
And he said, "Listen, I've got seven restaurants." He said, "I'd like to have 20." He said, "I could have 20, but I can't afford at this rate."
How many jobs are you talking about, if you added another 13 jobs? He said, "It would be about 160 jobs." And this was a conversation I had with him, just talking to him. That's being replicated in small businesses all across the country. So if I'm president, my priorities will be lifting the tax burdens and lifting the regulatory burden so that small businesses, we can go from those seven Charlie the butcher shops to 20.
GLENN: If my tax burden went from 40 percent to 16 percent, how many jobs would we create?
PAT: Hundreds probably.
GLENN: Hundreds of jobs.
GLENN: Hundreds of jobs. And we're all the same. Anybody who owns a small business, we're all the same. We are being -- if they cut regulations, now, not necessarily in this business, but I know just from HR, we've got three people, I think, working in HR. What are their jobs? Their jobs are to keep us compliant.
If we just reduce the regulation that -- that eat up so much of a small business' time and so many of our resources just keeping us in compliance with the federal government, how many jobs would we create? Who has a compliance officer in a small business just to keep you compliant with the laws for Obamacare?
How many jobs are being eaten by the federal government?
See, they say -- Barack Obama says, "The federal government creates jobs." And that's because, if you go to Washington, they are creating jobs. These places are getting bigger and bigger and bigger. And they're all federal jobs. What do those federal workers do? They create paperwork for people like us. They create situations where you need somebody to stay in compliance. That's the problem.
And nobody else is really talking about these things.
PAT: How do you -- if you're an economic person at CNBC and you know this stuff pretty well, like they obviously do, how do you not say, "Wow. That's our guy --
GLENN: I don't know.
PAT: -- that's our guy?"
GLENN: I posted this. This is 41 minutes of his interview. And I have never heard a politician talk like this. Never. This guy smoked MSNBC -- or, CNBC. There was nothing they could bring up on the economy that he couldn't answer. Remember, they started with, "Can you explain this?" And then she followed with, "Okay. But tell us, how is this happening with Europe?" And he answered the question.
I mean --
STU: Yeah. By the way, quick tip for journalists interviewing Donald Trump: End a lot of questions with "can you explain this" and see what he comes up with. Because he can't explain any of it because he doesn't know -- he'll go back to China and everything else. Hold him to it. Make him explain those specifics. That would be really helpful.
GLENN: Right. Right.
STU: By the way, you're talking about regulation, Glenn. The average US firm, the annual cost burden for regulation is $233,000.
GLENN: How many jobs do you create with an extra 233,000?
PAT: 50,000 a piece. Four.
STU: Yeah. Four or five jobs.
GLENN: The average place. The average place in America.
STU: And that's --
GLENN: Would have money for four extra jobs and some money left over.
STU: And, by the way, that's just federal regulation. The total cost nationally, $2.08 trillion. Trillion.
GLENN: And that is just burnt money. That is $2 trillion that is just burnt. There's nothing -- there's nothing being created with that $2 trillion. Nothing being created of any value. Anything that you can take and turn into something, there's nothing that you can turn and sell to somebody else. That's $2 trillion of burnt money.
STU: And just to go off on manufacture specifically, because everybody talks about them, the average cost for manufacturers, just compliance, is $19,564 per employee. $19,000 per employee. But that hits different for the size of your firm: A big employer, it's $13,000, it costs. For a small manufacturer, small businesses, as you were just talking about, two-thirds of all --
GLENN: All jobs in recessions are created by small businesses.
STU: 13,000 for big employers. 35,000 per employee for small businesses.
GLENN: So you want to raise -- you want to raise -- you are working in the manufacturing industry, you go ahead and say, "I want -- I want Ted Cruz as president because he's going to cut all of the regulations or a lot of the regulations. They go from $35,000 a year just to keep that employee in compliance. And they cut it down to $10,000 a year. What do you say those -- those jobs and those employees get a 10,000-dollar raise?" And the rest of it is used to create new jobs, to grow their business, or to be able to reward the people that are -- are -- took the risk in the first place.
Featured Image: Screenshot of Squawkbox