CNBC TRANSCRIPT: CNBC’S CHIEF WASHINGTON CORRESPONDENT

JOHN HARWOOD SPEAKS WITH CALIFORNIA REPUBLICAN

GUBERNATORIAL CANDIDATE MEG WHITMAN ON CNBC

Following is the unofficial transcript of a CNBC interview with California

Republican gubernatorial candidate Meg Whitman on CNBC’s “Your
Taxes, Your Vote: Countdown to the Election,” Friday, October 15,
2010 at 7:30pm ET.

All references must be sourced to CNBC.

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JOHN HARWOOD reporting: Meg Whitman, thanks so much for being

with us.

Ms. MEG WHITMAN: Happy to be here.

HARWOOD: In your book, you talk about a part of your professional life
that was before eBay, when you were at FTD, and you said at one point
before leaving, `This company isn't fixable, at least not by me.' Why
shouldn't anyone who's looked at the recent history of California
conclude that's exactly what you...?

Ms. WHITMAN: Well, California's a huge challenge, no question about it,

but to really--the thing we have to do, first and foremost, is we've got
to get Californians back to work. We've got a 12.4 percent
unemployment; 2.3 million Californians wake up without a job every
morning. And if we don't get people back to work, we will never have
enough tax revenue from personal income tax or corporate taxes or
business taxes to invest in the things we really care about. So job one
is getting people back to work, and I've got exactly the experience that
we need to do that. I mean, I've been in the business of creating jobs.
My opponent has been in the business of politics for 40 years. So I
really understand, you know, the needs of small business and what we
need to do to keep jobs in California.
HARWOOD: So how do you do that when you've got--you walk into a
$19 billion deficit hole from the get-go?

Ms. WHITMAN: Yeah. Well, the budget plan, first you've got to work the
revenue side, right? We've got to get Californians back to work. But
then I've identified $15 billion of savings that will, frankly, I think make
California stronger, not weaker. And I'll tell you the categories they fall
in. First is we do have to shrink the size of government. We have too
many people who work in government. Second, we've got to reform
the public employee pension crisis, which is in many states, not only
California. But this will cause California to run out of money if we don't
fix it. I'll give you a little statistic. In 2000, we spent $300 million to
support the public employee pension. This year it's 3.9 billion. Then we
have to reform welfare. We've become a welfare state. Twelve percent
of the population, a third of all the welfare cases. And then we really
need to run this government more efficiently and effectively. Using
technology would be a place I'd start.

HARWOOD: But now don't you think that if it were as easy as cutting
wasteful and obviously frivolous programs, that it would've been done
long ago by Governor Schwarzenegger and others?

Ms. WHITMAN: I bring, I think, a unique expertise to this. You know, in

Silicon Valley, when we have a problem we can't solve, we figure it out.
We go around, we go underneath, we use technology to do things that
haven't been done before. We haven't even begun to use technology
to make the government run more efficiently and effectively. For
example, to find the fraud, $3 billion to $4 billion of fraud in the
administration of Medicare and Medi-Cal. I mean, can you imagine? So
there are...

HARWOOD: Don't you think Governor Schwarzenegger wants to get rid

of fraud, too?

Ms. WHITMAN: He does, but he, you know, he and I have quite different
backgrounds. I mean, I applaud Governor Schwarzenegger on many
dimensions. He did a number of good things, but hadn't had the
experience of running a big, large organization where you have to
focus people on doing a small number of things well. And boy, my
technology expertise, I think, is going to make a big difference here.

HARWOOD: Talk a little bit about the fundamental difference, though,

between working in the public sphere and working in business. I was
reading one of the profiles of you in the--someone who had watched
California politics for a long time said she's going to be shocked to
discover how powerless a governor is compared to how a powerful CEO
is in a company.

Ms. WHITMAN: Well, the government should never be a business, and it

isn't. But I think there's lots of things that we can apply, managerial
expertise, that will help put California back on track. I mean, what we
have here is a crisis of very significant proportions and what I can tell
you is doing the same thing over and over again and hoping for
different results isn't going to get you here. So I think there's a lot that
I bring from the private sector, bringing people together, focusing on a
small number of things, doing things in ways that have not been done.
And, you know, California's been on a downhill slide for many years,
and we're going to have to fundamentally change how we do things.

HARWOOD: You said that you've got to get the revenue side in order.

Ms. WHITMAN: Mm-hmm.

HARWOOD: Every single, at the national level, big deficit reduction

package by President Reagan, by the first President Bush, by President
Clinton, has involved tax increases, revenue, as well as spending cuts.
Is the better part of honesty and candor with the voters of California to
say that's what you're going to have to do as well?

Ms. WHITMAN: I don't believe we are going to have to do that. I am

against increasing taxes on Californians.

HARWOOD: You can close a $19 billion budget deficit simply by cutting
spending?

Ms. WHITMAN: And growing the economy. What we need is a bigger

economy, not a bigger government, and so if we can get Californians
back to work, bring unemployment down, that will increase tax
revenues and then we have to, as I said, we have got to take a look at
every line-item in this cost of the state of California, and we're going to
have to run it more efficiently and effectively. The truth is, we have a
government we can no longer afford and Californians are overtaxed.
We have among the highest sales tax, the highest personal income
tax, the highest business tax rates. And part of our economic problem
in California is we're not competitive to neighboring states. You know, I
know what it was like as a CEO, you look over the landscape and you
say, `What's the easiest, best, simplest and cheapest place to do
business?' California doesn't win on most of those dimensions today.

HARWOOD: But why shouldn't one of our viewers listening to this

interview, in hearing you say, `We're going to cut waste, we're going to
cut welfare. We don't need to raise taxes. We can cut the budget
deficit by growing the economy while cutting taxes,' say, `Yeah, she
may have--used to have been a straight-talking CEO, but she's totally a
politician now.'

Ms. WHITMAN: Well, I'm not a politician. I've, you know, been in
business for 30 years. I mean, I am a fiscal conservative, and that is
born out of 30 years in business, deeply understanding you simply
cannot spend more money than you take in. Deeply understanding,
you know, how we can do more for less. That's what the private sector
does. That's not what the government does, and we need a different
approach. And there is absolutely a way forward here. You know, look
at what Chris Christie has done in New Jersey. He had a worse budget
deficit as a percentage than we had--than we have. Look at, he's
reduced costs, he's, you know, streamlined the bureaucracy, and he's
closed the budget deficit. And that's exactly what we're going to do in
California.

HARWOOD: Governor Pete Wilson's former speechwriter said, `She's

been spending $2 million a week on generalities.' True?

Ms. WHITMAN: Absolutely not. I have the most specific plan to get
California turned around of any political candidate, I think, in many,
many years. I've got a book that talks about my exact plan to create
two million new private sector jobs, a very detailed plan to save $15
billion.

HARWOOD: But every analysis of the race I've seen says that you and
Brown both have ducked specifics on exactly how you're going to close
that budget gap.

Ms. WHITMAN: Absolutely not true. I have been so specific, far more
specific than my opponent, Governor Brown. He has no plan. In fact,
the other day he said, `The process is the plan.' Well, if you like the
process in California right now, in Sacramento, and the complete
dysfunction of that state government--you know, the budget was 111
days overdue--then Jerry Brown is your candidate.

I've got a very specific plan because what I know is, in a crisis, you've
got to focus on doing a small number of things well. I believe you can't
go to Sacramento and try to boil the ocean. You've got to focus on a
small number of things because there's lots of people who want to stop
you: the Democratic legislature, the bureaucracy--which is completely
out of control in Sacramento--and the entrenched interests. So you've
got to focus like a laser, you've got to get the right appointments in
your administration, and you're going to have to work productively
with the California State Legislature, which I've got a plan to do.

HARWOOD: Sarah Palin used to talk in 2008 about how, in Alaska, she
had taken the state plane and put it up on eBay. Now there was a
problem or two with the telling of that story, but when you look at
California government, what goes up on eBay, what gets privatized?

Ms. WHITMAN: Well, we have to look and say, first of all, we have a
government we can no longer afford, and we've got to look at
everything to reduce the costs. And, in California, we have hired over
33,000 people from just five years ago when, by the way, the revenues
of the state were about the same. So how can we shrink government,
use technology to do more with less. There are opportunities, I think...

HARWOOD: So less for schools, less for roads, less for prisons, less for
police?

Ms. WHITMAN: No. No. I'd say, first of all, less people. We've got to get
the pension program under control, we have to reform welfare, and
then we have to manage it better. Let me give you an example, the
Bay Bridge. We needed to do seismic repairs for the Bay Bridge. The
budget was $1 billion. It came in at $5 billion. In the private sector, if
that happened, you would lose your company, you'd lose your job. In
Sacramento, everyone just blames the other party. So there's lots we
can do here to run this far more efficiently and effectively and then
give us the capacity to invest. The challenge that we have in California
right now is because revenues are perennially less than cost. We have
no capability to invest in infrastructure. The water bond is the perfect
example. We need to invest in the water infrastructure in California.
We have no money to do it right now.

HARWOOD: How do you grade your own investment on the campaign?

Ms. WHITMAN: Mm-hmm.

HARWOOD: You've spent an awful lot of money. What sort of metric

have you used to evaluate what's worth it and what wasn't? Or do you
simply say to your consultants, and I know you've got some very good
ones, `Whatever you say, guys, we're doing it.'

Ms. WHITMAN: So, at the very beginning of this campaign, we laid out
a strategy to win. And we, you know, got very detailed on policy,
created a very detailed plan to turn California around. But what I can
do here is get my message out and give Californians a choice. I'm up
against a career politician who has one of the best-known names in
California politics. This is his 14th election. He's been in office for 40
years, and I also face huge amount of money from the unions. Over the
last four or five years in California, they've poured $300 million into
controlling politics in Sacramento. So what I've been--what I've been
able to do is get my message out, give voters choice. And it's a very
stark choice this time in terms of who they think will be the best to
govern California.

HARWOOD: Public polls indicate you're a couple points down. Do you

think you've gotten exactly what you've paid for?

Ms. WHITMAN: You know what? In a state where we have 2.3 million
fewer Republicans than Democrats, I'm happy to be in--where we are.
This is a dead heat race. It's going to be a dogfight to the end. But you
start 2.3 million votes short of where a Democratic candidate starts.
And, of course, I had a very contested primary. Jerry Brown had no
primary at all. So I'm happy with where we are, and we're going to
spend the next 20 years looking for votes in every part of California.

HARWOOD: Two things, quickly, before I let you go. The first is, you
know, there's a reason why some people go into business and some
people go into politics, different set of motivations, different skill sets.
Nobody doubts that you're smart and you were successful at eBay, but
is it possible that the string of controversies that have been thrown up
about you, issues with employees and the housekeeper and all that
sort of stuff, suggest that, at the level of the personal touch, the
emotional intelligence that really successful politicians have to have,
that that's not what you're good at?

Ms. WHITMAN: You know, I guess that's going to be up to the voters in

California to decide. I've spent, you know, 30 years in leading teams of
people, bringing people together. I led a community at eBay that, you
know, was 80 million unique visitors a month strong, and so I think I
understand what California needs to turn itself around. I know how to
bring people together. I know how to create a shared sense of vision
and values, and I know how to create confidence in people. And what
California lacks right now is confidence. Every place I go, people say,
`Can California actually be fixed?' It can be fixed. It's going to take a
different approach, but we have a great state. And you know what, it
matters to the country because where goes California goes the US.

HARWOOD: Clearly the issue that's dominated the race the last couple
of days is this "whore" comment...

Ms. WHITMAN: Yeah.

HARWOOD: ...that an aide to Jerry Brown made. I want to go back to
the idea of you as a straight-talking, no B.S. businessperson. If that's
who you are, realizing the way that word is used colloquially, why don't
you just step up and put it to rest and say, `This is silly. It's not an
issue. I'm not insulted by it. So many things in politics people pretend
to be outraged because they use it, that's old politics.' Why don't you
get rid of that?

Ms. WHITMAN: Well, I think what you're seeing in California is old style
politics, which is personal attacks and slurs, that is not befitting to the
people of California. And I think those are...

HARWOOD: That was a recorded telephone call with somebody who

was not attempting to put that out in public at all.

Ms. WHITMAN: Well, I think your personal conversations, of course,

reflect, you know, who you are and the kind of campaign you're
running. But, listen, I agree with you. I think voters want to talk about
the things that are going to make a difference. While all this has been
going on, unemployment has gone up, not down; we haven't gotten
better schools; we haven't cut one dollar out of, you know, government
spending in a way that's really meaningful. So my view is, I want to get
back to talking about the issues and--because I think this is a very
serious election. Californians, have a very big choice in front of them:
`Which direction are we going to go? Are we going to be led by
someone who has a fresh approach, brings an outside-in perspective?'
You know, California and America was supposed to be a citizen
democracy, wasn't it? You know, that you would serve, maybe, in the
real world of the private sector, have some common sense and bring it
to make government better and that's what I want to do here. I know
we can restore the California dream, but the choice is between that
and a 40-year career politician who's never spent a day in the private
sector.

HARWOOD: But just to clarify, in that spirit of getting back to the

issues...

Ms. WHITMAN: Yeah.

HARWOOD: ...are you willing to say that you know that Jerry Brown was
not attempting to slur you in that way and that you're not insulted by
it?

Ms. WHITMAN: Hey, listen, that's going to be up to the voters of

California. You know, I think I deserve better, I think the voters deserve
better, but each and every Californian is going to have to make a
determination as they look at both our campaigns and both our
candidacies and say, `Hey, who do we want to lead the state for the
next four years?'

HARWOOD: Meg Whitman, thanks so much for being with us.

Ms. WHITMAN: Thank you. Nice to see you.