Former eBay CEO Meg Whitman Wants to Be California's Next Governor

This is a rush transcript from "Your World With Neil Cavuto," May 5, 2009. This copy may not be in its final form and may be updated.

NEIL CAVUTO, HOST: Well, the economy turning the corner, the president turning up the taxes, and now a rising star in the Republican Party is turning up the heat.

Welcome, everybody. I'm Neil Cavuto.

The Fed chief now says the economy is pulling out a recession and could soon be growing again later this year, just as President Obama is planning billions in new tax hikes on business.

Meg Whitman says this is no time to be hiking taxes anywhere. The former eBay chairman should know. She built eBay from a company with just 30 employees to one with 15,000 workers and $8 billion in revenues.

Now she wants to do the same for cash-strapped California and is running for governor.

In a rare national appearance, Meg Whitman joins me now for this exclusive chat.

Meg, good to have you.


CAVUTO: I was thinking of you running. I have interviewed you so many times in your eBay capacity that I guess it says something about these times that a woman who made a fortune and created a behemoth, you know, selling stuff on the Internet is going to try to come to California's rescue.

WHITMAN: Well, I looked at the state of California. And we are in big trouble in California. It's far worse, actually, even than nationally.

And I looked at the high unemployment rate, the crumbling infrastructure, the K-through-12 education system that is now rated 48th out of 50 states.

CAVUTO: Is that so? Really?


And businesses are leaving California. We are bleeding jobs to California — to Arizona, Colorado, Texas, Utah, Nevada. And I said, you know what? I just refuse to let California fail. I am going to try to step in and see if — if some of the skills I had at eBay and other places can be brought to — to government.

CAVUTO: Meg, I was in your fine state a couple of weeks ago for the tea party. And I was in Sacramento, where, if you become governor, I guess you will be sworn in.

And a lot of those folks I talked to hated both parties.


CAVUTO: They hated Republicans. They hated Democrats. They hated the spending. They hated taxes going up in your state.

And the Republican governor and Democratic legislators are just letting it happen.

How do you say, "I'm different"? What do you say?

WHITMAN: Well, I think it's about focus, Neil.

There's three things we have to focus on. First is job creation and job retention in California, because, unless we get the economic engine going again in California, I am not sure anything else we want to do is possible.

CAVUTO: But how do you get the engine going...


CAVUTO: ... when there's no cash to get it going with?

WHITMAN: Well, the first is, we have to make it a far more business-friendly place to do business.

We have to streamline regulation. We have to reduce taxes, and we have to actually be really interested and focused on, are businesses happy in the state? Who is leaving? How can we stop them? And we're going to have to stand up and compete.

CAVUTO: But it's a national trend you're bucking, too, because there is a trend for more government, whether you're for or against it. And the guy who is espousing that, with a number of valid reasons, is very popular in your state. That is President Obama.

WHITMAN: Well, I think we need a complete change in terms on how we welcome businesses and keep businesses in California.

The second thing is state spending. We have a spending problem of epic proportions, Neil. We have a $150 billion budget, and it is not efficient, energetic government. A bureaucracy has grown up over so many years.


CAVUTO: You know, Meg, they always say that. Arnold Schwarzenegger, when he came in, after the referendum, he was going to be different. The Terminator was going to stop it.


CAVUTO: And it got worse.

WHITMAN: Well, I have run large organizations. I have balanced budgets. I have created jobs.

As you know, 1.3 million people make their living selling on eBay. And I understand how to lead large organizations. And one of the biggest differences, of course, is, I run very large organizations.

CAVUTO: Well, would you consider hawking any of the state's assets online, if that were the case?


WHITMAN: Well, the first thing we have to do is, we have to streamline government. We have to do things much better, much more efficiently to deploy technology...

CAVUTO: Everyone says that, Meg. Everyone says that.

WHITMAN: Yes. But you know what?

CAVUTO: I mean, God bless them for saying it, but it never happens.

WHITMAN: Well, it needs to happen, because Californians can no longer afford the government they have. We have to got to give them a government that they deserve and works for the people.

And I know it has been said. But, you know, I think it is about time we try to apply business to running the state a little bit more like a business, because we have to.

CAVUTO: Well, maybe so. But you are a billionaire. And you were reminding me of the first question I asked you, how does it feel to be with all that money?

But a lot of people can't relate to billionaires. And they want to know, especially in California, where a lot of wealthy business men and women have tried for various statewide offices, and almost always fail — you could argue Arnold Schwarzenegger was an anomaly — it never happens. It happens in a lot of other states, but it doesn't happen in your state. Why not?

WHITMAN: Well, I mean, I think the thing that I bring to the party is, I know a lot of about small business.

I mean, eBay was a tiny business, right, 30 business, $4.7 million in revenue, which we grew to a very large business. But I understand how to create jobs. I understand how to create the conditions for small businesses to grow and thrive.


CAVUTO: Well, what would they take? You would cut taxes, right?

WHITMAN: Well, the first thing you do is, we have got to streamline regulation.

The permitting process, the competing agencies that try to regulate — we built a building in Sunnyvale for PayPal, two-and-a-half years to break ground. We had to hire three consultants to navigate the labyrinth of California regulations, which maybe is OK for a big company, but if you're a little company, it takes 11 permits to open a hairdresser in San Francisco.


CAVUTO: ... going on, on the national level now, where they're trying to re-regulate banks, financial institutions, because a lot of this laissez-faire approach to business, the Obama folks claim, during the Bush years led to the problems we saw.


So, we have to have smart regulation. And we have to enforce the rules that we have.

CAVUTO: Would you re-regulate the financial industry?

WHITMAN: Well, I think there are certainly new forms of regulation that are going to be required.


CAVUTO: Would you raise taxes, as he wants to do?

WHITMAN: I would not be raising taxes today at all.

CAVUTO: Well, because he says — for 95 percent of folks, says he is not.

WHITMAN: Right. Well, one of the crazier things that has happened in California, for the average family, they are getting an $800 rebate from the Obama administration, and they're going to — and the average family making $45,000 a year with two children is going to send 732 of it to Sacramento.


CAVUTO: All right, but businesspeople have to be very pragmatic. And you have already run into that buzz saw of, you're liberal on a lot of the social issues, abortion, what have you. You are deemed a fiscal conservative. It is the conundrum of a businessperson, I guess.

Now, that is why the real core conservatives in the party are not quite sure what to make of you. How do you allay their fears that you are not their candidate?

WHITMAN: So, I have really, as I said, the number-one priority is, we have to revive the economy in California. As I said, if we don't create jobs and we don't retain jobs in California, it does not matter what else we do.

CAVUTO: But that core group is the one that says, it is all the money your state is spending on illegals that is a big reason why it's...


WHITMAN: That is...

CAVUTO: And I just want to remember, because I think you told "The San Francisco Chronicle" not too long ago, whether they're legal or illegal, those benefits go to children. And we have to protect the children, referring to benefits that must be maintained for them.

That was a very altruistic, very decent personal position to take, but it immediately created a firestorm that you were catering to illegals.

WHITMAN: That's not true.

We have to secure the border. We have to ultimately hold employers accountable for hiring only documented workers. We have got to take out sanctuary cities. As you know, San Francisco is a sanctuary city. There is an ordinance on the books that protects illegal aliens and criminal illegal aliens. We have to stop that.

At the same time, we have to view immigration in California as an economic opportunity, both at the low-skilled wage level, as well as the high-skilled, Ph.D.s in math, science, computer science, because we rely on them to continue to grow our economy.

So, we have to be tough on illegal immigration, but we can't lose sight of the economic opportunity that immigration provides.

CAVUTO: All right, but now let's go back past the immigration battle to a governor who you have spoken highly of. And that is former Governor Pete Wilson. It's been a decade since he last sought office, but hiked taxes during that time.

Now, you are the woman who is talking about cutting taxes, but one of the guys you compliment is a guy who raised them.


And every time in history is a different time. The choice that has been put before Californians is a false choice, that you either have to cut services, cut firefighters, cut teachers, cut policemen, or raise taxes. It's a false choice. We have to, first and foremost, make government spending more efficient.

There's a...


CAVUTO: But you have a balanced budget requirement, right?

WHITMAN: Of course.

CAVUTO: So, year in and year out, it's got to be balanced.



CAVUTO: So, even if you cut taxes, right? I mean, a lot of conservatives support that. A lot of liberals support that call.

WHITMAN: Well...

CAVUTO: But the near-term effect of cutting taxes, at least up front, is, you lose revenue.


Well, the first thing I would do is go after the cost of the bureaucracy. There's 345,000 people who work for the state of California.

CAVUTO: Is that right?

WHITMAN: It is an enormous number.

And the bureaucracy — by the way, the number of people who work for the state is 2 percent higher today than it was a year ago. If you had seen the revenue decline that state of California had seen in your business, you would have no choice but to cut head count until the company is healthy again.

And the governor and the legislature has refused to cut head count. And I think that's the wrong choice.


CAVUTO: What do you think of Schwarzenegger? What do you think of Schwarzenegger?

WHITMAN: I admire much of what he has done, workman's compensation reform, the redistricting initiative.

But I don't believe the negotiation he came to in this most recent budget crisis was in fact in the best interest of Californians.


CAVUTO: So, you think he folded? You think he folded?



WHITMAN: And he did not — he did not stick to his principles of low taxes, efficient government, and getting the economy going.

CAVUTO: President Obama went after multinational corporations. And that raised a whole hullabaloo in your old haunt, Silicon Valley. Many even strong Obama supporters saying it hit the very companies that were growing and hire a lot of Americans. What did you make of that?

WHITMAN: Well, I think we have to incentivize people to keep jobs in America and also let them get a cost structure that allows them to compete on a global basis. And I think...

CAVUTO: Well, are you for or against what the president is proposing?

WHITMAN: Well, what he is trying to do, right, is eliminate the lower corporate tax rates overseas.

And I think there is actually some small rationale to that. But we have to remember...

CAVUTO: But he is making villains, these companies say, Cisco Systems, among them, for hiring abroad to keep themselves viable here.


WHITMAN: Right. Right.


CAVUTO: Do you buy that?

WHITMAN: I don't think we should make companies villains. It doesn't mean that every CEO is perfect or every company is perfect.

But companies, small and large, are the engine of job growth. They're the engine of the economy.


CAVUTO: So, what do you think of the way the president has vilified a lot of — sometimes for deserved reasons, but bankers are not trusted. Brokers are not trusted. We're bailing out folks who can't get out of their own way.


CAVUTO: What do you make of that?

WHITMAN: And certainly some of the most egregious cases on Wall Street, obvious cases of fraud, but I believe most business owners, particularly small business owners, are honest and trying to do the right thing. And they are...


CAVUTO: What about the big business guys?

WHITMAN: And I think many of the big — most of the — most big businesses are — also tried to do the right thing.

CAVUTO: Do your old friends in Silicon Valley, many of whom support the president and supported him aggressively, have they relayed to you any disappointment, or are they fine with what he is talking about?

WHITMAN: I think everyone wants the president to be successful, right?

CAVUTO: Well, I know that, but what do they think?

WHITMAN: And — but I think everyone is a little bit concerned about the size of the deficits that we are running, the nature of the spending programs, which were not targeted towards job creation mostly.

I think we should have targeted most of that stimulus package to job creation. It should have been temporary.

CAVUTO: Would you have targeted it to tax cuts? Many conservatives in your party, on a national basis, say yes.


I — you know, what I would have done is, I, first and foremost, would have said, how do we create the most number of jobs the fastest?

Chuck Schwab said something interesting the other day. He said, there are six million businesses in the United States. How about we create an incentive for every single one of them to hire one more person?

CAVUTO: That's not bad. That's not bad.

WHITMAN: And that would be six million jobs.

CAVUTO: Let me get your sense. You worked and wanted Mitt Romney in the beginning. Mitt Romney might run for president again. Would you support him if he were?

WHITMAN: I would support Mitt. I think Mitt is just a fantastic individual. He knows a tremendous amount about the economy. He has traveled all over the country. And I'm a big supporter of Mitt's.

CAVUTO: What about Sarah Palin?

WHITMAN: You know, Sarah, I think, did an admirable job in the position in which she was dropped into, which was an extraordinarily difficult situation. She was dropped in, in the last inning of a baseball game, where the Republican team was down by a couple of runs. And I think she comported herself admirably.

CAVUTO: Jeb Bush said that other day, Meg, the party has got to get over — I am paraphrasing — its fixation with Ronald Reagan. Move on.

What do you say?

WHITMAN: I think we need to go back to our core values that made Republicans great. We have got to lead with our power ally, which is the economy.

How do we create jobs? How do we get government spending under control and run efficient, energetic government? How do we encourage inspired individuals to create wealth? Because I don't believe government creates wealth. I think it is individuals and small businesses that create wealth.

And I think the Republican Party, we can't lead with the social issues. We have got to lead with our power issues — power alley issues, which are not divisive, which everyone can buy into it. And let's lead with what we know most people want. And it's the tried-and-true formula for creating a strong economy, which allows you to do many other things.

CAVUTO: Jack Kemp, who recently passed away...


CAVUTO: ... had said, Republicans needed to reach out to minorities, and failed in that regard.

Would you, are you going to do the same?

WHITMAN: So, I want to do three things in this campaign.

I want to obviously reach out to the conservative base of the Republican Party in California, because they are very, very important. But, secondly, I want to reach out to women, who have left the Republican Party in extraordinary numbers.

The second group is 18- to 29-year-olds. We are losing share of 18- to 29-year-olds in the Republican Party at an alarming rate. And we have to stop that, because they are voters...


CAVUTO: What is the number-one way you can do that?

WHITMAN: I actually think through talking about jobs and the economy.

If you're in college — I have two college boys. They are very worried about what they are going to do when they get out. And if you are a young professional, you worry that, you were the last in, you are going to be the first out.

CAVUTO: What if you're very worried if you have a kid in college that they will never get out of college? Is that — I guess that's a whole separate...



CAVUTO: Meg Whitman, thank you very, very much. Good seeing you.

Meg Whitman, of course, made eBay a culture phenomenon, now running for governor of California.

We wish you well. We are going to keep watching you very, very closely.

WHITMAN: Thank you very much, Neil.

CAVUTO: Thanks, Meg. All right.

Content and Programming Copyright 2009 FOX News Network, LLC. ALL RIGHTS RESERVED. Transcription Copyright 2009 CQ Transcriptions, LLC, which takes sole responsibility for the accuracy of the transcription. ALL RIGHTS RESERVED. No license is granted to the user of this material except for the user's personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon FOX News Network, LLC'S and CQ Transcriptions, LLC's copyrights or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.