Home Depot Co-Founder: A Lot of Uncertainly in the GOP Field

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Home Depot Co-Founder: A Lot of Uncertainly in the GOP Field

Exclusive: Ken Langone on Cain harassment allegations, 2012

This is a rush transcript from "Your World," November 8, 2011. This copy may not be in its final form and may be updated.

NEIL CAVUTO, HOST OF "YOUR WORLD": All right, the scene right now in Scottsdale, Arizona, an empty podium, but pretty soon Herman Cain is going to come up to that podium and try to deal with the all of these allegations that have popped up as to whether he harassed women when he was head of the National Restaurant Association.

I guess it’s Phoenix, Arizona, Pam? I misstated -- Phoenix, not Scottsdale. But, again, he should be coming there in about a half-an-hour.

Meanwhile, Home Depot co-founder Ken Langone is watching this closely, because this is part of the back and forth in the Republican race. Mr. Langone of course the co-founder of Home Depot and a backer of Mitt Romney, right?

KEN LANGONE, CO-FOUNDER, HOME DEPOT: Yes, sir.

CAVUTO: What do you think of these Cain charges?

LANGONE: Well, I think, without regard to the merit of the charges, I think it has been handled terribly.

I think whoever advised him to stonewall was dumb. When you run for president, everything is on the table. That’s part of the deal that you accept when you decide you’re going to jump into the fray. So my first thought would be for him to think he could simply say, I’m not going to talk about it, and it would go away, only heightens the curiosity of people.

CAVUTO: Is it too late for what he’s going to do in a half-an-hour?

LANGONE: You know, I can only think back to the Bill Clinton era. Anything is possible in America.

CAVUTO: Yes.

LANGONE: Right?

CAVUTO: Yes.

LANGONE: And you would have thought that when Bill Clinton had to go on television and admit that he had lied, "I did not have sex with that woman," what is "is," and -- but look at him. He came back and he is a very popular guy in retirement.

CAVUTO: So far, Herman Cain’s poll numbers look stable. What do you make of that?

LANGONE: I think is a lot of uncertainty in the Republican field. I think, for example, the fact that Perry jumps in, he goes to the head of the class, Cain jumps in and he goes to the head of the class -- I am supporting Mitt Romney.

CAVUTO: Why? You really wanted Chris Christie of New Jersey to run.

LANGONE: You can’t have what you can’t get.

CAVUTO: Did you work him over hard, please, run, run, run? The talk was that you made a full-court press.

LANGONE: You call the governor and ask him just how hard I pressed him. I did everything but sit on his chest, OK?

CAVUTO: And he just told you, get off my chest?

LANGONE: No. He just said that he felt like he had an obligation to Jersey and he felt that what he had accomplished so far was fragile and it will take the full four years. And in the spirit of candor, I said, you know, Governor there is no certainty you are going to be reelected in ‘13.

CAVUTO: What did he say?

LANGONE: "I understand that," he said, "but I still have to make this decision."

And I said the reason we wanted you is exactly for the way you are acting right now. That was your attraction to us. Honest. Direct. You know where he is. You know where he stands.

CAVUTO: But then you had to revert to another -- then you went back to Romney. Did Romney like a second fiddle?

(CROSSTALK)

LANGONE: No. John Whitehead brought Governor Romney in to see me.

CAVUTO: John Whitehead, the former Goldman Sachs...

(CROSSTALK)

LANGONE: Right. We had a nice visit and I was very forthright. Christie had not decided yet.

And I said, Governor, I want to be honest. I am doing everything I can to persuade Governor Christie to jump into the race. And if he does, I will support him. On the other hand, if he doesn’t, I want you to know I will do everything I can to help you get elected.

And that is where we are.

CAVUTO: What did he say?

LANGONE: He appreciated that. He thanked me.

CAVUTO: Really?

LANGONE: He said, I appreciate that.

CAVUTO: Did he say that you would be a treasury secretary?

LANGONE: I’m -- I’m -- you know the great thing about -- I am 76 years old. I am too old.

CAVUTO: You don’t look a day over 75.

LANGONE: Well, I -- maybe I don’t look it, but I’ll tell you what.

(LAUGHTER)

LANGONE: Look, there is nothing in this for me, except one thing, thinking about two or three generations out, what the hell are we doing to the kids if we don’t fix this mess now.

Think about the future of these kids. You look at Greece, you look at Italy, you look at Spain, you look at Ireland, Portugal, guess what? It will be here. We have got to learn to have fiscal discipline. But on the other hand...

CAVUTO: Well, Republicans are hardly showing it.

LANGONE: Oh, whoa, whoa, whoa. Do me a favor. I’m not going to sit here and issue an apology for the 2001 to 2009 spending rate, OK? I’m being very frank.

CAVUTO: And, by the way, hats off to you. You were very critical of it then.

LANGONE: No, I was -- back then, I said, you know what? Representative Ryan now has religion. He is all for spending restraints.

And I asked him, I said, how many spending bills did you vote against when George Bush was president? Every one, he voted for.

CAVUTO: So you think there’s a little bit of pox on both houses?

LANGONE: Well, no, sure there is.

CAVUTO: OK.

LANGONE: But where are we now? Why do I like Romney or why am I supporting him, which I also like him?

His wife got up last week at this fund-raiser we had for him. And she said I want to assure all of you one thing about my husband. He is an honest man. And there is nothing in his past that will come out that will embarrass any of you or me or his family. He is a good man and he’s a decent man.

Fair enough. Start with that.

CAVUTO: I’m sure none of these spouses have said -- I don’t wish anyone ill, but that’s not the first time a spouse has...

(CROSSTALK)

LANGONE: Let’s put it this way. If you will take reasonable odds, I will take the bet. There’s nothing there of that nature.

CAVUTO: Is that important to you that are no ethical...

(CROSSTALK)

LANGONE: No, but its noise that diverts you from the big issue.

There is one issue, only one issue. Not Iraq. Not Afghanistan. Jobs. Jobs. Jobs.

CAVUTO: You think Mitt Romney is the best poised for that. Why?

LANGONE: Simple. He is a businessman. I believe there will be more input from the business sector if he is president to figure out how we create jobs not in the public sector, but in the private sector. The public sector jobs only exacerbate the issue. You have got to raise taxes.

Let me give you a number. And this came from him. We bought 1,000 ships a year during World War II. And we had 1,000 people in the Bureau of Ships. In the 1980s, we bought 17.2 ships a year, and we had 4,000 people in the Bureau of Ships. Today, we buy 9.2 ships a year, and we have 25,000 people in the Bureau of Ships.

Before the stimulus package, we had one person at the Department of Transportation making $170,000 or more. Right after the stimulus package was passed; we have 1,149 people in the Department of Transportation getting paid more than $170,000.

This is why the stimulus didn’t work. It didn’t. The whole idea of a stimulus, John Maynard Keynes said it is pump priming. Stimulate. Keep it -- get it going. It didn’t do anything like that because none of it worked its way into the public sector.

Look, you know what? I’ll give you one more example.

CAVUTO: Real quick. Real quick.

LANGONE: The gang downtown, you want to see trickle-down economics work? Those people who are now out of work as waitresses working in shops, those people all depended on the people that work down around there to be able to get in those shops.

CAVUTO: They were being occupied, yes.

LANGONE: Gone.

CAVUTO: OK.

LANGONE: Go ahead. Take your time.

CAVUTO: We’re going to take a break here.

(COMMERCIAL BREAK)

CAVUTO: Well, he bashes the Wall Street fat cats, but right now the Wall Street fat cats could be his best friend, because with the Dow’s gain today and the S&P 500 and the Nasdaq also doing well year to date, maybe this is the wind at the president’s back.

The co-founder of Home Depot, one of the savviest business reads I know, Ken Langone.

Wouldn’t that be ironic?

LANGONE: I think it’s more than just the market. What about the people out of work, and not the 9.1 or 9 percent, the 15 percent, 16 percent, 17 percent, 18 percent out of work, OK?

CAVUTO: But if this continues, the argument is, not among all, but that it could be the wind at his back, that it will improve prospects for those folks.

Do you agree?

LANGONE: I think -- I think the surge in regulation these last three years has dramatically changed the underlying structure of job creation in America. Look at Wall Street. Look at the banks. They are laying off left and right.

(CROSSTALK)

CAVUTO: Bonuses are way down.

LANGONE: Yes, because the profits are way down. Goldman Sachs lost money in the last quarter.

CAVUTO: I talked to your buddy Bernie Marcus not too long ago if he could do or you guys could do...

LANGONE: We couldn’t do it.

CAVUTO: .... today what you did with Home Depot when you got it going.

LANGONE: We couldn’t do it. We couldn’t do it.

CAVUTO: And he said -- no, I don’t understand. What is different?

LANGONE: Here. We believe that every person that worked with us -- nobody worked for us -- they were our associates -- should own the stock, directly or indirectly. Options, today, you must expense.

So, when we started the company, and we had two stores and then four stores, those people that got those options, we would have had them immediately expensed with the Black-Scholes about 40 percent.

CAVUTO: Right. Right. Right.

LANGONE: Well, guess what? We never would have had earnings. And it was foolish because if the options expired out of the money, the expense we booked never really happened.

CAVUTO: Yes. But you know why I don’t buy that? You would have found another way to make it work. And you guys and Steve Jobs and Bill Gates, the one common theme is, in a very tough environment, you guys made it work.

LANGONE: Look, we made it -- look, we started in the roughest of times. We started in 1979.

CAVUTO: Sure.

LANGONE: Right. We probably didn’t know any better, so we didn’t know what fear was.

But you are asking me if we could do it again. We could probably have succeed, but not on the scale that we did. Keep in mind...

CAVUTO: So what does this president have to do? Tell me two things Ken Langone says he has to do right now.

LANGONE: He needs a sentiment transplant. He needs to go from looking at business as fat cats, and saying this is what brought America to the party.

I will tell you right now, the biggest threat to our democracy in my mind is unemployment. People who have a job, people who are educating their kids, people who are going do a movie, people who are paying off a home, people who are buying a car, they are in the game. They are in the game, and they are happy.

But you take people who are out of work and all they see is despair, and he talks about -- or whoever it is talks about the widening gap between the rich and the poor? The reason is not that we worked harder or smarter and made more money. The reason is that we are not bringing education into the lower -- I am where I am today because my parents were adamant about my having a quality education.

And I went to a public school out in Long Island. I had great teachers. And I learned. And I got -- I was eligible for college. It wasn’t hard for me to jump into the mainstream.

CAVUTO: But do you see their point about that chasm, the one way to close it is to tax guys like you more, to narrow it?

LANGONE: It’s not going to -- you could tax us 10 percent and you won’t move the needle.

Why not accept the biggest barrier to closing that gap are the quality of teaching in the public schools. Look, there is a direct correlation. Look and see the performance of the kids and look at the economic -- you bring someone to Home Depot that can count, that can read, that can communicate, that does a great job -- we have a guy, his name is Joe McFarland. I’m so proud of him. He started with us at the very bottom. He now runs 700 stores.

He has probably got, I want to guess, 125,000 employees under him.

CAVUTO: Who actually came up with the Home Depot idea? Because neither you nor Bernie Marcus were handy.

LANGONE: No, Bernie and I were walking a store one day when it was Handy Dan, before we got fired.

CAVUTO: Right. Right.

LANGONE: And I was all excited. We were in Kansas City and we were opening a new store. I owned 16 percent of the company. And I was being my usual stuff, which is like, if you want to play poker, play it with me, because when I have a great hand, I whistle and I clap my hands.

(LAUGHTER)

LANGONE: And so Bernie says, hey, you better be careful. I said, what do you mean? He said, there is something out there that could wipe this industry out. And I said tell me what it is. He said, no, it is so profound; I’m not going to tell you.

So when Bernie got fired and called me for a job, he had no money, he had a family, he had no insurance. He called me and he flew to New York and we met at the Waldorf Astoria on a Sunday morning. He brought a lawyer with him, a good guy, Jerry Glassman. And I said -- Sigoloff, who is now dead, let his soul rest in peace, if he had one -- Sigoloff says -- I mean, Bernie says to me that Sigoloff wants to put me in jail.

I said, for what?

I don’t know.

So I said to Jerry, I said, Jerry, whatever the hell these guys did, he’s not going to jail. I said, fine. I said, Bernie, let’s start a company.

What do you mean?

Remember that you told me there was this thing that if somebody did it, it would change the industry?

CAVUTO: Yes.

LANGONE: And that was it.

CAVUTO: Amazing.

(CROSSTALK)

CAVUTO: You were not handy then and you are not handy now.

LANGONE: You know what I have got in my office? I have got the original plan before we opened our first store.

CAVUTO: OK. Man, I want to see that. Maybe we will see that tonight on Fox Business, because you’re going to be joining us for more of this on Fox Business.

(CROSSTALK)

LANGONE: I can’t go back to my office and get it.

CAVUTO: OK. Fine.

LANGONE: It’s in my office. Why bring it...

(CROSSTALK)

LANGONE: Next time.

CAVUTO: Just show up yourself.

You’re going to see more of this legend at 6:00 p.m. on Fox Business.

LANGONE: Only in my own mind, legend.

CAVUTO: Yes. That’s what I’m told.

Seriously, if you don’t get Fox Business to see this...

STUDIO: Demand it!

CAVUTO: Or you will have a billionaire on your you know what.

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