Former NYC Mayor Rudy Giuliani to Visit THE KUDLOW REPORT Tonight

Following is the unofficial transcript of a FIRST ON CNBC interview with Former NYC Mayor Rudy Giuliani tonight on CNBC's "The Kudlow Report" (M-F, 7-8PM ET). Additionally, here is a link to video of the interview: http://video.cnbc.com/gallery/?video=3000126638.

LARRY KUDLOW, host: Welcome back to THE KUDLOW REPORT. Let's get right to our special guest this evening. We welcome now first on CNBC America's mayor, of course, the former mayor of New York City, my great friend Rudy Giuliani.

Rudy, Michelle and I don't want to spend the whole segment on this, but as you probably know, there is a saucy story--that's what I'm going to call it-that today Michael Bloomberg on grounds of environmental--on grounds of global warming--has endorsed Barack Obama. Do you think this has anything to do with getting FEMA money and paying for all of New York's infrastructure, or what strikes me as an odd time for the mayor? It's like, doesn't he have anything better to do?

Former Mayor Rudy Giuliani: Well, I don't know. You'd have to ask Mike exactly why he wanted to do it on that--on that basis. You know, it seems to me there were some other issues that were pretty darn big like what's going on in the Middle East, a disaster in the Middle East, a disaster in Libya, the disaster to our economy that this president has brought about, his inability to really set forth a plan for the next four years that makes any sense. And you want to talk about this particular issue that we're going through, his absolutely just say no to any form of expansion of energy, which is the reason why we're having such a tough time recovering. Michelle just made the point before about this aging infrastructure that we have. Well, we haven't rebuilt it, not because we don't have the money to do it, we haven't rebuilt it because all these groups oppose every single thing you want to do. If you want to build a new generator, they oppose that. If you want to build new transmission lines, they oppose that. God forbid you should build a new nuclear power plant. Oh, my God, oh.

KUDLOW: But that's what Bloomy is saying. I don't mean to cut. That's what Bloomy is saying. When he goes down this road of global warming and he also mentioned, Rudy, cap and trade. He is saying we're going to put limits on the volume of energy, all energy, including, you know, the new fracking energy for natural gas. This is an era of limits. It's anti-growth. And New York City doesn't need anti-growth policies and neither does the rest of the country.

Mayor GIULIANI: Well, the reason for the difficulty in recovering right now is that we are always at the breaking point on energy.

MICHELLE CARUSO-CABRERA: Mm-hmm.

Mayor GIULIANI: I knew this when I was the mayor. I built 10 new generators as a result of that. I really pushed to do it by the New York Power Authority. Where--and this is not just true of New York, it's true of all throughout America. We operate at the limit. Now some of that is economics because it costs money to buy that excess energy, but some of it is also that excess energy doesn't exist because we haven't built a new nuclear power plant in 30 years.

CARUSO-CABRERA: Right.

Mayor GIULIANI: We haven't expanded transmission lines, we haven't modernized. And a lot of that is because--I would call them not the environmentalists, the extreme environmentalists who oppose it and just block it completely.

CARUSO-CABRERA: What do you think of the situation in New York City right now, how it's been handled? And when you were mayor, was there an on the shelf plan in case we got hit by a huge hurricane like we have?

Mayor GIULIANI: Well, sure. I mean, the city's had hurricane plans for 40 or 50 years. We had several hurricanes. This has been an enormously intense storm, so I don't know there's really any really good comparison to it. I think that--I think--it seems to me the emergency plan has worked pretty darn well, particularly during the emergency. The length of time for the recovery is a systemic problem that should be cured. And the length of time for the recovery, some of that is due to the fact that we don't have as much sources of energy as we should have. We should probably have 10, 20 percent more than we have. And the reality of that is that's been a long-term opposition to really redeveloping our infrastructure.

CARUSO-CABRERA: Mm-hmm.

KUDLOW: That's the thing. Mayor, I just want to go there because we were talking about this in the last segment. Regarding the role of big government, which regulates all the MTA rates, it regulates Con Edison, it regulates all these infrastructure operations, it is the exact opposite of a free market and it seems to me at crises like this, the negative consequences come out. We don't have what we need because we don't charge what we need in a free market.

Mayor GIULIANI: Well, I think that's absolutely true. I think the reality is the supply of our energy hasn't increased with the demand on our on our energy. And the reality is then when you get hit like this, and where you're operating at the breaking point, then it takes forever and ever to rebuild. Also, a lot of this equipment, I'm not a complete expert on this, but I do know from my experience as mayor, a lot of this equipment is very old, which is the reason why it takes three, four, five days to bring it back.

CARUSO-CABRERA: Mm-hmm. Right.

Mayor GIULIANI: Whereas if you had modern equipment, you could bring it back in 12 hours, 24 hours. And that's a failure of long-term, not just investment, it's an opposition to doing the things that have to be done to really making us energy sufficient.

CARUSO-CABRERA: Mr. Mayor, I know you're a classy guy, you don't like to second guess, maybe you don't like to be critical, but if you were mayor of this city, would you be running the marathon? Or would you allow the city to host the marathon on Sunday? Is this a good idea?

Mayor GIULIANI: One hundred--100 percent.

CARUSO-CABRERA: Why?

Mayor GIULIANI: I agree with that 100 percent. The city has to go on. The city--the city has to...

CARUSO-CABRERA: It's stretched to its limits. The cops are stretched to their limits.

Mayor GIULIANI: I--OK. This is--this is what we have 35,000-size police department for because we can do remarkable things. We can get hit very hard. And you know, I once had a tremendous snow storm two days before--two days before the New Year's Eve celebration. They wanted to cancel New Year's Eve. I said no. They wanted to cancel New Year's Eve in 2000 because of terrorist threats. I said we're going to deal with the terrorist threats. They wanted to cancel the marathon in 2001 and I said to heck with that, we're going to have a marathon and we're going to show that New York City is the most resilient city in the world. I applaud...

CARUSO-CABRERA: So if you were still mayor, we would've had the Halloween parade?

Mayor GIULIANI: I don't know about the Halloween parade, that was a little bit close to it. But we sure as heck would've had the marathon. And I applaud...

KUDLOW: But Rudy...

Mayor GIULIANI: I support the mayor in doing that.

KUDLOW: But...

Mayor GIULIANI: I think he's making the right decision.

KUDLOW: Well, two things, you gave a speech--you gave a speech today. I got a copy--or you gave a speech yesterday and you said in large capital letters, New Yorkers are resilient. And I say amen, God bless. I think that. I've been a New Yorker for a very long time. And you also do praise Mayor Bloomberg's performance during this crisis. Let's put his silly op-ed piece aside for a minute. As somebody who's one of the greatest crisis mayors in the history of this country, Rudy Giuliani, at least that's my humble opinion, you are giving Mike Bloomberg high marks, are you not?

Mayor GIULIANI: I give him high marks on the whole handling of this, including the decision to go forward with the marathon. I disagree with him on the--on the Obama endorsement. But that's a wholly separate matter.

KUDLOW: All right. One other one, just coming back to some of the nuts and bolts. What happens to businesses? They take a look at what happened downtown, the whole bloody thing was a big mess, it's still a mess, going to be a mess for a while. Yes, we got the stock exchange open. Is there an issue of companies moving outside New York City and going to places? I don't know where they go, Dallas or Houston or you know, Atlanta, that have better...

CARUSO-CABRERA: Or Stamford, God forbid.

KUDLOW: And have-- well, Connecticut's just as big a mess as New York. But I mean, do they go out of town, Mayor Giuliani, because they think that the facilities are better?

Mayor GIULIANI: I don't think so. I don't think so. I think the big issue in New York is not something like this. This is very rare and the reality is natural disaster can hit you anywhere. Texas, unfortunately and tragically, has been hit with some pretty terrible natural disasters in the last couple of years. So no. I think--you want to keep New York City vibrant, then you worry about taxes. That's the ongoing thing that businesses have to pay. And the reason they start looking outside of New York City is when they can get better deals outside of New York City, where the tax level is much--is much less.

KUDLOW: Amen.

Mayor GIULIANI: So that's the thing I would look at. You keep taxes low in New York City--I mean, downtown Manhattan has doubled in size since September 11th.

CARUSO-CABRERA: Mm-hmm.

Mayor GIULIANI: I don't see that changing.

KUDLOW: All right. Great stuff. Many, many thanks.

Mayor GIULIANI: Thank you.

KUDLOW: America's Mayor Rudy Giuliani. As always, we appreciate it.