tv The Kudlow Report CNBC October 9, 2009 7:00pm-8:00pm EDT
side shock therapy. i'll tell you how. and the max baucus version of the obama care will really cost $1.5 trillion plus a huge middle class tax cut and another bailout nation. this time the fha is going under and we, the taxpayers, are going to fund it. "the kudlow report" begins right now. fasten your seat belt. good evening, everyone. welcome back to "the kudlow report." first up tonight, nobel surprise, president obama was awarded the nobel peace prize today in an out of nowhere announcement. was it justified? what thr smoking in oslo? the president himself didn't even seem to think. so take a listen. >> to be honest, i do not feel that i deserve to be in the
company of so many of the transformtive figures who have been honored by this prize. i will accept this award as a call to action, a call for all nations to confront the common challenges of the 21st century. >> all right. we give him a lot of credit forever his humility in that acceptance speech. here is a true irony. nbc saturday night live blasted the president for his lack after chiefment so far. take a look. >> on my first day in office, i said i would close guantanamo bay. is it closed yet? no. i said we would be out of iraq. are we? not the last time i checked. i said i'd make improvements in the war in afghanistan. it is better? no. i think it's actually worse. how about health care reform? hell no.
global warming? no. immigration reform. no. gays in the military? no. limits on executive powers. nope. torture prosecutions? nope. >> all right. here now is syndicated columnist and brightbart.com publisher andrew brightbart. andrew, welcome to "the kudlow report." no, no, that's you. you're doing a great job and a great service. i love reading it. let me just begin. what were they smoking in oslo? >> i feel sorry for president obama. because that semifunny saturday night live routine now has a pufr punctuation mark where it's a thaw session for president obama in the fact that he hasn't had any major accomplishments on the world stage. so i feel bad for him. it will be anal betrbetros arous
neck. for him, they studied him and his psychology and flattering will get you everywhere. >> that's an interesting point. is this os llo committee, a prey far left group, they once gave the peace prize to yachter arafat, for heaven's sake. are they trying to neutralize him? don't go into the surge in afghanistan. don't put the heat on iran, that kind of thing s this a calculation by these norwegian socialists? >> well, that's exactly what they are. i think it's all a calculation just as the way that mainstream press and the united states has treated him just as the international press has treated him. you know, the you have the president of the czech republic. you had sarkozy mock the president. and now you have "saturday night live" beginning to mock the president. so this was a calculation born
upon president obama's public perception back in february. and things have changed drastically in the last seven months. >> there is only so far lovely speeches can work. isn't that one of the messages? >> he has two skills and that one is speaking and the second one is community organizing. and what the a corn scandal, you now realize that community organizing isn't, you know, helping with the trash cans in the inner city. that it's a skill set of intimidation and trying to get your way using, you know, nefarious forces. and i think between his speaking and community organizing, we don't know of a third skill set from president obama. >> and for our viewers and listene listeners, you broke the acorn storey. it was a heck of a thing. andrew, is this the not bush award? is that really behind this? the i hate george bush award from europe? >> well, i mean how old is that
getting? of course it is. i'll say this also about this award. the award literally means nothing at this point. >> expand on that self-esteem. that's an interesting point. what you are thinking? what's behind that thought? >> that's political correctness. we used to have rigid standards in our school. we used to have rigid standards in the united states when it came to, i don't know, it's monetary poll sichlt we don't have rigid standards anymore. we want people to feel good about themselves. that's what people graduate college with now isn't a degree in english or history but usually in some multicultural field like gender studies, african-american studies. and people graduate feeling good about themselves, feeling good about they're sexual orientation and feeling good about, you
know, it's just -- i don't know. to me, it's cultural marxism at the end of the day. i think this is starting to be a un filed field day that is between president obama and his policies and the nobel prize being handed to him it's the world trying to lure america into the socialist, you know, european poll. >> pull to the left. get us more like that. they're not doing that here. i think that's a great point. were you at all impressed with mr. president obama's speech. michael mere said congratulations, president, now earn it. everybody unks this is a pufrpg
wags to the "snl" joke from last weekend. he had no choice but to play it humble. >> i think we all agree, i was reading our friend peter binheart on the daily beat. he was fairly representative. they all said he shouldn't have gotten this. this is something of an albatross for him. >> they put him in a very difficult position. timing is everything. and right now, of all, you know, of all the times in the last year that they could have done this to him, he's not looking like he's the magic man that they portrayed him to be when they were probably voting on this. >> what do you think as a last little one. hillary and bill clinton. what is their reaction early this morning when they hear that obama has gotten the nobel peace prize? mindful, andrew, that all during the bitter, rough primary campaigns last year between hillary and obama, she basically said to him, you're all hat and no cattle. you make a lot of speeches but
you have no record and no action. it's like deja vu all over again with this peace prize. >> i think they're secretly enjoying. this i think that they are seizing that president obama took away her presidency. and so i think that between the acorn scandal and this, what we both call an albatross, i think that they're thinking there is the slight potential that she has a chance in 201 because the missteps this president has taken. >> 2012. really? you think he'll run at him again? >> look, there's more videos. there is more acorn videos. so i'm coming from a biassed position. and there's a lot more scandal out there. >> we appreciate that very much. my hat is off you to. you're all cattle and good hat. great breaking stories we look forward to seeing you more. thanks very much for coming on the show. >> thank you. >> coming up, tim geithner, the
treasury man. he is auld talk and no always. he is all hat and no cattle. tlaen are new revelations. is white house chief of staff ram he manual running dollar policy into the ground? is emanuel running the treasury and everything else? and look at this just released dramatic video of the september 29th tsunami in american samoa. we'll have more on this. happen. this is a new view of the
that's new footage. now, 40 years ago, that's right, 40 years ago to the week paul volker began a dramatic effort to save the u.s. dollar. and later, working with ronald reagan, volcker succeeded. today treasury man tim geithner isn't even a poor imitation of volcker. he is all hat and no cattle as the dollar continues to drift lower threatening bulge inflation and huge blow to american prestige. listen to some of the cliche ridden meaningless statements by the treasury man. >> a strong dollar very important to this country. i think the dollar remains the world reserve currency. i think it will be for a long period of time. a strong dollar is very important to the united states. we have a special responsibility in the united states to make sure we're doing the things in this country to preserve
confidence in the u.s. financial system, confident that is very important to sustain the dollar's role it's the principal reserve currency in the international financial system. >> just a lot of yaping, no action. this is not leadership. this is surrender on the dollar. now we learn that rahm emanuel may be running dollar policy and the u.s. treasury. from january to july of this year, geithner and emanuel met in person, spoke on the phone or left messages for each other at least 108 times. that sin credible. and some observers believe that dollar's plunge is, in fact, a deliver deliberate pursuit of a secret obama job plan. talk about 1970s utilities. oh, my gosh. the treasury and the fed are asleep unless they take action and stop all this excess verbage. the dollar is going to continue
to sink. we're going to try to give them a wakeup call. here now is steve moore. listen, steve moore, i want to start with this new revelation from the journal's freedom of information act. 108 phone calls and so forth, back and forth which makes me think this is a deliberate dollar decline policy in some sort of 1970s, you know, job creation act. what's your take on that segment of this? >> first of all, larry, it doesn't surprise me at all. is running the monetary poll sichlt he is running everything. there are two or three people that kral everything. one is being the president and the other two that sort of are the chicago boys. and this is the mode of operation of this white house. rahm emanuel doesn't know anything about monetary policy.
so that is scare jiy. i agree with what you said in the introduction. it was amazing when you played that segment about tim geithner saying we're pursuing a strong dollar policy. the audience laughed aye at him. that was extraordinary. i think that if tim geithner would come clean and say, look, we -- our dollar is in a free fall right now. we're going to try to restore, you know, we have a big problem here. we're going to try to restore the king dollarment i would feel much more confident. but this delusion that we're promoting a strong dollar policy as the dollar collapses i think is accelerating the decline. >> think of it this way. we had the go-20 meetings in london and then pittsburgh. we just had some kind of g-7 meeting, i believe, in istanbul. it seems to me that geithner has no leadership. he's -- they didn't have a plan to stabilize the plunging u.s. dollar. there are reports today in your paper and others that the asian folks are starting to buy the dollar and stop the free fall.
but geithner can't seem to organize anything. now that makes me think that they don't want to organize anything, stooech stephen. that's why i want to go with you. this idea that there's a secret jobs plan that is the dollar's demise. do you buy that? and would that work? >> you know, i do -- first of all, i do buy that. look, i don't know what tim geithner's mind. but i do think there say mentality. and this white house, and by the way, it carries over, interestingly enough, from the last white house. and, in fact, we know -- now know that the bush administration, i think this was one of the economic down falls pursued a weak dollar policy intentionally for precisely the reason that they thought this would increase exports and reduce our trade deficit. that policy was an abject failure because what happened is the dollar weakened, larry, as you know. what happened to the price of commodities? it shot up to $150. so we didn't reduce the trade receive it is. i wish we could drum this in the heads of the people at treasury
that a weak dollar policy does not improve your trade position at all. >> all right. it may backfire. it may cause higher inflation and may cause higher interest rates and we have higher taxes coming out. there so this is all the piece. this is what we tried in the '70s. it backfired. you're right, george w. bush tried this and backfired with him. now let me ask you, what is to be done? ben bernanke gave a speech last night. but once again he said, yeah, we can drain cash and we can sell bonds to pull cash out of the market. but we're not going to do so any time soon. william dudley, the head of the federal reserve bank of new york, essentially said the same thing. so as i see it, dudley at the new york fed, bernanke the big chief in washington, plus geithner, plus rahm emanuel are all on the same page. they don't care about the falling dollar. is that your take? >> it is, i'm a believer that it matters a lot. the fact that they keep trying
to -- that i don't even pass the last one when they say they're pursuing a strong dollar policy does not insure confidence. >> action is better. why shouldn't the fed start draining cash right now? why shouldn't the fed do what paul volcker did 40 years? start moving that target rate up? and why isn't the treasury department backing it up with some dollar purchases in the open market? okay? i'm not a big interventionist. but if you have a two-pronged attack, robert rubin did this. this is how you have to do it. it's action, steve. not words. >> well, i think it's both. i agree with the action. and i'm not normally an interventionist either. but when you see the dollar falling by almost half its value since 2001, yeah, it's time to intervene. i would add to that, by the way, i believe that our fiscal policies are also, you know, contributing to the decline in the dollar. when you're borrowing nearly $2 trillion a year from foreign markets, that does not instill confidence in your currency.
when you tell the world that you're going to raise your capital gains and income tax rate that, does not install confidence in your future. >> i'm a big believe that's right reagan tax cuts actually contributed to the strength of the dollar. >> that's why i think volcker worked beautifully with reagan. he tightened up monetary policy and protected the dollar. reagan lowered tax rates. the result was we cured stagflation and the dollar rose because the u.s. was hospitable to capital. we're not hospitable to capital now. >> that's right. and this is an important part of the story. what happened, the reason the dollar rose in value in the 1980s because the demand for the dollar rose because people had confidence in the reagan policy. i don't think there's global confidence in investor confidence in the fiscal economic policy now. >> that's why i keep calling a return to the lapper munndel policy. i call it king dollar. lapper said lower tax rates for growth. that's what we need. that's what we're not getting. steve moore, bottom line here,
will there be a save the dollar effort? >> i think there should be. whether there will be, i'm doubtful. why haven't we seen one in the last six months? >> you got it. rahm emanuel, 108 phone calls to geithner. that's one of the scary fact identifies i've seen. >> he runs everything. he runs everything. it's the chicago model. >> steve moore, "wall street journal" editorial page. >> coming up, the dow hits a new high for 2009. that's right, the dow is still strong. this by the way, is the two-year anniversary of the dow's all-time closing high back october 9th, 2007.
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our partnership has a long history. the new york stock exchange is where people look for companies held in high esteem around the world. nyse euronext powering the exchanging world there was a $50 drop in gold. now in the markets, the sectors like energy and materials led the way. banks were also strong and retailers did their part. the index dropped 4 .5% across the board. that's terrific. now you know, my point f washington doesn't screw this all up by destroying the dollar, stocks are telling us the economy is healthier than almost anyone believes. a printer of the v shaped
recovery if we would save the green back. so, do we set our sights on the october 9th, 2007 market peaks of two years ago? let's talk briefly about this with our pal dan fitzpatrick, stock market mentor. let's read the numbers out. october 9th, 2007. we called this the good old days. dow was 14,164. the s&p 500, 1565. the nasdaq was 2859. the nasdaq peaked in 2000. to date s&p 500 was at 1071. what is your take, dan? can we march back to the old highs? >> i don't know. back then i remember the cotton was high. the living was easy. i mean, i think it's going -- i think it's going to be kind of a tough trek back to the highs, larry. i was listening to your last segment. the dollar is the linchpin of the whole thing. we got to define our
conversations speaking strictly of equities as opposed to the big financial mushroom cloud down the road. strictly equities. one, the dollar keeps going down, i think we're getting the old jobless recovery that everybody seems to believe in except me. you got to go long. there's no other option on equities. you hear the really successful traders continuing calling for the top, continually saying we're done. i'm raising cash. and then the market seems to move in higherment guess what? they're not out there buying stacks. >> my great friend says it keeps rising. it is amazing mentioning old pros, barry is saying is the market rally that everyone hates continues. it's not over yet. that was up on his website. that's interesting. dan, in some sense, and, you know, i've been a bull on this story this year anyway.
>> right. >> don't always get it right, lord knows. the stock market is healthier than you think. the only trouble is this dollar story. in the short run, easy, easy money, cheap dollar, probably good for stocks. but, but, but, how long can that last, dan? >> well, that's -- that's the million dollar question which used to be the $10 million question according to today's standards. but i think this can go on for a while, larry. we have stimulus upon more stimulus upon more stimulus. i'm not advocating any of. that but what i'm saying is our money is so cheap that specifically as it relates to equities, i -- don't get me as the raging bull because you know i'm not. but i have to be honest. i -- kind of see no end in sight. i hate saying. that but my point is, like with the s&p 500, i really, really feel that we can hit 1200 by the end of the year. >> by the end of this year. >> i really do. >> we are. so we're talking too much. 2 1/2 months. >> right.
>> and keep something in mind, too, larry, the savings rates are up, right? well where is this money going? it's ultimately a lot of its finding its way into the stock market. >> okay. i think -- i agree with a lot of what you're saying. i'm a bull. i've been a bull since, gosh knows, last winter. i think there is going to be a much stronger recovery. not 10% which we should get. it could be 3%, 4%, 5%. you're right. but, but, but suppose you get stronger numbers. i think the fed is asleep at the switch. they don't understand how the private sector is self-correcting into a better recovery. they are missing. that they're missing the significance of the dollar. if the fed tightens policy early next year, let's say in the winter, not by quarter points, but by half and three quarter points, what kind of problem is stocks going to have? i don't mean quarter point like we had in 2000 what, 3, 4, 5, 6. halves and quarters such as kevin worst suggested. is that next obstacle?
>> i think so. i would like to see the fed strengthening the rhetoric, so to speak. fire these little test missiles out there and see what the market does. because there's no question we have a skiddish market. everybody is skiddish. and it is the rally that everybody hates. we hate to love. and we love to hate. but i do think that some time in the early part of next year if the fed just starts saying, you know, the end of the easy money is in sight, then we see what happens with the market. >> is that the point? last question real quick. >> sure. >> so far the cheap dollar has been consistent with rising stocks, including this week. i mean you have dow up almost 400 points. at what point, dan, does the sinking dollar become consistent with falling stocks? >> when it surpasses the low in 2008 f we start hitting new
lows, then everybody will be playing freak out. >> okay. freak out. we'll leave it there. dan fitzpatrick, thank you. tune in to squawk box as earning seasons picks up. profits are the mother of stocks and the economy. who said that? i did. coming up here on "the kudlow report", is the second stimulus the right way to solve 10% unemployment? goodwrench... we roll out the blue carpet for drivers of these great gm brands. we can do the small things, the big things, just about everything...
no more tax rate reductions. so investors might supply more capital and the workforce might provide more services. democrats do not understand that helicopter cash sprinkles from the sky does not promote growth nor investment or productivity. their stubborn rejection of the successive supply-side economics is not only ill advised for the economy, it is going to do more harm -- this is not just a theoretical matter. why not slash tax rates on both large and small businesses? why not keep the bush investment tax cuts in place? why not lay out a low flat tax reform plan to help every single taxpayer in the country? let them keep more cash and give them more after tax reward incentive? but that's enough from me. let's get right to this debate. we've got former laborer secretary robert reich.
we have reuters money and politics columnist and blogger james speck kus is. >> larry, the real question is when the exit strategy should occur and i agree with you, i mean look at this very, very tough nut to crack. i would say the white house is considering a lot of alternatives to try to keep the stimulus going. at least until there's light at the end of the tunnel. by the way, i wish i had been able to disagree publicly and on camera with my old friend stephen moore about a lower dollar. a lower dollar can be stimulative. you want to do everything can you at least until the economy begins turning around to get a stimulus out there. >> jimmy, let's leave the dollar alone just for a moment.
this is all cash for clufrnkers for me. now they're talking about appliances and homes. now they're talking cash for clunkers to broad businesses to make temporary hires. you know the business story. you fire the workers then use the tax credit to rehire them. then the credit runs off in a year or two and you fire them again. that's not a supply side marginal incentive. >> no. it's not. i think the problem with the obama administration, the democratic party, robert reich, they did have an '80s. they had two 70s and went right to the 90s. they missed the supply side revolution. they have not come to grips that tax cuts worked. they have an ideological blind spot. they're not going to consider broad base tax cuts. they want to get past this recession and raise taxes dramatically. so they're not even looking at tax cuts. they're looking at tax increases. >> tax increases, robert reich? >> let me just say that stimulus
did have a lot of tax cuts in it. >> good point. >> and, james, i agree with you up to a certain point. i think that tax cuts can be a stimulus. i think middle class tax cuts and small business tax cuts can be helpful to stimulate the economy. there could be a range of possibilities here. republicans and democrats could get -- >> but if we're going into the next year as i think we are with double digit unemployment, we're going to see a lot of republicans join with democrats to stimulate the economy, certainly with midterm elections coming up. >> jimmy p., let me just ask you, here's where i agree with bob. and i even agree with the house republicans who seem to favor the temporary tax credits for jobs. jimmy, that's just putting temporary cash in to the till. the only real tax cut, at least that's my view, is the supply side tax cut where you reduce the marginal rate permanently so every extra dollar you keep as a worker or investor gives you a better after tax profit.
temporary tax credits are not the same as real supply side tax cuts. the financial crisis and with the economic crisis is a lack of confidence. lack of confidence about the future. and that's the temporary tax cuts don't do. you need broad, permanent -- not targeted and timely from the carter playbook. you need broad permanent tax cuts. but this administration doesn't want to hear it. all they're hearing is tax increases and tax increases. they have the huge deficits. they say they're going to solve them by raising taxes. they're going to get more spending. >> robert reich -- >> again, let me just frame the issue, as i see it. certainly as i see it talking to other people in washington. i talk with on the democratic side. the republicans are the ones that are worried about deficits right now. blue dogs are worried about deficits. but others are saying, no, don't worry about deficits right now. worry about it in the future. but right now, government as the spepder of last resort has to run a deficit. >> i'll give you one cain that
is worried about deficits, robert rubin. he told the obama administration late in the campaign and recently they have to get ahoefld the deficits. not 20 years from now but right now which is why him and roger altman are talking about the vat taxes. they'll raise taxes toed 4dz 00 billion a year. >> i think that makes no sense at all. a vat tax, for one thing, is ve regressive wlchlt you have double digit unemployment, one out of six americans is underemployed or unemployed, there is not the demand for goods and services. this is a central point. >> looking at it from the demand side, look at it from the supply side, not demand side. >> robert reich, my point is, you know, you came on looking from the supply side. supply-side economics i hate to tell you contributed to some of the problems we're in now. >> right there, that's the problem. >> listen, supply-side economics contribute to a 25-year boom that not only worked for ronald reagan, it worked for bill
clinton. >> it saved western civilization. >> it actually worked for bill clinton. >> it saved the dollar. it saved the dollar. it saved the economy. you know it brought the unemployment down into the 4% zone. >> this is religious orthodoxy. >> i think religious orthodoxy can be right or wrong. temporary cash from helicopters never works. i have to get out. robert reich, thank you so much. and jimmy p. as always. >> good night. >> coming up, will the fha be the next housing domino? and the receiving end of the taxpayer bailout? in other words, housing domino bailout nation? that's the big issue. # tdd#: 1-800-345-2550
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front page "new york times" story, another government mortgage giant in dire straits. yesterday fha commissioner david stephens tried to calm fears. take a listen. >> let me simply state at the outset that based on current projections, absent any catastrophic further home price declines, fha will not need to ask congress and the american taxpayer for extraordinary assistance. we will not need a bailout. >> yeah. never heard that before. so will the fha problem be the next fannie or freddie? taxpayer bailout nation? here is john carney from businessinsider.com which runs clusterstock.com. hey, john, you broke this story. i don't know, when he john a month ago. so now this guy david stevens, what's he smoking? we know what the oslo nobel peace prize is smoking. >> here's the thing, he said absent catastrophic declines, they won't need a bailout. that is actually wrong. they don't know what the future
default rate will be. and as robert reich just said earlier in the subject, one out of six americans run employed or underemployed. they can't afford to pay off the mortgages. the fha is therein shurg mortgages every day. they're doing a billion dollars in business. 6,000 mortgages. they really cannot have no idea what kind of risks they're taking on right now. >> and this is stuff, john, as i recall from prior conversations, the down payment is near zero. what -- 3.5%. so we're throwing money once again at people with nat enough skin in the game who probably can't afford it. have we learned nothing? >> it's exactly right. everybody now talks about the, you know, the mortgage companies being irresponsible. this actually government policy right now. this is an agency of the united states government is insuring mortgages where people just put down 3.5%. if you get any drop in your housing prices, it makes sense to walk away at that rate.
>> sorry, data point in this "new york times" article, up 76% defaults from last year. >> right. >> that's a big number. >> it is a huge number. the fact is that a year ago, if you ask them, you know, what's going to be the incline? they would have no idea that it was going to jump 76%. so now when they tell us oh, well we're okay absent any big, you know, catastrophe, how do we know that? why should we believe them now when they got it wrong a year ago? >> why don't they change the lending policy? there's a thought, john? why does the somebody in this country stop the government from forcing these, you know, low income, unaffordables or put some skin in the game? you know? got help us for 20% down payment which is the old fashioned way. >> it's old politics right now. they really are driving to the same ideology that went into it before which was we need to get low income people owning homes
which you blew up. that is still the policy. that is still driving it. and no matter what, they don't seem to back out of it. barney frank says, you know, yeah, this is what we want them to be doing. >> in fact, we learned nothing, john. we learned nothing. let me ask you, i think we looked at this the last time. ginny mae that, is fha bungled. so they're at risk. i know it's all government guarantee. but is there any trouble in this market? they own all the pools of fhas? >> as you said, it's dominos. when fha goes down, ginny mae is in trouble. they've been the one securitizing all of the fha mortgages. >> wow. that could be very bad news for the government securities market. john carney, you are terrifte t. clusterstock is terrific. i'll cover this story. coming up, critical conditions. the real cost of the president obama camp prepare for health care sticker shock of $1.5 d trillion.
that's the baucus plan. we'll be right back. this might not be the best time to sell a home. but we just can't wait for the market to heat up. (woman) need to sell? re/max agents have the experience to get the job done. nobody sells more real estate than re/max. where do you want to be? have discovered how easy it is to use legalzoom for important legal documents. so start your business, protect your family, launch your dreams. at legalzoom.com we put the law on your side.
and james capretta, first time on the show. author of the health core policy blog and national review blogger. james, you're saying the $829 billion cost for baucus care is not true. it's really $1.5 trillion in brief take us to $1.5 trillion. >> first, you have to recognize that the bill that senator baucus is proposing assumes $200 billion in physician fee cuts that no one believes is going to occur. they have $200 billion in spending you know is going to occur that they didn't account for. they're shifting at least $100 billion to the state governors. they're not going to take it. they're going to force congress at some point to pay for all these entitlements themselves. and then you have this one provision that says we're going to give away a massive new entitlement but only to people who give their insurance. there is about 130 million people between 100 and 4 hundred hn above poverty. they want to give away this
entitlement. they're only going to give it to 15 to 20 million people. and then force everybody else, literally another 80 or 100 million people just to buy insurance without any new additional assistance. many of who can't really afford what they're giving. they're going to make it more costly. >> there is a lot of flawed assumptions in here. >> it's just not realistic. let me switch over to matt. matt, my friend, others are saying the same thing. they're saying something similar. donald marn is saying something similar. i don't think james is completely off base. what's your response? >> it doesn't surprise me that the conservatives are doing anything they can to discredit a march toward a major systemic health reform. the first thing you should do is pause and realize how refreshing it is to have an administration and democrats in congress who are finally trying to propose measures to pay for their actual major initiatives. remember, under the bush administration, the three big ticket items, the bush tax cuts in 2001, the iraq war, a trillion dollars, the big
medicare prescription drug benefit, all totally unpaid for. the republican clan is bore roet money from china. let the kids pick up the tab. >> we have to do it again? >> no, we're not. whatever you -- >> why do i have to do this all over again? >> we're not. >> why do i have to break the bank all over again? >> we're not. what obama is doing and what the democrats under baucus have been trying to lean on is we work through this process is they've identified we're going to slow the growth of medicare from 6.6% to 5.9%. larry, you know that is doable. that's not some attack on seniors. >> i don't know. >> they propose -- >> you may be right. you know more. both you have guys know more about the details about this than i do. but all i'll say and come back to james, every time we run one of these big government entitlements or takeovers it's all or part of health care, it costs more money. it never costs less, james. it always costs more. and on top of that, you're saying there's a big tax hike for middle income people. can you expand on that? >> yeah.
and the going tobelow $250 behind poverty. this would impose taxes on people between under $200,000 a year in income of about $45 billion in new taxes by 2019 and every year thereafter. plus an additional 15 or $20 billion from all the fees on devices, drugs, and insurers that are going to get passed on to consumers. so we're talking at least by 2019 about a $60 billion a year middle class tax increase. i don't think that's going to survive the process either. so that is another big hole in this plan. >> matt, what's your response to that? >> republicans are living in a fantasy land. by 2019, when we're well pass this recession, there is no question. economies who are honest know it, taxes will rise because we're retiring the babyboomers. the idea that we're going to
forever exempt americans from having to actually pay for the boomer's retirement is nonsense. it is a fantasy. rouge bartlet talked about it. can you basically ex-communique it. the rest of you who aren't acknowledging this are in a fantasy world. >> james, you respond to that. >> look, i think at least matt is being honest and saying he wants to raise taxes on the middle class. >> i'm not saying i want to. i'm saying that if you're going to retire -- if you're going to double the number of people on medicare and social security, it is a fact. it's not i want to. we can't borrow the entire babyboomers retirement from china. >> they've been trying to sell this health bill as painless, painless, painless, going to give away the whole new entitlement and painless for everybody. the reality is this bill would have a huge middle class tax increase. >> the other thing is -- >> that's the untold story. >> i just got to close. i appreciate your debate very much, jim. we have a lot to do. the baucus plan is going to get a vote and then be put together with ut chris dodd kennedy plan. and then the nancy pelosi plan.
she wants to tax insurance companies. james capretta, thank you. matt miller, thank you. we appreciate it. everyone else out there, thank you for watching. have a great columbus day weekend. i'll be back at work next week. my name is kudlow. this is "the kudlow report." we believe in free market capitalism on the supply side. (announcer) we call it the american renewal and at ge it means innovating, inventing and building things. it means everything from shipping a new wind turbine every 4 hours to creating some of the world's most advanced healthcare technologies. manufacturing is part of ge's belief that the american renewal
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thnchts is fast money. the dow climbing back to a new high for 2009. take profited or keep riding until dow 10,000, traders have got your answer tonight. also, a look inside the revolution that hp was the top executive out at the firm and gold record breaking week. the liquidator has a fund and they trade and follow. first, let's get to the word on the street. guys, do we have a party hats on or -- is debbie a downer? >> listen, you bring up -- it's hard to break up. it takes a while to get over it. >> put salt in the wound. >> it's too easy, keith. all right. so par