tv The Kudlow Report CNBC January 8, 2013 7:00pm-8:00pm EST
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>> good evening, everyone, i'm larry kudlow. is the boeing 787 fit to fly or is it a firiing nightmare. and the stock has been crushed. meanwhile after filling out his national security bcabinet. we have government shut downs and debt ceilings. vice president sebiden is meeti with the nra and senator feinstein wants to ban handguns
the kudlow report begins right now. >> cnbc contributor jared bernstein. i can't think of a single reason why they have to put in such an unstring wi undistinguished person in such an important spot. >> i take issue with that. you have to take into consideration issues, but i will say when it comes to one of the most important jobs of the treasury secretary, which is managing the budget, you can't
have a better guy than jack lu. you can talk a lot about it. >> that is where i disagree. this is not, hang on a second. i'm going to give jimmy a whack at this. this is not the director of the office of managing the budget. that is where i used to work. this is about financial matters. this is about guys who know what goes on at the world's financial capitol. this is about guys who used to look after the currency and about guys who are going to have to deal with republicans over the debt ceiling and according to every leader that i have talked to, he is poison to republicans. jimmy. >> let me put it in a charitable way. he is not the sweet talker that
tim geithner that republicans are. the easy thing about him, i think you are right. he is far more ideological than that, he is not like tim geithner. he is head of the new york fed. he is well versed in the new york currency and you have a life long budgeteer. can i add to that? i want to say something about out going. i have the highest regard for them. his financial knowledge was excellent. his knowledge of the whole banking arena. and i'll tell you this too, while i disagreed with him on fiscal issues. he and i had a great personal relationship. what i understand is, he does
not have a personal relationship and doesn't know how to deal with people on the other side of the i'll. and that on top of his personal experience to me makes this a poor choice. >> on financial experience i'll grant you some points. this is a guy who has been negotiating complicated deals for 20 years. on the hill in the reagan years, and because there were these tough opepisodes, i would reall take that off your list. >> according to that book, he helped sabotage, he was the guy, he was the guy jar red who sabotaged the talks last year by coming in with the last minute tax hike deal. >> he was not.
he protected medicare for va vulnerable people. let me tell you something you will appreciate. i used to work with him and i used to have arguments with him 50% of the time where he was to my right. i would think you would appreciate that. >> that was a long time ago. that was a clinton democratic party. this pick to me, puts to rest the whole idea that there will ever about an obama pivot to the center. he went with a guy who was to the left of tim geithner. he is there to execute the obama tax hike don't reform entitlements policy. >> that is a greaeat point. >> he is there to stabilize the debt. >> this is not a centerist appointment. th mr. geithner, i believe he
was a centerist. >> why is he a financial market guy? >> he grew up as a banker. what about larry fink, he is a democrat and well respected by everyone. >> i have a list here. >> jamie diamond. ken chenault. >> you need someone who understands the fiscal books at a time like this. >> we disagree. we don't need someone who understands the books, we need someone who understands where we should go and where those books should take us. and i don't think he does. i don't think they understand fiscal policy better than jack lou.
he got you guys a surplus back in the 90s. >> all established people in financial markets all distinguished people who command the respect of not only around here in the new york area but the whole g-20. this is going to be a bad mistake. it may be the haegle of the justice department. >> i'm not sure why you are discounting the fact that jack lu can call up president obama and get him to pay attention to stuff that he cares about. >> we have a financial criticize are we going to turn to jack lu? >> every treasury secretary has the ear of the president. >> now, to the stunner story of the day, yet another mishap for boeing 787 dream liner and it
happened again in boston. let's get the latest from necn, alicia, thank you very much. >> reporter: this is your pricing to have this happen two days in a row. the same airline, the same flight number and same origin and destination. but two different planes and two different problems. the 787 was taxiing out on the runway when some of the fuel spilled out of the tank. a pilot contacted officials they rushed out there and were able to contain the fuel spill. in all, officials tell us 40 gallons of fuel spilled onto the rain way. now that plane, because of the plane was towed back to the gate. the passengers and crew deplaned from there. 180 people.
mechanics determined that the problem was most likely that the plane was over fueled or there was a transfer of fuel that was the issue. the flight was deemed to be safe and took off after 4:00 p.m. the issue we saw yesterday was a 787 with no passengers. this was in between the flight that landed here. mechanics are onboard that plane and cleaning crews onboard that plane and they detected some smoke. ntsb investigating and responded and the investigation is focused on the battery unit where the fire was centered. officials say that the fire was the more serious unit. and they do not believe that this will ground the dream liner fleet. larry? >> all right. many, many, thanks we appreciate
the update. by the way, it is becoming a stock market story. boeing stock shares fell. switching gears now. the debt ceiling may expire as early at february 15th. so, i want to know, if republicans are still embar ked on a government shut down no debt ceiling hike ckamakze mission. if the gop keeps talking about a shutdown and no debt ceiling. this is a mission of the first reign. >> i think it s considering that the white house has said repeatedly including today. that president obama is not willing to negotiate with the debt ceiling at all. but you do have senator mitch mcconnell coming out over the weekend saying that he is not
all the way for a government shut down but it might be on the table. you have ted cruz saying that it may lead to less spending and more reform. he credited well welfare reform comparing it to the 1990s. >> i don't know your they don't just rally around the spending issue. they didn't get any spending cuts in that god forsaken tax bill that we got last week. >> right. yeah, and you have the remotion al side of what the left likes to use in the arguments of military families in the time of war. that is something republicans could get their arms around. senator sessions is coming out today.
he has been saying this for a couple of months. the last time the ceiling debate came around. and if democrats want, the debt ceiling raise, they should have harry reid produce a budget. >> i don't mean to cut you off. but senator sessions is coming on this show later on. one last one. the boehner rule, you want to raise the borrowing rule i think it is sound fiscally and plitly. >> one to one seems equal right? >> but seems like this deal $41 in tax hikes per $1 in spending cuts with middle class taxes going up, i doubt that we are going to get that either. this president has made clear he not only wants the debt ceiling raised. let's not forget, he wanted the
debt ceiling eliminated. that is the kind of negotiating that he is putting forward even though he said he is going to have to negotiate. that is what he said for a long time. if the gop plays his cards right and sticks to the spending see kwaester, i think that will put obama back think the defense. stick around. we have much more cooking for you. but look, i shothought obamacar was supposed to keep costs down. we are going to tell you why. later on, team obama going all out an gun control. i'm glad they are meeting with the nra. but now senator feinstein wants to ban gun control. we'll be right back.
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what we see right now is in states like florida, kwlohio, california, health insurers are getting permission to raise insurance premiums by 20% or more. new mandates, you buy a fully loaded cadillac it is going to cost you more than a stripped down toyota. obama care regulates the amount of premium revenue that has to be spent on so called medical x expen expenses. this is known at the 80-20 rule.
>> that is the key point. >> they are going to raise the premium revenue that is the only way they can do it. >> the profit control. the near cousin to price control. that is so anti-premarket capitalism. it is unbelievable. now, does this get worse peter as time goes on and these boards get geared up? does this get worse? are they going to come after companies and make it a 90-rule and shrink profits more? >> they tried to do that in the ridoriginal bill. they said if they did that, that the budget office would have to reclassify the insurance industry as quote and essential governmental program. they said if you increase this anymore it is going to be a
wholesale government takeover of the industry. >> that is interesting. let me bring in michael farr. good to see you. cnbc contributor. michael, a couple of quick stats. if you go back and look at more or less march of 2010. the health sector of the s&p up 29%. hospitalses and facilities up 252 2552 22 55%. pharmas down 3% since it came into play. what is your take on this section? >> larry, my take is that companies and individuals ultimately and economic terms will behave rationally right? i think the market suspects that sooner or later they are going
to squelch down the loop holes for the companies. if they have to pay higher prices and they have a 80-20 rule that can go to administration and everything else they are going to raise fees so that the fees are larger and therefore the percentage is larger and they don't care. >> your logic is correct. that is what we are talking about before. the question is, the insurers have done poorly. they are the guys that can get you. if you think of the places you can invest. this is the easiest place for the government to go and cinch things down. they don't benefit from the way
that the other providers do. you are going to have a whole lot more people showing up at the hospital and buying medical devices and even though you have insurance pressure you are going to make up for it in volume. that might not happen with the rule that could become more onerous. >> peter, let me come back to you. despite the huge increase in insurance premiums that you describe. you look at the medicare report, health care costs up only 3.9% annually over the last nine years. health savings accounts new forms of competition have hold down overall costs. it seems, where the marketplace was able to work. things were doing very well. costs held in check it is where
the government interfered where we came into problems. >> the most promising sector in the health care market in terms of premarket is the sector that the government has mucked with the least. where we see them being able to take control of health care and they have financial risk at steak and what we see is when you give individuals choices there aren't significant health outcome effect but you do see big cost reductions. take the medical savings accounts. >> they will be cut back in b bamcam. >> what is your favorite health sector right now? >> i continue to like the pharmaceuticals. i like johnson and johnson. this is an old story here, if
you add more regulation it is going to cost the company more and they are going to figure out how to pay as little as they can. >> it is happening again lots of unintended consequences with this health care. >> what is it 2.5% tax? >> i will believe it when i see it. democrats in the senate have never taken a tax down. mike at farr thank you. well down. now, we are going to go back to the gun debate. still a hot topic. team obama pushing hard for bun control and senator wants to ban handguns that is going way too far. we are going to have the latest on that all coming up. hey! did you know that honey nut cheerios
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welcome back to the kudlow report. in this half hour. the boeing 787 is turning into a fiery nightmare and the stock is getting crushed. plus 1,350 days and counting that is how long it has been since the democratic controlled senate passed a budget. and how it could become a bargaining chip to the upcoming fight. and team obama and sen the democrats are going all out for new gun controls. tomorrow, vice president biden is going to meet with organizations and thursday he is going to the nra. all this suspect senator feinstein plans to go after h d handguns. let's talk.
we have blake zeth and we may get jeannine turner. blake, the thing that blows we aw away, no handguns are you kidding me? look, i'd like to make a few changes myself. but what is that all about except a violation of the second amendment. >> i haven't seen the agreement. look, i think at the end of the day, the house is controlled by the republicans. and they are not in favor of the gun safety legislation. they are going to have to change some minds. reaching out to gun owners not alive with the leadership with the nra and fun nevmanufactures.
but reasonable gun owners like my father-in-law who likes to hunt but doesn't mind that people have to submit to a background check to get guns. those are the people that we need to make change. >> i think they are going to go beyond restrictions on assault weapons and beyond these high capacity clips. those are the two issues that i sign onto. maybe you have some news. besides banning handguns, she is banning rocket launchers. i'm not worried about that. but, she also wants to ban 1,000 rifles and shotguns. she wants to ban 1,000 rifles and shotguns and these handguns now what is up with that and do
you think that obama and biden with cowtail to that? they are taking the opportunity to push what their real agenda is and we are seeing that with this broad approach to more gun control. people forget it is not just diane feinstien that wants to ban handguns. she is going after any detach able magazine. when they ask the question will president obama go as far as she is suggesting with the banning of 1,000 guns, the answer is yes. let's not forget that president obama wanted to ban the sale, manufacture and transfer of all handguns when he was in chicago. he has a guy running the justice
department who wanted to brainwash people in the 1990s and one more point quickly is that we have been hearing a lot about gun safety. the nr aa is a gun safety organization that provides thousands and thousands of training classes each year on how to use guns properly and not in a disrespectful manner. >> chicago has the toughest laws about banning handguns and chicago has become the murder capital of the world. what do you make of that? >> two things. the first thing getting back to something katie said before, the notion that obama wants to take away anyone's guns, in which he did nothing on gun safety, and that is a comploiaint coming fr
the left. he sure didn't show it in his first term. getting back to chicago. it is not just the locality gun regulations that you need to look at. they can come from the state that you are in. illinois on a state level, doesn't have the toughest regulations, when you look at regulating air pollution, you don't say let's focus on the city. you have a region or national plan. >> let's bring in radio personality and great friend, jeannine. it seems like the whole democratic party now is going to go for unbelievably gun controls that they have never been able to get in the past. what is your take on it and what should we be doing? >> i hope that doesn't happen.
if you look history. as soon as the people are disarmed dictate tership is the next step. this is an american issue and an american problem. i don't believe that we need to have a new law passed. this is a cultural issue as well. we have more responsibility as americans and families with our guns, a but b, let's look at the culture, the tv, movies. i was in "cliffhanger". i was in one of them. the violence. i think we in hollywood should look at this. i believe we can't rely on hollywood to do it. americans need to come together and say we all are aparty to this violence. let's not buy these tickets to
these movies anymore. >> besides the violent movies and games, and dealing with mentally ill backgrounds, what about putting, i'm going to ask you directly. what about putting faith back into the schools? faith back into the schools? that's right. faith as in we know between right and wrong we believe in a higher power and we know that it is wrong to go out and kill somebody. it seems to me that the teacher's union have done everything they can to take faith out of the classroom. i think that faith is important and i think education is important because so many things happen under the influence of drugs and alcohol. i agree with you. it is a cultural issue as well.
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um... try the number one! yeah, this is pretty good. [ male announcer ] over a third of a day's fiber. fiber one. joining us now from mobile, alabama senator jeff sessions rank and member from the senate committee. you have made this an important cause. why should taxpayers grant us a greater authority? 17 months ago. the president got a $2.1 trillion increase in the
limit -- debt limb et of the united states so he could borrow that money. he has gone through that. secretary geithner said we have already hit the debt ceiling again. so i think any banker that is asked to raise the loan limit would like to see a financial plan if they are going to be allowed to borrow more. >> when you talk to your counter parts. kent conrad was the chairman of the budget committee is that correct? >> that is correct. >> why won't he make a budget? that is what i don't get. again, the point i want to make, which you are made a million time times. >> i'll tell you why they won't write one, note that kent conrad
was determined to bring a budget to the committee and mark one up but on the day before it happened harry reid told him not to do it and blocked him from doing so, the reason they don't want to do a budget is because it would require them to state to the american people how much they are going to tax and spend and what kind of plan they have for the future. they do not want to do that and it is a sad time that the senate will not follow the law and lay out their plan. larry, we have complemented paul ryan for being courageous for the budget he wrote. why was he courageous? he put out real numbers that people could analyze and exam e examine. >> the only issue from up here.
that i have no problem from anything that you have said. the 1,150 days is out rage us. like the improerial congress. do you worry people up here on wall street get real nervous when people say we don't re-up the debt ceiling? >> well, i think they should tell the president, why don't you allow a budget to go formwad instead of blaming the republicans for saying we won't raise the debt limit. i know this can be a difficult financial issue. and congress and republicans need to be sensitive to it. i'm aware of that. i would say that if the result of some temporary period of dispute results in real spending
limitations putting the country on a sound financial path don't you think the world would feel better about america would we ever get our house in in order? >> some time in our life time there has to be some spending e restrai restraint. let's go back to our panel. blake, i want to hear you defend the senate democrats who haven't put a budget up in 150 days. >> i think the idea that he is going to use the debt ceiling to ill elicit this budget is scary. bringing this budget through to expose deficit spending, that is something that democrats will remind voters, but the idea that we are going to use the debt
ceiling is scary. the senators said wouldn't it send a message to the american people. >> katie, i asked him about the failure of the senate to make the budget. why they haven't done it for 1350 days. if blake won't answer it, maybe you can. >> i think senator sessions was correct in saying if the democrats put forward a budget they will have to show the american people what they are spending their money on and it is not going to look pretty. it is either a slow march to death or a short march to death. and one thing that isn't talked about a whole lot with harry reid and his illegal moves not
to introduce a budget for 1300 plus days is the fact that he has created financial crisises year after year after year. and the deficits that we see are direct responses to the senate producing a budget. >> down in texas, they reported if i'm not mistaken, they have strong economic growth and have lowered taxes and increased surplus. what is missing here from the national story. nobody talks in those stories. but that doesn't mean the texas model couldn't be used in washington. >> texas is doing a great job and i wish the rest of the country would emulate. one of the issues that we have in our constitution is we keep a balanced budget. the fact that we don't have one in our country is reprehensible.
let it happen. george washington it may be horrible for the economy. but george washington said the problem with a democracy is that the people can't see it until they feel it. let's just let it happen and then maybe finally people will go wait, we have a problem here and maybe we have to do something about it. >> suppose we let it happen. >> suppose we default on our debt. i don't want to. i don't think it is good for the us. suppose nothing happens and maybe that is the best possible thing. >> absolutely not. it would have terrible global ram ramifications. you are telling the rest of the world that this country doesn't pay it's commitments.
congress need to take up the issues among themselves. >> the point you have dodged is the senate won't take up the issue and they won't give you a money and financial and spending blueprint. i don't know how you do a sequester if the chamber won't play by the rules. >> i want to say that the senate democrats lead by harry reid did pass a budget and that has been the baseline for spending. so that is the budget that they are going off of. so for blake to blame republicans is just not true to the facts. >> did they do that in the last decade. it is barack obamas second term let's get over george bush. >> you are the one that said i was blaming it on one party.
>> you know, i have to say this, the budget deficit has a share of gdp as late as 2007 was 1.6%. we would take that in a nano second right now. i'm going to think about your thoughts jeannine. maybe we out to let it unravel. anyway, thank you we appreciate it. now, getting back to this debacle for boeing. another day another serious problem. with the jet at the boston airport. can boeing really get past this. holy cow the pr is going to be terrible. next up. set? i've got two tickets to paradise! pack your bags, we'll leave tonight. uhh, it's next month, actually... eddie continues singing: to tickets to... paradiiiiiise! no four. remember? whoooa whooaa whooo!
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fire, not only was there a fuel leak, but i read in the wall street journal last december they had a problem with the engine and had to have the faa take a look at it. what is your take? >> that was the reason for our downgrade this morning. is that we do understand having been a commercial pie liglot my these issues do happen. it is that the one that is are happening to woulding are issuing that could have catastrophic questions and while we are completely comfortable with the plane being safe, and this issue gets resolved. there is reason enough for us to look at the situation and say do we want to be in front of this given the fact that we are for sure to have incidences and that is the nature of the beast.
it could be a problem. >> all right. i want to ask you how serious you think this is. to an amateur who flies a lot. it sounds serious. and especially when it is splashed all over the paper and the media. the battery fire is a serious issue that occurred at the dpga. so it wouldn't be a problem air bourn but it is a problem on the ground. who knows. boeing has identified fi the battery as a problem. is it a manufacturing problem or a system problem or something that could be fixed quickly? boeing won't be impacted in the long run because it is more likely a quick fix. it is a serious issue. the headline sounds worse than i
think the reality is particularly for the long-term. >> carter. last minute here. you say boeing is switched from traditional copper wire with aluminum wire. you say they have outsourced production of the electrical systems. that is where the problems are coming from. you have identified two of the problems from the manufacturing side. >> and it is the most electric jet they have ever built. but p, it is the core problem. you know, i have comfort. boeing has been building a airplanes for a long time. the apu that happened today is used in flight and is critical -- >> i got to jump. out of time. sorry. thank you very much. tough story.
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