tv The Kudlow Report CNBC January 22, 2013 7:00pm-8:00pm EST
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more football or super ball. remember what i said about v verizon and dupont you can't make a snap judgement. i will see you tomorrow. good evening, i'm larry kudlow. before we get to all of our stories, our sizzle story this evening is this, another five year high in a market that jumped 62 points. but gosh does it have legs, the kudlow report begins right now.
>> s&p 500 now just 70 points shy of an all time high also up on the day. here now is one of the respected names adam parker. thank you for coming out here. do google beat good add numbers. stock up after hours trading. that tells me that the economy is doing better. what is your take? >> i think the economy is more mixed.
it seems to me, google hot today and obviously a great tech story and also an advertising tostory. friday, general electric. kind of told us that world economic expectations might be better. is the world better? >> i think it is possible that the eearnings are going to be better. if you look at the bottom of estimates, they were $114 for the s&p -- i'm sorry $120 they are coming down. we suspect they are going to continue to come down. we suspect the corporate earnings are going to come down. i want to add economic stuff to this. today, existing home sales 12.8% above a year ago.
existing home sale prices plus 11%. that is progress it was falling at 4%. last week, manufacturing up, capitol goods up. are he ewe estimating the econo? >> clients are asking me about upside risk. nobody is asking about upside risk. i think the question is, is it in the price already. >> all related to the housing
ready. for, the fed is easy. we all know the fed is easy because it has a federal interest rate. at least for the next six or nine months. but did you know. i went back and looked at numbers. the broad money supply. my gosh i still look at it. it is up 10% in the last six months. bank loans. c and i loans. business loans, double digit growth over the last year. it has been 18 months. once again might there be more, more, wins behind the economy behind the world economy, i'm going to ask japan in a minute? >> money supply and bank loans to businesses? >> it is all good. >> it has improved a lot. i think the question is, will it continue from here. is the policy going to be better
or not. if i told you a year ago the s&p earnings wouldn't grow we talked about it before, some of the models. >> you have to use your judgement. that is why, i'm cherry picking numbers to get your reaction. >> i think from the stock perspective it is the rate of change. housing growth is going to slow some. what we are advocating to get it to china. i like china. it is coming out better. we are finding stocks because the sentiment isn't up. >> in the same, rough, neighborhood, i'm watching japan pump money in and deappreciate the value of the yen, which i
think is heading from 100 yens to the dollar from 75. i think that is great and i think that is good for world growth but do you? >> well, it could be. i think we are pretty opt miss trick and agree with you as a firm. there aren't that many companies that depend on japan relative to the u.s. rebound that you talk about. if japan is doing better china will do better. they are doing better aren't they? >> it could be. i prefer to isolate. the u.s. stocks that don't have china exposure. japan is better. >> usually i'm a hard money guy. last one the s&p closed today, your best guess is 1334.
we have a range of outcomes. it depends on that multiple. the good news is we see earnings over the second half of the year. the market is ahead of itself. we have mentioned washington once and we don't have to. >> in a few weeks wield worry about that. >> adam parker of morgan stanley. speaking of which. back to the washington tricks. the house republican leadership has attached a ten year balanced budget plan back on the extension. let's get to robert costa, what, it wasn't good enough that they extended the debt? they don't know what they can do that? i don't know what the heck that means. you tell me. >> greetings from capitol hill.
interesting things coming out of the house meeting tonight. in order to get this three month extension of the debt limit. you have to get conservative votes. he made a pledge to balance the budget in ten years. when he unveils the budget, they see that as a big win. >> i'm going to ask this of you and our guests. they are talking about a balanced budget. can you tell me why, where, how they are going to get this budget balanced? mr. ryan, last year, i don't think this budget balanced for 20 years. you are saying ten, ten is fine. are they going to cut something that they can identify? >> your comments are reflective of what they are saying to his
face. between now and april when paul ryan unveils his budget. you are boeing going to see hig for his cuts. they want him to take the lead when it comes to reform. >> you heard president obama yesterday. i dare say he does not want spending caughts and i dare say he would be happy to see in reverses in government spending. so that does not jive with what the house is doing. >> that is a fair point. some critics say inside of the house conference there is a real fight. they want to take these bold stances on the ten year balanced budget so they can get some leverage to fund the government when it comes up for a vote in a couple of week. >> no, i think they are doing
the lord's work. thank you very much. we have a couple of special guests to tell us more. democrat from vermont, shawn duffy, republican from wisconsin. to both of you gentlemen friends of this show i wish you a happy new year. mr. boehner attached a bublg et to this. >> there are no specific cuts. where in medicare or the pentagon are they going to cut? they have to specify that before you can have a serious conversation. i don't think members of congress should be playing with fiscal fire which is what we are doing when we use a tactic as a threat to plunge america into defought. i believe that republicans and democrats should denounce using that as a threat. your previous guests gave
goodness about the economy. the biggest threat about the economy is congressional dysfunction. >> do you have a response to peter walsh. >> lord knows if we could have a balance absed budget. but you made this deal yeah, we are going to extend the debt ceiling. now, it gets attached to a balanced budget. >> two points, in regard to congressman welch. when you have liberal s ip the house and senate, that is their plan to spend more money. i know you are talking about our budget larry, but we have to step back. there is going to be no budget that takes place unless the senate passes a budget. but to get congress both chambers to work together, we
need the senate to pass the budget. so we said no budget senate, no pay. that is a way to get the senate to engage. >> i'm not challenging your logic, but i'm challenging your process. the series of dates that is so important one is april 15th. i preseume that is paul ryan's budget. i don't see how you can vote tomorrow on a debt extepgs nsio increase and attach a balanced budget before you know what the balanced budget is. i see that as a problem. i want peter to tackle that. >> we are passing the no budget no pay act. it is going to give both chambers, the senate and the
house to pass the budgets. what you are hearing is, the house is going to more than likely pass the budget. but tomorrow, all we are trying to do is say, senate, you haven't acted in ten years isn't it time you want to tell them what you are doie i going to sp? this could be a kum by yah moment but you can't do it unless you get the sent at to act with us. >> another key day is march 1st. $1.2 trillion over ten years that is the key to cutting spending will that get done peter welch? >> it shouldn't get done. the president said he would do
that. you know i'm with shawn when he says the senate should act and pass a budget. but the house should pass this ten year goal and the majority should put a plan on the table and you can assess whether it is good or bad. this approach is a bad gimmick that is playing as i say with fiscal fire. we should do what darrel isa would require a $1.7 trillion increase in the debt ceiling. darell should be candid in passing the ryan budget. >> in terms of wall street. the first vote is tomorrow. it is a vote to extend or increase the borrowing limit. but that is an action that wall street will look at in the
house. first of all, you are right. and wall trestreet wants us to the fiscal progress. but, to mr. welch's point american families don't wait ten years to balance their budget. they don't call that extreme they go, that takes too long. we have to let them know that it is going to be a challenge to get to a ten year plan but we can do it if we work together. that is the message coming from congress right now. let's work together because if we don't i have little kids, my kid rz going to pay for this debt. they are the victims of this policy. >> i'm agrees with it. but americans pay their bills. they don't threaten to buy a freezer to stiff the payment because they are over the limit.
>> that is what we are doing right now. >> before we get to the next generation and the generation after that. i would like to see some spending cuts right now. and i think that is what wall street wants to see. but i appreciate you coming back on the show. thank you ever so much. let's turn offur attention overseas in a moment. we have the latest election results. this here is a liberal left manifesto and i think it attempts to sink the republican party. please don't forget free market capitalism. and the path to prosperity. i am larry kudlow. we will be right back. [ male announcer ] you are a business pro.
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the question wasn't whether he would win, but which party would come in second. in order for the form a government he will have to come close to form a government. conventional wisdom says, if he forms a government israel will be close to negotiations again. former anchorman turned politician made statements saying he ran on a platform on mandatory military service.
we ran the numbers larry. >> appreciate it. with the prime minister's party working with a weak erer majori what does this mean for the u.s. in the middle east? sorry, ambassador ginsberg. the question is iran. not palestine and also president obama. how does this affect israel's relation wi relation? >> it is clear that the wings have been clipped.
if he is going to abide by we don't want you playing around with the united states relationship. he's going to have to be a lot more kinder and gentler to this president who won and overwhelming mandate to avoid going to war with iran. if you catch the president's speech and his address there were lines in there that made it clear that the president is going to walk the extra mile to see if he can engage iran rather
than go to war with iran. >> i'm sure that he will. i'm sure that the president of the united states will have that military option still on the table. larry, the key here is that it is quite evidence that he doesn't have the strength or the political power to force the president of the united states hand when it comes to iran the way that he had it going into the primaries. it is evidence that the public will not stand on him playing politics on israel's security by
undermining israel's relationship with the white house. one of the lines in the inaugural speech. let's stay on that, it is possible according to mr. obama to win the peace without having a war. that is the basic, what he essentially said. that sounds like a certain backing off. since iran seems to be the most hostile, that is more bdubbish. i think john kerry's first job is going to see whether or not he can do negotiate a grand agreement with iran. it is evident to any one sitting here in washington larry, that the president wants to see if he can finally use the man kadate coach the iatola to avoid a k
confli conflict. the key here is if he can avoid a charge whereas whether or not kerri and haegle will bring the bacon home in order to avoid the conflict. >> here is the line. we are heirs to those who won the peace and not just won the war and we must carry those lessons this time as well. i'm not sure ambassador ginsberg means. none of us nknow how fruitful
their been. he wants to show, that engagement with iran at least in a final attempt is worth having his right wing in this country and the right wing go after him in order for him to prove to the american people that he went the extra mile. >> i would add, sir, it is possible to win the war, and the peace. i believe that is part of world war ii. i was mistified by that part of the inaugural speech. will golf superstar pick up and leave high tax california? of course he should. we'll discuss his comments.
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responses to new challengemis. preserving freedoms requires collective action. to me that spells more government. but listen to this next one. >> the commitments we make to each other. these things strengthen us. [ applause ] they do not make us a nation of takers they free us to take the risks that make this country great. >> with all due respect those entitlements are going to have to be reforped reformed to avoi
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discussion of the connism aecon. later on, will phil mickle son leave california? quickly, my take away from the address yesterday, attempting to break ronald reagan's three decade long policies. i think the president had no entitlement reform or growth proposals and this talk of collectivism, it means that government is becoming the great equalizer. mr. obama seems to want equality of result and i think he's all wrong. let's talk about this. let's bring in art laffer and andrew codd. >> art, he didn't even hardly
mention the economy. but you are an economist, how did you read this speech and what does it mean? >> it was terrible. i love the stories, i left california years ago and i hope that phil does. you can't have equal results unless everyone is equal at zero. if you tax everyone at 100%, and you subsy died ev ssidize up to income everyone will have equal results and they will be at zero. incentives matter a lot and the president has gone beyond what he should do and i don't think it will work. was this a campaign speech and a continuation and a clearer statement of his ultraliberal
philosophy? >> i think it was worse. it ignored the reality of america. he didn't talk about the problems that people have to get back on their feet and get the economy moving again. he never mentioned taking risks and said he wanted to protect us from risks and i don't think he did a very good job other than outlining a manifesto. >> before i go back, let me follow up. what makes you think that mr. obama is acutely concerned about the economy and jobs, he won anyway. i know he is concerned about gun control. maybe not such a worthy goal. a very unworthy goal, you see where i'm going on this?
i don't think growth is anywhere near the top of his agenda. if that is the strength, that we have taken risks in the past and been rewarded, that is what individualism is about. he wants to go back to a collective society. but, the speech itself read very, very well. if that is your philosophy it read well. i actually enjoyed reading the speech and listening to it and i didn't agree with it. i don't think it addressed the concerns of america. where is he reaching across the aisle. i'm not talking about doing it my way or the highway. i didn't see him do that. we are at war right now. he talked about ending two wars, we are in the middle of a war. he did nothing to address that.
>> art, if you look carefully and you read the speech carefully, you will see the words tax reform. they are in there. i want to ask you, you are an expert, where do you think that phrase means? >> in thissize izeyes, it meanr tax rates. we understand that we need government. when it gets too large it is like eating 100 hamburgers. he never cut tax rates to 0 and get regular government. it is the proper balance and he is pushing the systems that have clearly made damage to the connism let me clarify that. you are saying his version of tax reform is to raise the rates and get rid of the deductions.
is that right? >> what should it be? >> it should be lower rates. the 1986 tax act was the single best tax act that i have read about ever. it lowered the rates and it broadened the base and yet it provided to enormous growth and almost all of the democrats voted for it. and you know, it is amazing how well that worked. it was bipartisan and everyone focused on american prosperity and growth. this man wants to stop these types of reform that create growth. i don't think i heard a phrase of let's come together. we have been growing at 2% for years. we have deficit problems and not a single word of unity.
what do you make of that? >> he didn't try to bring congress together. i'm not talking about the house. i'm talking about the house and the senate. they have to work together and the president has to be the leader to make that happen. he didn't demonstrate that. i'm troubled by how his address sounded. it didn't reflect the reality of today. the problems that he should be leading us to solve by calling for for entitlement rather than entitlement reform. and worse tax position. art laffer many thanks. now it is president obama's speech designed to break ronald reagan's hold on america. along the way. is he trying to split, fracture and bust up the republican party so his democrats can recapture
the house. we are going to look at that next up on kudlow. ♪ if loving you is wrong ♪ i don't wanna be right [ record scratch ] what?! it's not bad for you. it just tastes that way. [ female announcer ] honey nut cheerios cereal -- heart-healthy, whole grain oats. you can't go wrong loving it. heart-healthy, whole grain oats. music: "make someone happy" ♪it's so important to make someone happy.♪ it's so important to make someone happy.♪ ♪make just one someone happy ♪and you will be happy too.
strategy behind the inaugural speech? along the way bust up the republican party so the democrats can retake the house. let's talk about this. political analyst, we have kevin madden and national review senior editor. ramesh, what do you make of that? is this the end of the era of reagan an big government on steroids? >> i can that is certainly the ambition of the president. he said he didn't want to be like clinton. he wanted to be the way reagan was an change american politics. that is was the speech he gave
in which you wouldn't think a blade of grass go e es grows up this country. >> a single blade of grass without government. >> he talked about collectivism. he said we are going to keep the deficits and raise tax rates on the rich. campaign city, here we go. i don't think this is specific. it was broad in general and appealed to a lot of universal themes. anyone watching that team will know that it wasn't ideal logical speech. it was an important speech. the is agenda was laid out in the presidential campaign. he won that.
the american people voted for that. here, he was laying out the not very specific things he was going to do. but a vision for the country. he was dividing the gop. i don't think the president can take credit for the ambivalence that exists within the republican party. i mean how do you see this? >> there is no question you can't deny that obama wants to end the reagan era. but the second point is, can obama split the republican party? to some extent he did on the fiscal cliff vote. he has a lot of issues like this. immigration and gun control. to mark's point. the president went out there and tested what he believes is his
vision. this first term was about being a sen trist and now he is not held back by a political test. that is where he sees the second term. as far as republicans, we will be broken if we allow ourselves to be broken. the president has the platform of the presidency and he has organization. republicans have to look at where they get a better platform. ideas like more government and an economy that doesn't rely on government and whether or not we can do that with a greater organizational ability. that was the essence of ray
again. he went out and made it more marketable in the middle. he talked about free enterprise. >> he sold that to a part of the electorate. >> what obama is doing is interesting to me. he is quoting the founding fathers. all men are created equal. that they are entitled to life, liberty and the pursuit of happiness. yeah, but they were talking about freedom. economic freedom. they were not talking about the government imposing equality from above. they weren't talking about results. this was the freedom of opportunity. i think obama cleverly has this completely wrong. >> if you listen to the speech, when he talks about the founders most of the time what he is saying is what the founders did
was change over time and be completely different. this is not a speech that celebrates things like checks and balances. it is a speech that celebrates government power over a civil society. if you look at together in that speech together means the federal government. that has not been the way americans have seen ourselves. >> the idea of a collective vision which was in this article. you talk about collectivism at the least, you talk about social democracy. what ramesh referred to at the ultimate fly wheel and the ultimate enforcer. that is what this is all about. people are boeing to see this for what it is.
>> i go from a to b. it is the eastiest connection i've ever made. >> i will go to the united as in the united states of america. we are all part of the american fabric and the president was laying out a vision that accounted for everybody. he was very focused on equal opportunity to the point where he was talking about equal rights. words taken from the constitution. the elements that are criticizing the president, it is civil rights rhetoric. they are the same republicans that would be criticizing jfk for dividing the republican ares back in the 1960s when they were trying to pass voting rights. >> they were democrats. >> there is one big challenge.
reagan had reagan democrats and there is almost non existent in this country right now. and i think the way that he went through this address in a confrontational way sets up barriers for him. that was something that reagan was fantastic about. right now, obama has fractured capitol hill that not much is getting done. that is the challenge. >> we have to get out of here. he says the shrinking few do well while the growing group have trouble making it. and it isn't cleverly disguised. he won i get that. ramesh, thank you very much kevin and mark. top golfer complaining that he has a personal tax rate of 62%.
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may have to do something drastic like leave california. the question is how many will follow. 1.2% of millionaires in california move for tax reasons. after a tax hike in 2005 the number of millionaires actually grew. they have a one-two punch the rate has gone up 7.9%. you have phased down deductions. you can't deduct as much of your state tax as your federal. the population is aging so they are less tied to high tax states with their jobs and kids. more than 100,000 new millionaires alone. every time shares of google and facebook alone. we'll see whether this new market and the market
millionaires can my great the market millionaires. >> i always thought the uhaul ratings out of -- away from california. >> you look at the rates, they show it is more expensive to move out of it than to move into it. the economy there is growing. it is going to be hard to tease out the taxi effect. there are people calling me today saying this may be too much. >> this is the wrong side of it. here is a case where higher tax rates will give you lower tax revenues. we have that weird income of the wealthy was shifted in december. we don't know what is going to happen in the first quarter. and i read today former
president of france is leavinin france because he doesn't want to pay a 75% tax rate. >> anyway, great stuff cnbc robert frank. thank you. >> life, liberty and the pursuit of happiness. i love that. freedom and free markets, i'm larry kudlow, i'll see you tomorrow night. hey! did you know that honey nut cheerios
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