Limited choices. And just this afternoon we learned that the possible quarterback of the irs conservative targeting scandal is calling it quits. So now that lois lerner has retired, what does that mean for the investigation . All those stories and much more coming up live on the kudlow report beginning right now. Welcome to the kudlow report. Request im larry kudlow. Were here live at 7 00 p. M. Eastern and 4 00 p. M. Pacific so lets get right to the late breaking developments from the senate. Cnbcs john harwood in washington joins us with all the details. Good evening, john. Good evening, larry. Youre right. The news that both john cornyn and Mitch Mcconnell will not vote to sustain the filibuster that ted cruz is mounting raises the odds that a clean bill will go back to the house, maybe sunday, maybe monday. Now, we dont know whether thats going to play out exactly that way, but we do know that Republican Leaders believe this is a disastrous strategy. If you look at the poll that we had, the cnbc all america poll, we show ask americans do you want to defend obama care by 4438 they say no, but if you link it to a Government Shutdown or debt threat its 5919, overwhelming. Republican leaders know that the gop would be blamed for this, and harry reid was on the floor hammering that message today. Reporter a republican so intent on undermining both president barack obama and his Signature Health care law that they are willing to inflict Severe Damage to our economy in the process. America will know exactly who to blame. Republican fanatics in the house and the senate. Reporter larry, i can tell you the Democratic Leaders have a rising expectation that having voted to include the defunding provision in the bill that passed the house giving all those conservatives a chance to get on record, that john boehner will be willing to let that go to the floor and pass when it comes back. Well see. Boehners staff may send it back once again with another provision but there wont be much time to avoid a shut down again. Basically what youre saying is republicans dont want a part of a shutdown, this and many other polls say the same thing. Im going to speculate. You tell me what the odds are. It will be a clean bill based on the sequester spending levels, the lower sequester budget cut spending levels, and it will last until the middle of september, middle of december, sorry. Yes, and give them time to try to negotiate a longer term deal. Whether that could be an actual budget deal that has some entitlement cuts, revenue from a democratic perspective, ive continued to believe that that is so clearly within the bounds of what both parties want to happen that it could ultimately take place, but im one of the rare optimists on that store. More likely they will take some time to negotiate, monkey around a little bit with the allocation of sequester cuts and have a continuing resolution through the next year that preserves the sequester but not quite in the proportions, maybe alleviates a portion of it. Last one, john. Still the debt ceiling middle of october, end of october, whatever, and theres still a lot of talk. When i talk to sources in the Leaders Office in the house, theres still a lot of talk that a oneyear delay in the individual mandate, including taxes and other mandates and other regulations may be attached to the debt ceiling bill, so so the obama care battle is not over yet. No, its not, and they are talking about attaching that to the debt ceiling. That strategy is also not going to work because the president would never agree to that. That would in essence be nullifying his law because the individual mandate is really the core of the law, but it we may have another exercise in which conservatives get a chance to go on record voting to delay obama care in return for a debt ceiling increase and then boehner again would have to face a decision when a cleaner debt limit hike came back to have something to give his members, whether its a commitment on tax reform or something else, but they are not going to get that delay in the final product. All right. Many thanks, john harwood, appreciate the update. With the shutdown countdown still going in effect, president obama is wasting no time racking up the partisan jabs. The latest during his saturday weekly address. He bashed republicans for threatening a Government Shutdown and debt default if they cant shut off obama care. Take a listen to this. Think about that. They would actually plunge this country back into recession all to deny the basic security of health care to millions of americans. All right. Well, americas pointing fingers, too, right back at the president. The latest pew poll shows while 39 of americans would blame the gop if the latest budget battle leads to a Government Shutdown, 36 would actually blame president obama. 17 would blame both. But the president apparently will not negotiate. Thats what he told boehner friday night. I dont get it. Lets bring in our guests. Washington post online columnist matt miller and john fund, columnist for the National Review. Welcome, gentlemen. John fund, is my surmise and John Harwoods surmise correct now that Mitch Mcconnell and john cornyn have said no go, they wont do the delaying tactics, the cr will go back to the house clean, it will be a clean continuing resolution. Right, and i think the republicans, along with some democrats, will pass that out to keep the government going. I think that they are going to try to they are waiting for the senate, fiddle with the debt ceiling bill a little bit to see if they can attach something to that and say well live to fight another day in midoctober. Remember, harry reid may have his own surprise. I would not be shocked if harry reid put in a small tax increase to pay for higher military spending and put republicans on the spot in militaryoriented districts. In the cr. Yes. So hell break the sequester and try to sneak in a tax hike. The big goal that obama has is to get rid of the budget control act in the sequester which originally, of course, was his idea. If they try, that john could be right, ive heard those rumors, if they try that then the shutdown is still very much a threat and democrats could be blamed for the shutdown, so going from a clean cr to a complicated cr, break the sequester and raise taxes, thats a different ball game, matt miller. It is, but i i dont expect that. I think were going toned up with some version of a clean cr and the republicans will push the fight. You know, the next absurd fight to the debt ceiling thing, and well come back and do this in a little bit. Meanwhile, ted cruz is the one who gets the most mileage out of all of this as he continues his campaign for the presidency and suction up all the media and political oxygen there is. Well, even though its interesting, even though mr. Cruz did not get the kind of legislative strategy support he hoped he would get, the reality is, matt miller, what cruz has done with the help of others is hes kept the obama care issue front and center, and you look at polls, people do not like obama care, and they dont like the individual mandate, and they dont like the fact that congress is exempting themselves from obama care, and they dont like the fact theres no verification for obama care. In other words, cruz has put this issue on the front page every day. Youre right. Now we disagree about all the substance of obama care. I think adopting mitt romneys approach to using private insurers to expand Health Coverage to millions was a good idea. Put that aside, ted cruz, youre right. I think his role model is boeck barack obama who had a driveby visit to the senate, didnt stop to actually worry about passing anything and was immediately running for president. Ted cruz went to school on that. Realized so long as he can seize an issue and get immediate why and public attention on this, when i was in the green room, i was watching ted cruz, some ad campaign hes running, dial in and sign the petition to stop obama care. Hes a big winner though hes alienating his own republican colleagues. Well see how far he can push it. John fund, its not over until its over. Lets skip from the continuing resolution to the debt ceiling, okay. What i gather is that Speaker Boehner and majority leader cantor and others in the leadership are thinking very hard about attaching a oneyear obama care delay to the debt ceiling. They want to attach, that as a companion bill. Whether its a delay for the individual mandate or a delay for all of obama care. I felt all along an individual mandate delay would pass the senate. Red state senators up for reelection would vote for a delay. Whats your take on that, john . I dont think as early as october. Remember, obama care kicks in october 1st. If the headlines are really bad its possible they might be spooked but i think will take a couple of months of bad headlines. What the republican debt strategy requires though is a separate piece of legislation like what senator toomey had last year which says no matter what happens, if the debt ceiling isnt raised, our bonds and our obligations will be paid first and that will quiet down wall street and foreign investors. I think that has to pass at least the house in order to make the other part, a oneyear delay of obama care possible. I want to see the debt ceiling raised because i dont want to mess with that, never believed in that. Having said that, can they get, is there a legislative way to get a vote on a oneyear delay of the individual mandate . Let me say this again, john fund. Congress and its staff exempting themselves from obama care, that is really unpopular. The lack of verification, really unpopular, the lack of security for personal information, really unpopular, the exchanges themselves are nowhere ready. In other words, john, having exempted business and having watched labor squealing left and right, i think theres a lot of popular support, matt miller, for a delay of the individual mandate. Again, we just we just disagree, larry. Theres already exemptions for people for whom the mandate would be a hardship because their premiums would be too high a percent of income. Youre talking about 20 million to 30 Million People getting subsidies to buy private insurance if they are lower income, exactly the republicans rightly urged as a way to move towards universal Health Coverage. The idea that the republicans now are trying to pull out everything and throw everything, you know, but the kitchen sink to stop average folks from getting a little more Health Care Security is appalling. I understand the politics, but i just think its dead wrong. Matt, look, theres some elements of this, but not enough choice. Well another whole segment on this, the front page of the New York Times, there is not enough choice in this bill, there never was. A lot of people with illnesses are going to have to pay a fortune, an absolute fortune if they go out of network. Mend it, dont end it. They hate the mandate and the tax hikes. Go ahead, john fund. Larry, i think were seeing a lot of people that are going to get help with their private insurance, they are eventually going to be pushed into something that resembles medicaid, substandard medicaid, over half of doctors dont see medicaid patients. Thats the sting here of the just because you have insurance and access. Thats crazy. Doesnt mean you get treated. Its crazy. Spoken by very well insured people. Theres no reason to think that just like in massachusetts, just like in switzerland or holland, the subsidy of private Health Insurance is a way to give Health Security to folks. The idea that conservatives are walking away on the threshold of it being implemented from the idea they rightly suggested to the country is a sad commentary on where our politics. Matt, i grew up partly in switzerland, and i have to tell you bluntly this is not the swiss model. This is a medicaid model because the choices are going to be much more restricted than what you normally get in a private insurance subsidy model. Lets hear you guys come forward with ideas to improve obama care. He wont negotiate. Obama will not negotiate. Thats the key point. Thats the bottom line. Matt miller, john fund is right. Just as our show is beginning on friday night, we get a breaking news that the president is calling the speaker of the house to tell him he wont negotiate on the debt ceiling. Now why would he do that . We shouldnt even have a debt ceiling. That was the most obnoxious thing imaginable. John fund is right. Since when do president s not negotiate with the leadership of the house and senate, and by the way, obama care is germane, its as much a financial bill as it is a Health Care Bill with the costs and the taxes and the budgetbusting. See, thats the thing. This president doesnt want to compromise, matt. Ill take you at your word. You and i can sit down and hammer out something. Ill get you 25 different insurance plans, all right, off the internet, the way wall green and other companies are doing it, but obama wont do that. He wont do it that way to answer. Listen, larry kudlow, the day the republicans put forward a plan that the Congressional Budget Office certifies will insure the uninsured 50 million noninsured, im happy to walk away from obama care. The uninsured dont vote republicans and republicans have other priorities for the money. Thats the truth. Insurance doesnt necessarily mean treatment. Were going to do that in a couple of segments. Spoken like a wellinsured man. I am not. Matt miller and john fund, thank you, gentlemen. Youre both terrific. Now lets focus on how the markets are going to respond if there is a Government Shutdown. Well talk live with two traders just ahead. And later on the show is this the obama care bait and switch . Sure, can you get cheaper premiums but you may not believe what doctors, hospitals and other Health Care Providers youll have to give up. We have the grim details. Even the liberal New York Times, the liberal New York Times, splashing this story all over the front page. Dont forget free market capitalism is the best path to prosperity. I maintain obama care is nowhere near free market capitalist choice. Im kudlow. Well be back in the next segment. Tomorrow, raising the stakes in tech and telecom. Dealmaker Michael Price and ericsson ceo on the mergers, acquisitions and trends to watch. Squawk box tomorrow at 6 00 a. M. Eastern on cnbc. Shes always had a playful side. And you love her for it. But your erectile dysfunction that could be a question of blood flow. Cialis tadalafil for daily use helps you be Ready Anytime the moments right. You can be more confident in your ability to be ready. And the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph, like needing to go frequently or urgently. Tell your doctor about all your medical conditions and medications, and ask if your heart is healthy enough for sexual activity. Do not take cialis if you take nitrates for chest pain, as this may cause an unsafe drop in blood pressure. Do not drink alcohol in excess with cialis. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, seek immediate medical help for an erection lasting more than 4 hours. If you have any sudden decrease or loss in hearing or vision, or if you have any allergic reactions such as rash, hives, swelling of the lips, tongue or throat, or difficulty breathing or swallowing, stop taking cialis and get medical help right away. Ask your doctor about cialis for daily use and a 30tablet free trial. Welcome back to the kudlow report. Im Mary Thompson. Another day of losses, the longest losing streak in months. It has to do with the uncertainty about the fed and about a possible Government Shutdown. Back to you. On the money, cnbcs own Mary Thompson. Lets ask our traders how markets are going to react to a Government Shutdown. Here is alan valdez and jeff tillberg founder of kkm financial. Welcome back, my friends. Hi, larry, how are you . I read your notes. You are going crazy, obsessing about this Government Shutdown, and youve got it in psychological terms. Youve got it in fiscal terms. Youve got it in economic terms. Now, look, i loved reading your cards, but ive got to tell there you isnt going to be a shutdown. Its not going to happen. Well, larry, thats exactly my point where i think the damage is being done already. Theres been a survey that 47 of americans will pull back equity exposure in the event we do have a shutdown but this past weekend talking to my father, hes an electrician, having a bunch of his buddies asking questions to me so its hit main street. The damage is being done. In the event we see a selloff, kneejerk reaction, larry, we have to remember we live in an electronic trading world. We could see a 5 to 7 move down quickly. Not being represented in the vix but we did see selling data in the financials which have had a tremendous run. I do want to talk about financials. From the last segment we reported as breaking news, the two Republican Leaders in the senate are not going to propose any kind of filibuster and will vote for will vote for cloture which means they can get the continuing resolution done. No one has perfect knowledge, but the chances of a shutdown after this with the Republican Leaders in the senate are virtually nill right now. And most traders i speak to no one believes there will be a real shutdown. Jeff killberg, his dad is an electrician. Jeff is going crazy out there. Getting a lot of calls from clients who are greatly concerned. They think its real this time. Theres been 17 shutdowns, six under president ragean, but they feel like this is real. In a couple days. Reagan had one of the greatest bull markets in the history of the earth. Agreed. Were been buying on dis. Well watch it now because its the end of the quarter and the month so well watch it. This will roll the market. No question about that, so i think youll see the market exit late a little and come in a little more here, and i think well watch it. Its not a shutdown. Why dont stocks go up tomorrow on the strength of what senator mcconnell said. Mcconnell is the republican leader, and senator john cornyn. They basically said were going to put a clean cr and put it back to the house. They basically said we dont want any shutdown. They read the polls. I think thats bullish for stocks. Totally bullish for stocks. Definitely no shutdown, but right now theres uncertainty the there. I think they are all 3. 5 in the downtown, why are banks and financials getting beaten down . Look at Goldman Sachs around Morgan Stanley, off 3 3. 5 , Morgan Stanley up year to date 42 so this is the sector thats gained the most. Therefore, people are checking profits and taking low off the table and going into this. What is it though . Is it because longterm rates have come down and the socalled yield curve has flattened and thats bad for bank profits . Something is going on inside there. Take a guess for me. Well, i think its the uncertainty out of fed. I mean, big ben, hes waffled. Saw him essentially move that unemployment goal post. 6. 5 , 7 and now its back 206. 5 . Banks dont like uncertainty out of our fed chairman. I agree with you on that. You know what else, larry . Now you have goldman and goldman and citibank, travelers and visa all in the dow, all in baskets now so if one goes down it could take them all down. Bad news out of citibank so that brought a basket, jpmorgan, that will move the dow further down at times. I thought a few weeks ago when the banks reported pretty good earnings they were making mortgages and making commission on mortgages. Their bond portfolios were hedged. They loved playing the spread. What happened to all that good news on banks. Well, nowadays all you need is one bad news to one group. Citibank had the bad news. It brings down the whole group because its all these computer programming. I think the banks did make a lot of money early on. Right now with the uncertainty, as theres oscillation around 2. 75 in the tenyear, they are not producing as much out of income desk as they used to. The feds timidity, some would call it busyness last wednesday, i think gives us a picture of a very dovish fed and a very dovish new fed chairman, thats going to be janet yellen, i call her the queen of the ws, meaning no disrespect. I dont think the fed will tighten up its policies, i dont know, maybe until 2085 or maybe 2103. I think youve got easy money way murt than my eyes can see. I wont be around by the time the fed starts tightening you know, youre right, and were not seeing inflation but the efficacy of this quantitative easing is being traded by Portfolio Managers globally and once we make that move well see other people lock in step, but i think right now, the fed, they are really scratching their head and i think they made a mistake but not signaling to the beginning to an end of this. Now, they told us they would have the beginning of the end now and it backed off and really hurt their credibility. Maybe it pulled back 5 billion or 10 billion would have been the right course to take. Maybe this is all due to the potential shutdown. This is one of the reasons why they did not taper due to the fact that hes really worried about the fiscal woes so is this going to be a bigger problem, back to my point . Maybe bernanke is in my corner. Its going to be worse. Ive got to get out. I kind of like your reverse spin on this. What you just said is now that theres not going to be a shutdown the fed might conceivably be more aggressive in reducing its bond purchases. Now, thats a good reverse spin. Thats very, very interesting. I have to mull that over. I dont want to sit and meditate about that. Thanks so much. Folks, about to get you the latest on the kenyan mall massacre, and could we see a historic gesture at the u. N. Between the u. S. And iran . Cnbcs Mary Thompson has those headlines and much more for us next up on the kudlow report. Weve been bringing people together. 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Germanys Angela Merkel elected over the weekend as third term as chancellor of her party. She got 41. 5 of the vote but not enough for a majority. Many people in germany opposed her handling of the greek debt situation, she is one of the very few european leaders to survive that debt crisis. And theres a growing controversy about the u. N. General assembly in new york this week. There are reports president obama will shake hands with new iranian president hassan rouhani. May nod sound like a big deal. On the way into lunch. Doesnt mean they are bringing the scrolls out. It could be an opening to some talks. Im a hardliner on iran, but shake his hand, i dont know, nothing wrong with that. The guy doesnt have booing igi one way to look at it. Im sorry. Just what will people get when they sign up for one of the new Obama Care Health plans in the answer is not much. Youre not going to believe how bare bones these plans are, and if youre looking for a choice of doctors and hospitals you are out of luck. Weve got the details on that for you next up on kudlow. Hero if you had a chance to go anywhere in the world, but you had to leave right now, would you go . Man oh i cant go tonight woman i cant. hero thats what expedia asked me. Host book the flight but you have to go right now. Hero laughs and i just go . This is for real right . This is for real . I always said one day id go to china, just never thought itd be today. Anncr were giving away a trip every day. Download the expedia app and your next trip could be on us. Expedia, find yours. Nice car. Sure is. Make a deal with me, kid, and you can have the car and everything that goes along with it. [ thunder crashes, tires squeal ] so, what do you say . Thanks. But i think i got this. [ male announcer ] the allnew cla. Starting at 29,900. Welcome back to the kudlow report with this market update. Apple was a big gainer, up 23 or 5 . The launch of the new iphone is a stunning new success. 9 million iphones sold. A new record and a big jump over what analysts were expecting. Apple says this will help the Company Reach the high end of its revenue forecast for the quarter. Blackberry stock recovered today. A consortium agreed to take the Company Private for 4. 7 billion amounting to 9 a share. This stock, of course, was in the 60 range a couple years ago. Larry, back to you. Mary thompson, appreciate it. Tminus seven days an counting until obama cares individual exchanges kick in, and surprise surprise, were learning that the law is going to lead to reduced access to quality care, higher insurance premiums, and guess what, its already costing jobs . Now take a listen. Many of the Companies Really are not interested in hiring fulltime people thats real et issue with obama care, that they are not going to hire fulltime people until they know what the costs are going to be. And remember how president obama repeatedly told us this . Let me be absolutely clear about what reform means for you. First of all, if youve got Health Insurance, you like your doctor and you like your plan, you can keep your dock tomorrow. Can you keep your plan. Nobody is talking about taking that away from you. Well, mr. President , turns out thats not exactly the case. Just today we saw a number of headlines highlighting the true costs of obama care, but none more striking than the New York Times which writes that the only reason premiums may decline for some that many insurers are significantly limiting the choices of doctors and hospitals available. All right. Lets talk with two experts, joining us is dr. Bill grace, an assistant professor of medicine at new York Medical College and Health Policy expert betsy mccoy, author of the book beatty obama care. Betsy, begin with you. I was surprised with this New York Times, lower Health Insurance premiums to come at the cost of fewer choices. Let me get this right. They are narrowed the base of doctors, hospitals and other Health Care Hospitals in order to keep premiums down but what if you need better coverage, what are you going to do . What the Insurance Companies have done is this. They saw that premiums would have to spike for several reasons so to keep them from going higher and in the 16 states that have announced premiums, they are up 24 over last year, but to keep them from going even higher, Insurance Companies are paying the doctors and hospitals that participate in these Exchange Plans much less they are paying doctors and hospitals in insurance plans. Really like medicaid with a private insurance name attached to it and because they are paying the doctors and hospitals Bargain Basement prices, fewer doctors and hospitals are willing to participate. Right. So in california, none of the university of california hospitals nor cedar sinai, the prestige hospital in los angeles, is willing to participate, and in many, many other parts of the United States the premiere academic hospitals say we cant do this. All right. Dr. Grace, two things going on here that interest me. One is the reimbursement rate. Thats what the Cleveland Health center talked b. Had to lay off a lot of workers and cut costs, they dont believe they are going to get reimbursed. Thats your medicare and medicaid problem. The second problem is as advertised the idea one of the big ideas for obama care is that people with prior illnesses would get insurance but really when you read this New York Times article, if you are ill, you have such narrow choices that youre going to have to go out of network, and if you go out of network it is going to cost a bloody fortune. Now that is a direct contradiction to one of the big selling points of obama care. As i mentioned last time i was on the show, the numbers do not add up and will never add up. Just cant make Something Like that out of nothing. The other thing, layer, is nobody is ready for this. You know. Theres a perfect storm coming come january 1st of next year. First of all, no one is ready today on october 1st because today 35 of the 50 states, we cant even get the software to determine if youre an employer or a physician or an individual person. What your subsidies are going to make a decision on what plan you want. We cant verify the income levels. You cannot verify, that and on top of that, you know, most of this is going to fall on primary care specialists. Right, and whats happened is we are already 15,000 physicians too short, and right now with the perfect storm coming, obama care and the icd ten codes, these codes are going to make chaos. Whats an icd ten codes. The new codes, european codes that tell you whether you you code somebody if they have gotten bitten by a rat or a horse or right. They are chaos coming down the track. I want to go back, betsy. I want to go back to this point though, the New York Times article, because coming from the times its big news. Although other newspapers covered this months earlier. The los angeles times, for example, covered this many, many weeks ago. But dr. Bruce segal, the president of americas essential hospitals, which was formerly the National Association of public hospitals, thats a big deal, he says insurers are telling his members, quote, we dont want you in our network. We are worried about having your patients who are sick and have complicated conditions. Now, this goes back to my other point. One of the selling points of obama care is people with prior illnesses would get taken care of. They will get clobbered they are saying the Insurance Companies wont let the proper providers into the system. They dont want to pay them enough. The seriously ill people and many of the big disease advocacy groups like the american cancer society, juvenile diabetes, they all pushed for obama care, and now the president has removed the cap on outofpocket expenses so sudden lit seriously ill people, as dr. Grace pointed out, are going to get clobbered the hardest because they will have to go out of network for the expert care and there will be no limit on how much they have to pay. How do you solve that . How do you solve this . You have to have some kind of federal and state risk pools to help those . Thats what we had in 35 states before obama care. Just tell me how to solve that because this i find troubling. Not only undercuts the selling point, objection but more important to the people who are ill and who get into this system and who find out the system doesnt help them and then they are going to have to go out of network and they will get clobbered financially, how do we solve that problem. Right now what youll have is another super medicaid program, not medicare, medicaid, who will be take care of you, the interns, residents and you hope they are supervised . How to sol of it, larry. We were solving t. 35 states in the United States had publicly subsidized high risk pools for the very people. What happened to that . They are being supplanted by obama care, and the seriously ill are going to suffer the most. Being replaced. Absolutely. They are being replaced. In addition, of course, everybody got bamboozled by the claims that there would be so much choice. You arrive at that exchange on october 1st its like going to a supermarket that only sells cereal. The shelves will be bare. Thats one of many reasons why the individual mandate should be delayed. Yes. Should be delayed, and let people come back and take a look at this thing. All right. Dr. Bill grace and betsy mccoy, thank you. Thank you, larry. Coming up now, the woman who may have been the ring leader in the irs conservative targeting scandal has called it quits. Lois lerner retired today, but does this mean shes off the hook . Does it mean no congressional or Court Testimony . Were going to get some answers to those questions just ahead on the kudlow report. I was made to work. Make my mark with pride. Create moments of value. Build character through quality. And earn the right to be called a classic. The lands end no iron dress shirt. Starting at 49 dollars. [ male announcer ] staying warm and dry has never been our priority. Our priority is, was and always will be serving you, the american people. So we improved Priority Mail flat rate to give you a more reliable way to ship. 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I dont want her to get off scotfree and i want you to tell me, does this retirement allow her to get off scotfree, or will she still go on investigation or go to court . I think things are still up in the air. I think the fact that it took the irs basically four and a half months to, you know, she got word that this internal and internal review with the irs was going to recommend that she be terminated, and so she chose a facesaving measure of retiring, but the fact that it took 4. 5 months to get there is a testament to the sclerosis of the federal government. The temporary acting director asked her. He did. And he refused. So why now . Why do we get this news today . Because werfel initiated an internal review of the scanned a. M. The board reviewing it was or is set to say that the that she should be fired. Right. Did that just come down in. That just came down and my sources at the Oversight Committee told me as a Government Employee you are alerted far in advance when theres something, you know, coming down the pike that you will be terminated so she was basically allowed to save face and retire. She will get her pension. Im told you have to be convicted of espionage toward to not get your government pension. Do you think knowing what you know and youve followed this as well as anybody, was lois lerner the quarterback, the mastermind of this attack on the conservative groups . I want to give the Oversight Committee credit for continuing to investigate the scandal, and they are still conducting interviews from some of the highest level people but i do believe she was the ring leader. Not the chief counsel who was a president ial appointee. Right. But lois lerner. I do believe that, and i think that it goes to show the power that, you know, one bureaucrat can, have and i believe other people were involved as well, but it does seem she that she was really at the center of this, and interestingly enough, you know, this report says that she was guilty of willful they say shes guilty of a neglect of duties and not willful misconduct which lets her off the hook but a what from what we know her actions were incredibly purposeful from day one. We know that for a lot of reasons and from her emails of the federal Election Commission which really, really gave it away. Okay. Her emails to the fec and internal memos to the irs saying this is a very dangerous matter, hoping it can be used to challenge the Citizens United decision, the Oversight Committee has said, chairman darrell issa said her retirement does not change the strategy for investigating this or to call her back for testimony. Good, good, she should be put on the hot seat again. Its not a criminal charge but a civil charge and she ought to go to court. Ought to have to go to court and pay some gigantic fine. Elana johnson, appreciate it. Heard some strong words today about fed easy money, this from the head of the new york fed. Two card carrying conservatives are about to debate here whether thats good or bad. Easy money, thats next up. [ male announcer ] 1. 21 gigawatts. Today, thats easy. Ge is revolutionizing power. Supercharging turbines with advanced hardware and innovative software. Using data predictively to help power entire cities. So the turbines of today. Will power us all. Into the future. Into the future. Over 20 million drivers are insured with geico. So get a free rate quote today. I love it how much do you love it . Animation is hot. And i think it makes geicos 20 million drivers message very compelling, very compelling. This is some really strong stuff so you turned me into a cartoon. Lovely. Geico. Fifteen minutes could save you fifteen percent or more on car insurance. Welcome back to the kudlow report. Im Mary Thompson. The united autoworkers trust fund has filed 100 million worth of shares compared to the 59 thats own by fiat but it does show the company has come a long way since bankruptcy four years ago. Larry, back to you. Thanks very much. Now, were beginning to hear from some Federal Reserve president s why they voted against a september taper of bond purchase. Take a listen to what new york fed president William Dudley told cnbcs own steve liesman. In my mind beginning to decide to reduce the pace of asset purchases from the current 85 billion pace requires two things in my mind. Number one, improvement in the labor market, and number two, confidence that the economy is Strong Enough to support that improvement in the future. All right. Question before the house tonight is bill dudleys easy money stand right or wrong as the president of the new york fed, by the way, the vice chairman of the open market committee, and hes, therefore, a permanent Voting Member and important influential guy. Lets bring in dave malpass and Jim Pethokoukis of American Enterprise institute. Jim, is bill dudley correct . Do we need a highly accommodative Monetary Policy . Listen, first i would like to say that i am based on your fed tightening in 2085, maybe 2103 call, i am shifting all the assets in the pethokoukis family fortune, so dont back out on me on that one. Thats what im hearing. I dont think the fed funds rate goes up until 2110. If i were bill dudley, listen, i think hes right. Listen, still like a ways from lower inflation. 7 employment target, im not quite sure what the path, is thats bad, but continuing the status quo is good. Dave malpass, from reading your articles i believe that you believe the feds money priming and bond buying has done more harm than good. Thats right, and we shouldnt call it monetary accommodation. What the fed is doing is borrowing from the private sector and stuffing the money into the government and big corporations, and thats just not good for growth, and the data shows it. The economy has done poorly as the fed bonds. The more they bought, the less growth we got. Jimmy, why hasnt there been better growth i . Mean, we got ourselves were marching towards a 4 trillion balance sheet, among other things. Why hasnt there been better growth . I think theres a couple reasons, the big reason as far as qe3 is happened at the same time as fiscal tightening including massive obama tax hikes. It did a good job offsetting bad policy. It would be better if we werent paying interest on reserves, one of the channels you could have had the fed policy work better so given that, and the fact that it isnt, as i said many times, a nominal gdp target, i think its worked okay and has been worth doing. Among things dudley says, he wants a very accommodative policy. Talks a lot about something called fiscal drag which in his mind and also bernanke has said this, the tax increases, the payroll tax hike and the income tax hike, yes, and the spending cuts, now should the Federal Reserve be offsetting fiscal drag by buying more bonds and injecting more cash . Well, i dont think there is fiscal drag from all the steps that you name there, and i also dont think that the fed should be looking so much at the fiscal policy, but the bigger issue that we have here is the bond buying itself is harmful. They arent allowing credit to grow in a natural way in the economy. They are diverting it so thats the bigger problem that i see with where they are headed. All right. We have the central bank that did exactly what david said which is dont look at fiscal policy. That was the ecb and what you got was a tremendous contraction, double dip and 12 unemployment. They raised taxes and didnt offset any of that, and thats been the problem with europe, a huge drop in total spending in the economy, not the debt problem. The spending problem created a debt problem. But, jim, europe didnt do it the austerity that people talk about in europe consisted of them raising taxes. They didnt really cut government spending, and so they they got a bad growth result, not because of the of the spending cuts but what else they were doing in the economy. Portugal, spain how come we had a bad growth result in 2013, the same as last year, despite all the tax hikes we just talked about. What was the difference . Why hasnt the economy done worse with the investment tax hike and the payroll tax hikes . Why, the fed no, its because up until 2013 we were under the risk of a major tax increase, the inheritance tax, hit the alternative minimum tax and on down the list, and that was taken off the table in january, so i think the tax bill that they did in january improved the tax code, and weve seen the result in a little better growth data. You cant tell me the tax code got better in 2013 . Sure, i can. 60 increase in investment taxes, the worst taxes there are. Wait a minute. The Dividend Rate is 15. Remember, all through 2009, 10, 11 and 12, president obama said he wanted lots of taxes on the table. The problem is the fed is still buying bonds, and thats dumping money into people that dont create jobs. Last word, jimmy p. Just have a couple of seconds. I think the fed is doing the right thing. I am worried thats become more discretionary, thats bad. When does the inflation hit . Conservatives have been waiting for inflation . 2058 or 2103 im not sure. This isnt inflationary, its contractionary, larry. Dave malpass. They may never tighten in my lifetime. Thank you, gentlemen. David malpass and Jim Pethokoukis. Thats tonights show. Thanks for watching, everybody. Im larry kudlow. More free market capitalism tomorrow night. I was made to work. Make my mark with pride. Create moments of value. Build character through quality. And earn the right to be called a classic. The lands end no iron dress shirt. Starting at 49 dollars. Always go the extra mile. To treat my low testosterone, i did my research. My doctor and i went with axiron, the only underarm low t treatment. Axiron can restore t levels to normal in about 2 weeks in most men. Axiron is not for use in women or anyone younger than 18 or men with prostate or breast cancer. 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