Transcripts For CNBC The Kudlow Report 20131010

Kudlow report, beginning right now. Good evening. Im larry kudlow. We are live here at 7 00 p. M. Eastern and 4 00 p. M. Pacific. Two big stories tonight the political story is still quite fluid. House republicans just got out of a meeting with president obama at the white house, and here is what House Majority leader eric cantor had to say about it. We had a very useful meeting. It was clarifying i think for both sides as to where we are. And the take away from the meeting was our teams are going to be talking further tonight. Well have more discussion. Well come back to have more discussion. The president said that he would go and consult with the administration folks and hopefully we can see a way forward after that. Once again, the big news is that House Republicans did offer a plan for a clean sixweek debt ceiling extension. But just in the last hour, literally, we have learned that the white house may be backing off its original enthusiasm for that offer. Senate democrats led by harry reid may be demanding a debt ceiling and a Government Shutdown deal at the same time. Throughout the hour, were going to talk with some leading congressional members who met with the president today. But first, for the very latest from capitol hill, lets bring in cnbc contributor and ace political reporter robert costa of the national review. Joining me on set Tyler Mathisen and dominic chu. First up, bob costa, what can you tell us . Has this deal broken down or not . It has not broken down. Remember, it is only thursday. House republicans came out today with their sixweek extension for the debt ceiling that is their final offer. But democrats naturally are pushing back today publicly. They want to reopen the government along with extending the debt limit. So were going to see between now and october 17th negotiations to see what democrats can get out of this extension offer. It sounded like as the day wore on, that president obama through his press spokesman jay carney was willing to accept the house original deal that there would be a debt ceiling increase, the cr socalled, or the shutdown would not be over just yet. Did they change their view in the white house . No. This is the final negotiation stage right now. There is significant progress today and at the president s recent press conference. The president has signaled a willingness to do a shortterm debt ceiling extension. So have House Republicans today. John boehner unveiled it at his conference this morning. The question is how do you close the narrowing gap between these two sides. Thats what is being hashed out tonight between the staffs. Excuse me, larry, i was going to ask robert if i might, robert, what does the gop get in return here . Does the gop get some sort of pledge unwritten that the administration and the democrats will negotiate over budget and entitlement reform, tax reform, or what . What do they get in return for yielding on the debt limit . Key player to watch right now is House Budget Committee chairman paul ryan. Because behind the scenes he is really telling conservatives to back this sixweek extension because it going to lead to a budget conference, to lead to larger fiscal talks. Thats what ryan wants to try to get real concessions out of the white house. But he knows he needs to get beyond the debt ceiling first. Quickly, can i ask you, can Speaker Boehner go to the floor of his house and say okay, were going to have the sixweek extension of the debt ceiling, and, and, to meet demands of the white house and the senate, we are going to end the Government Shutdown and reopen the government. Boehner do that . I think boehner is in a difficult position. He may lose a lot of Political Capital if he tries to could that. But his final offer to the conservatives may be were not going get any kind of fiscal talks or debt ceiling extension unless we reopen the government. And the key point, larry, a lot of the conservatives behind the scenes actually want to reopen the government because theyre getting a lot of pressure from constituents. Okay. Robert costa, thank you. Were going to see a lot of you as the show goes on. Were going get back to the politics in just a moment. But now, we want to look at this massive 323point rally. Markets are erasing all of this weeks losses, surging higher on the belief that there will be a shortterm debt hike deal in washington. Cnbcs bob pisani joins me now with the detail. This is as broad a market rally as weve seen in a long time. The biggest oneday gain since january 2nd. Almost 90 of all the stocks were on the upside. You throw a rock on the floor of the nyse today, and you hit stocks up 2 everywhere. Big cap, small cap, financials, industrials, materials, discretionary, all up 2 . And all the high beta stocks that sold off in the last few days, they were all up big. Biotech, china, internet, tesla, all had big moves up after the selloffs in the last two days. Why did the high beta names sell off so much . Thats where the hedge funds made their profits. Tesla is up 400 this year. Netflix 228 . Linkedanyone 97 . Facebook 84 . Hedge funds will sell to protect their gains if it looks like the debt limit might be breached. Finally, there was a lot of debate about the rally, that it was getting ahead of itself. Perhaps. But the market rallied when it realized that the deal was going to be built around raising the debt limit. Its the debt limit that is the crucial issue. Its the debt limit where the default risk lies. The rally is the markets way of saying were finally moving in the right direction after a week of going the wrong way. Larry, back to you. All right, bob pisani. Many, many thanks. Lets turn now to one of the galena parks negotiators fresh back from their meeting with president obama. Here now we welcome House Republican Conference Vice chair lynn jenkins from kansas. Ms. Jenkins, can you tell whats the president said today in that meeting . Will he accept will he accept an inkeys in the debt ceiling without ending the shutdown or is he insisting that they go together . Well, we did have a very useful meeting at the president s office. And he didnt say yes or no. But we all agreed to continue the discussion throughout the evening to see if we could come to some resolution. And what did he did he insist on anything . Did mr. Boehner insist on anything . Can you kind of open the black box for us . Well, we just laid out what our proposal was to the president , which is to do a shortterm extension of the debt ceiling for about five and a half, six weeks and appoint budget conferrees to work out some of the problems with our finances here in washington. Talk about tax reform, talk about reforming some of the drivers of our debt, our autopilot mandatory spending programs. We then were going to ask that we talk about how to reopen the government as soon as possible. And he is considering that offer. And like i said, well continue those discussions throughout the evening to see if we can get this Government Back open. Congressman jenkins, if the conferrees get together in the framework of this offer made today goes through, would those discussions be sort of about longterm deficit reduction, longterm entitlement reform, or would it be more narrowly focused on conferring over a 2014 budget, or both . Well, both. But our intent is to go big here and to finally we dont want to miss this opportunity in our nations history. Everyone knows that this nation is bankrupt there is not a kansan at home that would trust congress with their personal checkbook. Were taking in more money than weve ever taken in the history of this nation, and we still run deficits. Were hitting a 17 trillion debt here any day. You just cant continue to operate like this. This ends badly for our economy if we dont demonstrate an ability to get our fiscal house in order. If you recall the last time we had a debate about raising the debt ceiling, it wasnt that congress was having a disagreement about it. The outlook on our Credit Rating was reduced because we didnt demonstrate an ability to get our fiscal house in order. This is a moment that we need to seize to fix the problem. Congresswoman jenkins, one of the things that a lot of Market Participants have been referring today is this idea is way the markets reacted is a vote of confidence in what is happening with the talks. How important is that market vote of confidence . Are you as a Congressional Congress talking about what is happening with the markets and how theyre reacting to these particular talks . Of course were taking note. But no one here wants to default on our nations debt. And so thats why republicans in the house have suggested lets just get that off the table. Lets do a shortterm extension until we can all get together, get on the same page to demonstrate an ability to go big and do something to fix what is wrong with the Fiscal Affairs once and for all, and then but the immediate issue is the continuing resolution. Right. Ms. Jenkins, there is a long gain here and a short gain. Right. The long gain is about entitlements and tax reform and all the rest of the great thing. The short game is to get the government open. Right. Because we are learning that some people are actually suffering from this, contrary to what was originally promised. So tomorrow is day 11. Some people say we got to go to october 17th. My question to you, if we have a bunch of conferees, isnt the single most important idea to reopen the government . Were multitasking here, larry. The conferees on the Budget Committee would be working on a longterm solution. They would have five and a half, six weeks to come to that resolution. Opening the government is a negotiation that will happen tonight. And in the hours ahead. And we hope to have it open by, you know, monday morning. I know its a holiday. But the shortterm thats new information. That is totally new information. Thats the first ive heard of that. You think you can get the government open, lets say, by monday . Is that fair . Thats what we are discussing. And when we left the white house, we all agreed the president didnt say no. He didnt say yes to our offer. But if were going to open the government, we need to come to some negotiation on that in relatively short order, because people are hurting. Weve got to get this government open. But there are, you know, some things that we have to address in that shortterm negotiation. And were just thankful that the president has finally you know, for weeks he held on to this notion that there would be no negotiation. We are pleased that hes has come off of that and has begun to negotiate so that we can find the Common Ground. All right. Were going to leave there it. Many thanks, gop vice chair lynn jenkins. We appreciate the new information. Lets get reaction from cnbc political contributors jared bernstein. He is a senior fellow at the budget priorities. And robert costa is still with us. Jim and pete, what did you hear from ms. Jenkins . About this negotiation, what are they continuing to negotiate . The Republican Partys capitulation . Because it sounds like they capitulated on the debt ceiling, they got scared by that there are all these terrible reports from wall street. And of course the market goes up when it looks like there wont be a debt ceiling crisis. So thats sort of off the table. Now theyre talking about the cr. Now theyre negotiating about getting the how fast can we get that government become open . People at home are hurting. Listen, if they were going to play hardball on this, what they would do is say listen, thats our offer. They would go back. They would pass that offer and see if the democrats and president obama wanted to risk a debt crisis over 18 of the government being shut down. It doesnt sound to me like thats what theyre going to do. The thing that is a bit confusing toe me, bob costa, let me go back to you, and then i want tyler and dominic to come in on this. I dont know what is holding it up. I want to ask you, is it a fact that a lot of the conservative activists both in the congress and outside the Congress Want to make another run at obama care, that theyre going to use the continuing resolution and the shutdown to make another run of rolling back obama care in some way, shape, or form. Is that what is holding it up . Thats exactly right. Because a lot of conservative activists say if theyre going to give the speak area sixweek extension on the debt limit, they better still be able to fight on the shutdown, to fight on the cr. Inglin jenkins comments tonight to you here on the kudlow report are very interesting, because she signaled publicly that the leadership is open to refunding the government, to opening back the federal government. And thats something the leadership has been very reluctant to say publicly. If theyre moving in that direction behind the scenes, that means a deal could be in the works. And it certainly sounded to me, folks, as though one of the focuses of whatever conversations are going on right now this evening is to get the government reopened. Thats what congresswoman jenkins really seemed to indicate just there. It would it seems to me also, jared, that one of the things that is driving this are the poll numbers that indicate very strongly that the American People blame the gop principally for what is going on. And i think people probably are saying to themselves if you mess up my 401 k over this, im really going to make you pay. And that thats got an awful lot of people in washington scared. I do think that the polls are finally getting the attention of policymakers down here. But let me just say. Ive been listening to the whole show tonight. And pretty much everything i have heard is making me feel more hopeful than i felt for a while. So thank you. But i think more i think more importantly, if its interesting, it wasnt until 13 minutes and 20 seconds into our show that the word obama care was even mentioned tonight. And that was mentioned by larry, not by any of the politicians. So obama care is off the table. You have representative jenkins talking about meeting the president s demand for essentially two clean bills, one to raise the debt ceiling, one to reopen the government. And extra important bonus that i think we can all agree on, it sounds like theyre talking about a budget conference. Now, these folks have been dancing around each other, actually kabuki dancing around each other for months lets conference, no, lets not conference. Remember, at the heart of all this is the absence of a budget. So this is a very positive this strikes me as a potentially positive development. Lets bring this back. Because jim, one of the things that we talk about in the markets all the time is how much this particular drag has been on the overall stock markets, how much the debt ceiling debate has really kind of weighed on things. If we were to somehow magically get rid of all of this, we come to some longterm agreement, is there a sense among the constituencies that you speak to that we could see this American Economy really start to rocket higher because we have certainty about our financial future . Listen, i dont think the shutdown is obviously was ever the big issue in certainty or uncertainty about the shutdown. It really has been the debt ceiling. We saw today the 300 points like that when it looked like the debt ceiling was off the table. Now, i know on the word that supposedly president obama had rejected this deal, some say the mark is going to be down by 500 points tomorrow. I think as bob said, listen. People are still talking. To me it sounds like there is going to be a deal at some pointment were not going to have a debt ceiling crisis. The republicans are caving on that. Theyre eventually going to cave on the shutdown for at least the next six weeks. And listen, uncertainty is a drag on the market. If we can get rid of the uncertainty. I cant wait six weeks. I cannot wait six weeks. Marcus cannot wait six weeks. Im not sure the economy is wait six weeks. Bob costa, were going to cop back. But close this segment down. Tell me, do you believe that the Republican Party will accept a clean debt bill and a clean continuing resolution . That all this whole shenanigans came to nothing and were right back where we started . I think thats exactly right. I think ultimately by next week, house conservatives will accept a reopening of the government tied to a sixweek extension of the debt ceiling because they dont want to be blamed for default and they want to move on to a budget conference. Okay. Good stuff. Jared, jimmy, robert, well said. Stay with us, please. But now, i want to get back to this huge rally we saw on wall street today and whether the markets are making the right call in this very fluid political situation. Thats next up on kudlow. And dont forget, free market capitalism is the beth past to prosperity. One of the things im interested in is the nexus of paul ryan, entitlement reform on one side and progrowth reform on the other. Gosh, would i like that. Im kudlow, im here with tyler and dominic, and were all copping right back. I am today by luck. I put in the hours and built a strong reputation in the industry. I set goals and worked hard to meet them. Ive made my success happen. So when it comes to my investments, im supposed to just hand it over to a broker and back away . Thats not gonna happen. Avo when you work with a schwab financial consultant, youll get the guidance you need with the control you want. Talk to us today. Wow. What a day on wall street. Investors turned optimistic as washington may be nearing a deal on the debt ceiling. But could this entire thing evaporate because senator harry reid wont buy into the deal . My next guest says beware. Lets welcome kenny park kerry. Are you a seller . I think i dont have you to be caution, yes. Youre going to err on the side of being on the sell side versus rushing buyer tomorrow. Now, if they come to a deal overnight and all of the sudden everyone is on the same page, then i think they take the market higher, yes. But if there is still that disconnect and we dont have a deal, i think everyone should expect that the market is going to give some back tomorrow until we get nor clarity. And the question is going to be, yeah, okay, theyre going to come to the deal and were kicking the can down the road six weeks. What is going to happen in six weeks . Is it going to be real negotiation or do we just find ourselves back in the situation once again at thanksgiving . Dominic, if we have to wait six weeks for the government to reopen, then i would say were going to go through some major pain in the stock market. Now, thats not what lynn jenkins told us. No. She said reopen monday. But if kenny is right, if we have to wait six weeks every day with this thing, and by the way, the economics of that, you lose you could lose 3 4 to a point off gdp. Here is the real issue. If you drag this thing on, the sense becomes that youre going through a death by a thousand cuts, right . You need to rip that bandaid off, whatever cliche you want to throw out there. What has been very interesting with the traders that ive been speaking to throughout the course of this whole process is the idea when the markets have sold off, they havent sold off by a ton. We havent talked to 400 to 500point drops in the dow like we saw in anticipation of the debt downgrade when qewas in question, when the european debt crisis was swelling. What we do see is an ordinary selloff. If you see a bias put just because of a glimmer of hope, maybe the bias is to the upside. As we were talking about that all day today. As you pointed out, light volume there was a lot of Short Covering going on here. And so was this really a thrust upward . Was headline driven and technical . Here is the other thing. Dont forget, this morning when people woke up and they saw the headline and they had the sense it was going to rally, the sellers are saying im not offering here anymore, im going to offer up here and see how anxious the buyers are. Conversely, the buyers were saying im going to test the will of the sellers. Im going to bid down here. Everybody paid the offer thatch was the thing. People reached up there and grabbed that higher. I said last night that there was going to be a clear deal on the table. When i saw the paul ryan oped piece in the wall street journal and i made some calls to follow through, i said a deal is coming. Jay carney, the White House Press secretary did say probably around the middle of the day, im not precisely sure, but he did say the president would accept a debt ceiling increase without resolving the shutdown. That was his position. And i think that just drove the market up bonkers. Now tomorrow it may be a little more confused. Thats all im saying. Right. If harry reid comes out tonight and says no deal. Which he did. He did say. There is no more conversation tonight, i would not be surprised immediately tomorrow they take back at least half of what they they give back 150 points, half of what they took today. If were talking about doing something negotiations that take place over the next six week, and the government is either open or its not open. Lets assume it opens before six weeks. Right. Either way youre going to see a lot more volatility it seems to me and that the market is going to react as it did today to headlines and to every twitch and twitter to somebody saying something or clearing their throat on capitol hill. The key is at some point down the road, the shutdown does affect the economy. Absolutely. And profits. Thats what is going on here. The debt crisis was a much bigger, more immediate issue with the u. S. Treasury defaulting on debt. And ive argued until im blue in the face, never, never, never, never. And its about 30 of the budget, by the way that would be affected by this not raising the debt ceiling. About 30 . That can affect the economy. That can slow growth and it can slow profits. And youre exactly right. Listen. Were already in the middle of Third Quarter earnings season now, and were starting to see what the results are. And then what people are saying about what the future looks like based on kind of the developing story. Klaus kleinfeld from alcoa the other day, like a giant taser waiting to happen if they dont do something. I got to jump out. I got to jump out now. Stop following me. The president also met with Senate Democrats at the white house late this afternoon. And were to be speak with one of those senators who was at the meeting. Question, will the harry reid Senate Democrats buy into the debt increase without ending the Government Shutdown . Thats a key question. Thats what ken polcari is worried about. And were going to find out next. Stay with us, please. At a ford dealer with a little q and a for fiona. Tell me fiona, whos having a big tire event . Your ford dealer. Who has 11 major brands to choose from . Your ford dealer. Whos offering a rebate . Your ford dealer. Who has the low price tire guarantee, affording peace of mind to anyone who might be in the market for a new set of tires . Your ford dealer. Im beginning to sense a pattern. Get up to 140 in mailin rebates when you buy four select tires with the Ford Service Credit card. Whered you get that sweater vest . Your ford dealer. Transit fares as in the 37 billion transit fares we help collect each year. No . Oh, right. Youre thinking of the 1. 6 million daily Customer Care interactions xerox handles. Or the 900 Million Health insurance claims we process. So, its no surprise to you that companies depend on todays xerox for services that simplify how work gets done. Which is. Pretty much what weve always stood for. With xerox, youre ready for real business. The Wright Brothers became the first in flight. [ goodall ] i think the most amazing thing is how like us these chimpanzees are. [ laughing ] [ woman ] can you hear me . And you hear your voice . Oh, its exciting [ man ] touchdown confirmed. Were safe on mars. [ cheers and applause ] hi. [ baby fussing ] welcome back to this special edition of the kudlow report. Once again, dramatic news out of washington today. The gop has agreed to a clean, sixweek extension of the nations debt limit. The question is will the Democratic Senate go along with the deal while the shutdown continues. To try to shed some light on this, with us now is delaware democratic senator and Budget Committee chris coons. He attended todays meeting at the white house, by the way, with the president. Mr. Coons, as always, welcome back to the program. Can you shed any light on this . We are hearing that the deal may have broken. I say may have broken down. The president has decided a clean debt increase must be accompanied by a clean cr that ends the shutdown. Do you know anything about this . First, thanks for a chance to be on again, larry. We had a very positive meeting earlier today. The pat met with the Senate Democratic caucus. And just earlier this evening he also met with Republican House leadership. Im glad that the president is actively engaging on this issue. And im encouraged, as were the markets today, apparently, with news of a proposal from republicans for a clean sixweek debt ceiling extension. I think a core issue that we talked through in our meeting with the president earlier today was trying to discern why the government is still closed down. Ten days into this Government Shutdown, i think the purpose is for the shutdown that ive heard on the floor of the senate from my colleagues has morphed from the initial purpose, which was blocking or preventing the implementation of the Affordable Care act to other issues related to the Affordable Care act. My hope as a Budget Committee member, larry, that we can go to conference. That we can negotiate directly house and senate the issues that divide us, the fiscal issues that are important to preserving stability, to getting our markets back to normal, and to hashing out the very significant issues that divide the house budget and the Senate Budget, that both chambers passed more than six months ago. If we can get to conference, if we can negotiate between the house and senate, i think we can make Real Progress on dealing with the underlying fiscal issues that are really at core here. When you say negotiate and have a conference, are you talking there is a longer term issue of the whole next fiscal year, and then there is the shorter issue. Thats right. The socalled continuing resolution, which is commonly known as the Government Shutdown. Okay. And youre right, we shut down ten days. So let me ask you, harry reid said today there can be no clean debt ceiling increase unless the shutdown ends. And thats going to cause a tremendous negative shock in the stock market tomorrow if thats the prevailing view. Do you think that is the prevailing view, or do you think there is going to be a meeting of conferees right away to try to get both tracks to schett down over and the debt ceiling raised . My understanding, larry, is that conversations are continuing tonight. I think the good news in particular in terms of Market Expectations for tomorrow is that leadership, both party, both chambers are talking with each other and are exchanging ideas. You are right that leader reid has the position and is strongly supported by the democratic caucus. That Speaker Boehner should simply take to the floor a cr that would allow the government to reopen. Day after day, for the last ten days we hear unexpected, unintended negative consequences of this shutdown. Ive heard from the poultry industry in delaware, for example, something i didnt realize would be a consequence of a federal shutdown the vaccines that are needed for the next turn of the poultry flocks cant be released so that chicken growers in delaware cant grow their next flock because the fda is not there to certify. I heard earlier today from the ceo of major Delaware Company that theyve got tens of millions of dollars of product stuck on the u. S. mexico border because customs and Border Patrol cant deal with it. We need to simply reopen the government and promptly go to negotiations. I agree with your point that we should point conferees and negotiate out our budget differences. Thats the way the rules work. We should have been doing this six months ago. Just briefly, sir, do you have conferees ready to go . I basically agree with you. Today is day ten. 80 would be great if there was no day 11, to be perfectly candid. I know thats not realistic. Are your conferees ready to go . Im confident that chair patty murray, who is chair of the senate Budget Committee would very quickly appoint conferees. Talked to her earlier. I directly asked her, senator murray, are you ready to go to conference . She said iowa been ready for six months. She has gone to the floor to ask unanimous consent to go to conference 21 times. It just a very small number of senators from the other party who are blocking this. I think senators of both parties would like to see us follow our rules and our regular order. And its my hope, as is yours, larry, that committee can resolve this in the shortterm and get back to stability, predictability and growing our economy. Economic growth. Senator coons, as always thank you for coming on and thank you for the valuable information. Now, were going to focus on the markets and your money are your investments safer tonight in the light of all this fastbreaking new political news . Were going to get a live report on this wild day on wall street and what may lie ahead, next on the kudlow report. 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 this special edition of kudlow report. Im seema mody. It was a big day on wall street. All the hopes that there will be a big deal in washington on the debt ceiling and the Government Shutdown. The dow ending up 2 . The s p adding 36 points, and the nasdaq witnesses its biggest intraday move since january of 2013. The yield on the tenyear note rose to its highest level in two weeks, and then the u. S. Dollar staging a comeback today. The dollar has been under pressure recently because of the uncertainty coming out of washington. Now back to equities, because thats where we saw the big moves. All ten s p sectors ended in the in positive territory. Health care especially biotech the biggest gainer. In fact, this high beta sector was hit hard earlier this week. Analysts though say the move was inevitable given the big run the stocks had been on. Tomorrow we will turn our attention to financials, jpmorgan will be the first to report earnings this quarter. Wells fargo also out with earnings this the morning. Larry, given the dysfunction in washington, earnings will be a focal point. Earnings are so nice and simple and straight forward. Thank you. The republican consvice chair lynn jenkins told us that the house leadership is ready to open up the government and open it up soon. Take a listen. Opening the government is a negotiation that will happen tonight. And in the hours ahead. And we hope to have it open by, you know, monday morning. I know its a holiday. All right. Monday morning. Very interesting. So joining us now, just back from the white house meeting, we welcome Steve Scalise. He is the chair of the republican study committee, house member from louisiana. Steve, as always, thank you. A lot of talk in some of our prior guests tonight not only the debt ceiling, a clean debt ceiling for six weeks, but also a clean, continuing resolution which will reopen the government and end the shutdown. Do you agree with that . Larry, thats not where we are. Obviously we had a long meeting with the president tonight. It was good that we finally had that conversation. Weve been wanting to sit down and actually talk about our differences. You know, we talked about the debt ceiling. We talked about the cr. And clearly in a divided government, there are some big differences that we have on how we get our country back on track, how we control spending and get the economy moving. In your judgment, steve, what is the biggest obstacle to getting a nearterm vote on the shutdown, the socalled reopening of the government . What is the biggest obstacle . The biggest obstacle is an actual dialogue, a negotiation about the true differences we have. Look, there are a lot of areas of government funding that we agree upon. We have passed 18 different bills in the house to fund more than half of the federal government. And all of those have gotten big bipartisan votes. To do things like the Veterans Affairs agency, to fund our troops, to open up parks again. But there are also areas of disagreement when it gets into some of these federal agencies like the epa and the irs and the department of health and human services. So we need to negotiate those differences if were going to be able to work them out. You know, as recently as last week, the president didnt want to negotiate with us. But tonight he did. And he started that conversation, and i thought it was a very useful conversation. But clearly, we dont have an agreement yet. Thats why the speaker and his team are negotiating and talking to the white house through the night. So theyll have those conversations. If there is an agreement reached there, then well take up a temporary debt ceiling increase. But we still have other negotiations before the government is going to reopen to finally solve some of those problems as well. What do you think the likelihood is that house conferees and Senate Conferees can sit down and hammer out a continuing resolution, or more broadly, a budget for 2014. Well, finally getting the conferees a the table is one thing weve been trying to get accomplish. What is that so hard . Why is that so hard . You know, weve been asking for two weeks now for the senate for harry reid to appoint conferees on the opening of government. Because like i said, we passed four different bills to open up the entire government. Then we passed about another 14 bills to open up different agencies where we have agreement. And each time harry reid said he wont even negotiate on our differences. So clearly, you know, if the house is saying we want to negotiate and the senate is saying were not, you have an impasse. Hopefully that impasse breaks by tomorrow where we can finally get in the room and start talking. But talking doesnt get you a deal. You got to get an agreement. And hopefully well start that conversation tomorrow. Now congressman scalise, is there any hope here, there are those who are pushing for true fiscal reform, fiscal reform in the united states. Is there a way to get that in this process if you dont touch obama care, or is everything hinging on obama care . No. There are a lot of different issues, including the president S Health Care law that are holding the economy back and that need to be addressed. Look, the president himself has acknowledged that the Health Care Law has some issues because he has delayed over 1200 components with waivers and delay of the employer mandate. So this was a perfect law, it would apply to everybody. Weve got some issues with it, but weve also got issues with other parts of the government as well. And all of that needs to be put on the table. And that conversation needs to start. And it did start tonight. And that was good that we finally started that conversation tonight. But there are bigger issues to continue working out. Quickly, were running out of time. Sorry. There is a lot of news reporting this morning that Heritage Action and Freedom Works and some of the conservative groups were going to push their members, if you will, in the house and senate towards making major changes in obama care. In other words, take another run at obama care. In the continuing resolution. Is that true . Will that happen . You know, i cant speak for what outside groups are going to do or are interested in. I know as a member of congress, im very interested in addressing the big problems that are holding our economy back and that are hurting families. And some of those are coming from government. And part of that is the president S Health Care law. Some of that is the radical resolutions coming out of agencies like epa. When youre talking about the funding of government, all that of is on the table. Again, there are a lot of areas where we have agreement on funding. We passed 18 different bills to fund all or parts of the federal government. At the minimum, i think we should agree if a soldier in the field in afghanistan is killed in action, as a tragedy as that, his family shouldnt worry about whether or not they get their death benefits. Lets continue real negotiations on the areas where we have disagreement. Congressman Steve Scalise, thank you very much for your time. As always we appreciate it. So, folks, where do we go from here . Our panel returns with some predicts on what a deal might look like, up next on the kudlow report. Americans take care of business. They always have. They always will. Thats why you take charge of your future. Your retirement. Ameriprise advisors can help you like theyve helped millions of others. Listening, planning, working one on one. To help you retire your way. With confidence. Thats what Ameriprise Financial does. Thats what they can do with you. Ameriprise financial. More within reach. Welcome back to the kudlow report. Today House Republicans delivered a plan to raise the debt ceiling in the shortterm, and markets rallied bigtime on the glimmer of a deal over the horizon. Weve heard from both sides now. Lets bring back our cnbc contributors, jared bernstein, jim pethokoukis, and robert costa. Tyler mathisen and dominic chu joining me on set as always. Bob costa, lets go to you. I hope you heard the scalise interview. He seemed to be downplaying the conservative militancy. He is the head of the republican study committee. He is an important guy. And you know there were reports this morning from some of the newspapers and magazines that they were going to make a run at obama care. How do you read that . For right now, with the conservatives in the house, like congressman scalise, theyre trying to get through this sixweek extension of the debt limit. And they still want to fight on the shutdown. Theyre not ready to accept a clean cr and refund the government. But at the same time, paul ryan behind the scenes is working closely with scalise and others to get ready for a budget conference. They move the fight to the conference and move it away from the cr. Can i just ask procedurally, you have to have a vote on the cr. Its an appropriations bill, robert. Thats exactly right. You can merge them intellectually, but there has to be a vote some place on the continuing res. Thats exactly right. For boehner, the whip count is very interesting. He thinks he has the votes there, 218plus on a sixweek extension of the debt limit. If boehner decides to bring forward a cr in the coming days, there are at least 150 to 200 republicans who would likely back it. Would there be 30 to 50 republicans who dont . Sure. I think a lot of republicans are privately anxious, and they want to reopen the government. Jim, i heard congressman jenkins say there is a moment here. We got a possibility to go big and have a broad, big quote grand bargain. Do you remember that phrase . Do you see that . Because i sure dont. I dont know why there is anything different today than there was in the summer of 2011. I dont see any chance of that happening. As always, one of the big holdups is still going to be taxes. For all the talk, paul ryans talk about tax reform, the president still wants any tax reform to be a tax raiser. His Corporate Tax reform plan would raise more Corporate Tax revenues. Listen, here is the final deal. It might be something as insignificant as getting rid of the medical device tax in exchange for what . Carried interest . Is that going to be the big deal . I dont think there is going to be any big deal that is going to fundamentally change the longterm budget trajectory. Jared bernstein, i rather agree with jimmy p. I want to know where you stand on that. What are the odds of a longterm budget deal . I think theyre low. I think that the president has said recently in fact, when he was interviewed by john harwood the other day, he said rates . Were not going to do anything on rates. But we could look at a broader base. The key issue, though, as jimmy suggested, revenue, neutrality. Certainly the democrats are not going to give much at all on entitlements unless they get new revenues. Longterm big questions, no doubt about it. But i just want to say. I heard a very, very thawed version of Steve Scalise a few minutes ago on this show. I mean, this is a guy who about seven days ago was saying this is all about ending obama care, killing the economy, killing the globe. Now he is like well, yeah, there is some problems there, but were going to have to work it out. Obama care is alive. The debt crisis is dead. There is a certain coming together tonight. Whether it lasts through the late hours in the early morning, i have no idea. Well have to see. I agree. People seem to be. Weve had this all night. Theyre really on their best behavior. The knifes have been put back in the desks tonight. I wouldnt bet on them staying in there. I wouldnt either. Jimmy pethokoukis and robert costa, i got to go. Sorry. Whats next for republicans . South carolina congressman jim scott will join us up next on the kudlow report. 20 years with the company. Thousands of presentations. And one hard earned partnership. It took a lot of work to get this far. So now im supposed to take a back seat when it comes to my investments . Theres zero chance of that happening. Avo when you work with a schwab financial consultant, youll get the guidance you need with the control you want. Talk to us today. announcer at scottrade, our clto make their money do more. Re ann to help me plan my next move, i take scottrades free, inbranch seminars. Plus, their live webinars. I use daily market commentary to improve my strategy. And my local scottrade Office Guides my learning every step of the way. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer ranked highest in Investor Satisfaction with selfdirected services by j. D. Power and associates. Welcome back to tthe kudlo report. Joining us tim scott. Mr. Scott, welcome to the show. First time. We appreciate it very much. Some people have said that were not going to get the debt ceiling increased properly until we end the shutdown of the government. Until we reopen the government. Some people have come on the show tonight and said that by monday, we could reopen the government and end the shutdown. Where do you come out on all that . I think its obvious that the negotiators at the table really are the House Majority republicans, the Senate Majority democrats have to get to the same table. The president will have to sign off on a deal. I think there is some reason to be optimistic that that will happen. No question that todays announcement from Speaker Boehner about the sixweek debt court of appeal sag different conversation, be the same path forward. The real question we should ask ourselves as americans and as taxpayers are we dealing with the underlying problem that continues to push up the need for a credit card increase . That debt ceiling is an increase only reflects the fact that we spent more money than were bringing in the last five years. Its nearly 5 trillion more. So what we really want to have is a conversation about controlling the underlying problem. You know, senator, i dont pretend to speak for americans broadly. I speak for myself. And it feels frustrating that we would be talking about i guess if the best you can do is buy time by raising the debt ceiling for six weeks, you do the buy time. But its very frustrating to me the idea that were going to come back to this and visit this same discussion again in six weeks. And then maybe six weeks after that. How do you get past that kind of quicksand and break through . I dont get it. Well, im with you, larry. In my honest assessment, one of the challenges ive had through this entire process, i said it back in july. We need to be working on issues that are oneyearlong. We have a one year budgeting process. We should not have shortterm resolutions that fund the government. Think of it as a 4 trillion entity, a 4 trillion company. No one in their right mind, no ceo of the company would allow for us to have sixweek increments to deal with the finances of a 4 trillion company. I think that approach as a Small Business owner for the last 15 years. It only makes sense to me that that we would have a longterm strategy, understanding the priorities we need to meet, the obligations we have already committed ourselves to and not make new obligations 23 we cant pay for the ones that we have today. The problem in washington is we have two very different philosophies undergird the actions of both the republican and the democrat parties. We have to bring those two together and find some Common Ground, Common Ground to make this country work like a more efficient machine. Now senator scott, i come from a group of perhaps a generation that is so used to kicking the can down the road if youll forgive the cliche. Thats all we have ever known for the past five or six years. So what is it going to take to get a longterm deal done to keep this government open, to get our fiscal path in order . What would you like to see coming out of your particular party and even the democrats about what is going to happen with longterm budget success . Well, longterm budget success really means that someone like paul ryan and senator murray sit down at the same table. Theyre a trillion dollars apart. The challenging situation that we have before us today is that the Senate Budget that we went three and a half, almost four years without a budget. 1200 plus days without a budget in the senate. We need that budget that is hard to reconcile with the house budget. The house budget has a desire for the next ten years to get to place where it ambulances. The Senate Budget says we need more revenue from Everyday Americans which means higher taxes, more revenue, close more gaps, get more revenue. So the challenge we have are the two budgets are on two completely different paths. The way that we bring them together is to stop and ask ourselves what are the priorities with the federal government . Dont do other things. If we do that, we find our path forward. Sorry, senator scott, we got to leave it there. Im hoping for some progrowth tax reform as well. Amen. Lower taxes. Joined exclusively by peter roskam. Thats it for this evenings show. Thanks very much for watching. Thanks, tyler. Thanks, dominic. Appreciate it very much. Ill be back tomorrow. [ man ] on december 17, 1903, the Wright Brothers became the first in flight. [ goodall ] i think the most amazing thing is how like us these chimpanzees are. [ laughing ] [ woman ] can you hear me . And you hear your voice . Oh, its exciting [ man ] touchdown confirmed. Were safe on mars. 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