Transcripts For CNBC The Kudlow Report 20140104

Cycle . Thats his gift to janet yellin. Those stories and much more coming up on the kudlow report beginning right now. Good evening, everyone, im larry kudlow. This is the kudlow report. We are live here 7 00 p. M. Sxeern eastern and 4 00 p. M. Pacific. Much of the east coast digging out from a big snowstorm today and man,s is it cold. Single digits here in new york. Nbc newss ron mott joins us live from boston, where it may be worse. Good evening, ron, and thank you. Reporter hey, larry, good evening to you. Let me tell you, it is so cold out here its hard for me to really convey to you how cold it is. The muscles in my face are really straining to be able to get this mouth to talk, but i can tell you its 9 degrees right now with a wind chill of about 7 below. The temperatures are plunging quickly. And overnight were expecting the wind chills to hit minus 20. So theres . Real concern about the Homeless Population in boston. There are teams going around the city trying to get them into shelters tonight. Take a look at some of this video. This is some of this snow that fell here over the past 27, 30 hours or so. I live in boston. We expect it to get a little dumping of snow. Some of us on the north shore got more than we bargained for. As much as two feet on the north shore of boston. Here in the city anywhere from 12 to 15 inches. And on the south shore a real nasty problem with icy flooding. A lot of folks having to get around their homes in rafts and canoes. A really dangerous situation down there. This was a walloping storm here in the boston area. As you mentioned, larry, all across the northeast where you are in new york, then out into pennsylvania and down into philly, its been very cold as folks are trying to dig their way out of all of this. Fortunately a lot of folks had the day off, so crews really able to work on these roads. We expect theres going to be another warmup this weekend before another clipper system is threatening to bring some real cold temperatures here overnight sunday into monday. This is going to be a rough weekend for a lot of folks in boston. Great for the kids, larry. Ron mott, thank you very much for that report. Go inside, get warm, thanks for helping us out. Now, lets move on. Were beginning to see some signs that obamacare is unraveling. Reports are coming in from patients around the country that doctors couldnt verify their insurance plans. Some delays were so long that people chose to walk out without receiving care. Plus a new study shows that medicaid actually increases emergency room visits even for conditions that could be treated in primary care settings. So will all these issues lead to a Big Government bailout of the Insurance Companies . We have now paul howard, director of the manhattan Institutes Center for medical progress, and our friend, cnbc contributor Jim Pethokoukis of the American Enterprise institute. Twohour waits to get confirmation. Reports of people who really needed some help, chest pains and things like that, couldnt even wait that long and they had to walk out. Whats going on here . How frequent is this going to be . Well, look, back in october the Insurance Companies and the government admitting they had a 25 error rate with the files that the government was sending over from the botched website. The Administration Says it got it down to 10 . Thats still hundreds of thousands of people who may not have gotten Accurate Information to their insurers. The insurers have not been able to confirm their enrollment. So these people are showing up at hospitals or doctors offices and saying look, im enrolled but nobody can verify that yet. Jimmy p. , whats your take on that . And you know, doctors and hospitals are trying to be helpful but its not easy. I mean, the government, white house is asking them, jimmy, to finance all these mistakes and error factors that ron talked about. Its amazing that the people who have been demonized by the left, by democrats, and by the Obama Administration for wrecking the American Health care system have been, what, Insurance Companies and those doctors. The very same people who are now being asked to help, you know, be the glue to keep obamacare from spinning apart. Insurance companies, listen, who cares if they pay you. Just cover them. Doctors, who cares if they pay you, just do the surgery. Well catch up with you later. So i think its wonderfully ironic. It also goes to show you that this thing is not ready for primetime. It should have been delayed a year. What would have been the harm . We dont even know at the end of this year if more people will have Health Care Coverage. Forget about the access. You mentioned the oregon study. More people have Health Care Coverage than they did at the start of 2014. Ill tell you. When we come back, paul howard, you know, Charles Krauthammer wrote a very good column today about the Insurance Companies getting bailed out. Section 1341, thats the reinsurance fund. Section 1342, thats the socalled risk corridor. Now, as you and jimmy are reporting, with all these difficulties the burden is falling on the hospitals and the doctors and the Insurance Companies who are being asked basically to backstop everything. Does this enhance the likelihood that the bailout, which is written into law, will occur . The administrations got until march 31st to get these young invincibles, the young and Healthy People to sign up. Thats the only thing to save the Insurance Industry from take heavy losses here. The risk corridors, reinsurance fees, all those are designed to bail out the industry. Right now its looking like theyre headed for a bailout. The administration has worsened their position by telling people who kansd policies youre be bound by the mandate, you can buy a catastrophic policy. All of this has thrown the actuarial assumptions for the industry totally up in the air. Were not going to know for sure but it could be hundreds of millions of dollars of taxpayer dollars flowing to these companies. Jimmy go ahead, jimmy. On the flip side is that at the end of this year you have more Insurance Companies fleeing these exchanges, which means insurance plans will be even less attractive. People wont sign up again. Youll get fewer of these dsht young people who cant sign up this year they wont sign up next year. So the actuarial assumptions are even worse. But of course, listen, you can either bail out the Insurance Companies or all those people who now have these new unaffordable policies, well, gee, just make the subsidies bigger. So thats another bailout. Jimmy, as krauthammer suggests, its an interesting point, plirkt point, strategic point. Should the gop insist on taking those bailout provisions out . I dont know if you attach it to the debt bill or not. But have a vote on it. If they dont, given the history of this administration, theyre going to find the money. They will pay them. Because obamacare is only what obama says obamacare is. So they will find that money. And i think that would be very popular. I dont think it would pass, obviously. But i think theyll try to do that. Id love to see these sort of on the fence democrats in red states defend an Insurance Company bailout. Daring to vote against it. That would be something. Paul howard, let me go back to you. The study today from m. I. T. And harvard that bassically medicaid signups, which are voluminous are actually putting more people into Emergency Rooms in the hospitals, not less, that comes as a shock to some people. I always thought if you offered something for free you get morar of it. Whats your take here . It doesnt surprise anyone whos been following the medical literature. Look, weve known for years now that medicaid patients use the e. R. More frequently than private insured people, more frequently than the uninsured. And the oregon study, terrific study, basically a randomized controlled study showed yes, across every category they used more of all types of care but they used more e. R. Care by 40 . Punctures a huge myth the administration put out there, which is if we could just get these people covered wed bring down costs by reducing e. R. Use. Turns out its the exact opposite. Turns out according to the study 120 higher emergency room cost per covered medicaid person. 120 bucks, jimmy p. Now, this is another example its like the risk premiums in a way where the white house told us it would be cheaper and it turns out its going to make health care more expensive. This Health Care Reform plan is not going to make health care more affordable for most people. Its not going to reduce Health Care Spending overall. Ultimately, what it is is a redistribution scheme from the wealthy to the not so wealthy. Anything else, well, thats going to come afterward. At its core, remember, thats what this does. So the fact its not reducing costs and more people are using the emergency room, listen, thats just the sidelight. And the icing on the cake, larry, is it didnt improve health for this population. So ostensibly youre giving these people insurance. Remember, giving them a piece of paper, a, it doesnt give them access to good doctors. But b, we found out it doesnt give them better health. Well, those states that have projected the additional medicaid may look better and better. Thanks so much, paul howard. Jimmy p. s coming back for some more. Its time for our free market friday panel to weigh in on all these new obamacare horror stories. Theyre going to join us live on the set next up. And later in the show, we all miss the Ronald Reagan good old days. You know . It seems impossible now to pass progrowth immigration and tax reform. But we did it in 1986, when president reagan worked with the democrats in congress to make it happen. Why cant it happen this year . Hint, hint. We dont have quality leadership in the white house, for one thing. More on that key story in a few minutes. For now dont forget, free market capitalism is the best path to prosperity, not Central Planning health care. Im kudlow. Well be right back. [ male announcer ] this man has an Accomplished Research and Analytical Group at his disposal. But even more impressive is how he puts it to work for his clients. Morning. Morning. Thanks for meeting so early. Oh, its not a big deal at all. Come on in. [ male announcer ] its how edward jones makes sense of investing. We are the thinkers. The job jugglers. The up allnighters. And the ones who turn ideas into action. Weve made our passions our lifes work. We strive for the moments where we can say, i did it we are entrepreneurs who started it all. With a signature. Legalzoom has helped start over 1 million businesses, turning dreamers into business owners. And were here to help start yours. Aflac got em. Yeah, hes clean, boss. Now listen to me, duck. I have an associate that met with, uh, an unfortunate accident. While hes been incapacitated, somebodys been paying him cash. Now, is this your doing . Aflac . Now, if i met with some such accident, would aflac pay me . Nice. This is your stop. [ male announcer ] find out what aflac can do for you and your family. Aflac . [ male announcer ]. At aflac. Com. All right. Weve moved past the obamacare website issues. Now were starting to see some real implementation problems from doctors, patients, and Insurance Companies. Here to help us break it all down, our free market friday panel. We welcome back democratic strategist richard sacarides. Syndicated radio host hugh hewitt, author of the new book the happiest life. And w. O. R. Radio host mark simone. It is a great pleasure all of you, thank you. Hugh, what do you make of this . Every day new stories coming up, featured on drudge, front page of the newspapers. Whats going to happen here . All the smartest people, you just had a couple of great ones, jimmy p. Especially but avik roy or meganmark cartel, phillip klein, telephovin troy they all this is a disaster unfolding in an escalating fashion. Especially the medicaid expansion. Not only is emergency room usage going up, nonpayment to doctors and the refusal to see these patients is going to skyrocket. We have a health care crisis, not a problem, not a Public Policy problem but richards friends have thrown American Health care back 50 years. Richard . Do you have a response to that . Thats a tough charge. 50 years. He could have been even tougher. Listen id be content by just saying Central Planning doesnt work because i think that is at the heart of this problem. I think that will be a big test. I think the rollout was rocky. It was off to a rocky start. That was for sure. They had some technical problems. I think the Technology Problems are largely fixed. Really . Yeah. I think people are starting to sign up. And i think that once obamacare sets in i think once obamacare sets in, people are going to like what they see. Time out. Theyre going to like coverage for preexisting conditions. Theyre going to like i must ask you, the Technology Problems have been solved . This whole business is about the breakdown of the socalled back end where the website doesnt communicate to the Insurance Company, people that have inrolled and paid thats why theyre waiting two hours in Emergency Rooms and doctors offices, richard. Listen, i think well have to see. It is a massive undertaking, and there are going to be glitches. And its going to be disruptive. I mean, were changing the way health care is done in this country, and its going to be disruptive. But i think, you know, six months from now, 12 months from now people are going to largely like what they see. Theyre going to like that they have coverage. Theyre going to like that insurance is available for all. Thar going to like this new system. I think preexisting conditions is a big issue, very important issue. And republicans have got to do better are in selling the fact that they can take care of that too without this whole rigamarole, jerry rigged Central Planning. But do you think richard is right . This things going to just take care of itself and were all going to live happily ever after . Id like to ask richard, if this was a rocky start, what would be your idea of a really bad one . Well, the technology was off to a very rocky start. And that will obama is like a guy who burns your house down, shows up with a fire extinguisher thats empty and then says your house was no good anyway. I think that we have to judge this thing on the merits and it is too early to judge this thing on the merits. Its too early, and ill tell you why because six months from now when everybodys gotten on this plan and they find out they definitely lose their doctor, everybody loses their doctor, youve got no choice of hospitals, the most ridiculously slim networks. In New Hampshire youve got 26 hospitals. You cant go to 16 of them. I just dont think that thats going to be true. This is all anecdotal stuff. Were hearing all kinds of anecdotal stuff. Lets also i mean, lets also the harvard m. I. T. Study was done scientifically out in oregon which really pulls the plug on the idea that more medicaid is going to help the Emergency Rooms and hospitals and make everything cheaper. Its not going to happen. This is harvard m. I. T. But you know that study showed is that there were a lot of people for whom health care is newly available and they have medical issues and theyre getting treatment. I mean, this will be a big change. There may be things that we dont anticipate. Well have to adjust. Avik roys book how medicaid fails the poor takes the oregon study as well as the university of virginia study and conclusively analyzes that this is a disaster for poor people. When i watched the new mayor getting sworn, in ive been in new york all week to promote the book and he was talking about closing the inequality gap. In fact, obamacare will widen the inequality gap because people getting thrown on medicaid are going to have fewer and fewer doctors, fewer and fewer choices. I dont really believe that. I think what youre saying, the underlying principle youre advocating is that a publicly governmentsupported Health Care Plan for poor people is not workable, right . And so we just have a fundamental disagreement on that. I think that government can work, government can provide health care and Health Care Benefits to middleclass and poor people efficiently you already had a bunch of government medicare. Weve had a lot of Government Programs that have worked very nicely. Didnt provide enough coverage. Now were going to try a third system thats going to be inadequate. At the end of the year youre going to have 120 Million People who might lose their employer insurance who theyre very happy with. This is a nightmare. The medicaid thing, which is a disaster, they should just get vouchers and let them go and choose and theyll be a lot more efficient putting some private markets in. But hugh hewitt, let me just ask you, if this thing continues, this whole health care rocky start continues forever and ever, whats your take on the Insurance Company bailout issue . I mean, i think people are going to go berserk it may not even be the Insurance Companies problem but if we bail them out the whole countrys going to go berserk. If theres a bailout, there are eight Current Senate seats in play that look good for the republicans. That will take them out to 13. Well add this colorado where amy stevens or one of the others will come into play. We will take out merkley in oregon if they do an Insurance Company bailout. Al franken will be at the edge of disaster. Hes pretty safe right now, but someone like steve hexsmith will come ton the race. And the sure things like tom cotton is going to be and Shelly Caputo in west virginia. If theres an Insurance Company bailout eight wins we get will go to 13. Mark warner will go to virginia. Republicans are never going to get eight wins. Ill just say this. The provisions in the legislation, we talked about it on this show, krauthammer writes about it, its now gotten a lot of visibility. Those provisions are poison. Theyre political poison. You know that. I think that ive got to get out. I mean, i think that one of obamas biggest mistakes was he did too much for the Insurance Companies. Because he tried to compromise with the republicans. He wanted to bail out the Insurance Companies even more. Actually, ill put it the other way. The Insurance Companies never should have gotten in bed with this plan. Thats where the issue is. This is corporate cronyism i completely agree with you. Hugh hewitt, Richard Socarides, and mark simone, stk around. Weve got plenty of work for you. Right now its time to talk about fed chairman Ben Bernankes optimistic last hurrah. Smfg a Farewell Speech this afternoon that moved the markets for a while. Cnbcs Steve Liesman was there and he has the story next up on kudlow. Please stay with us. So ally bank has a raise your rate cd that wont trap me in a rate. Thats correct. Cause im really nervous about getting trapped. Whys that . Uh, mark . Go get help i have my reasons. Look, you dont have to feel trapped with our raise your rate cd. If our rate on this cd goes up, yours can too. Oh that sounds nice. Dont feel trapped with the ally raise your rate cd. Ally bank. Your money needs an ally. That its given me time toabout reflect on some of lifeseen biggest questions. Like, if you could save hundreds on Car Insurance by making one simple call, why wouldnt you make that call . See, the only thing i can think of is that you cant get any. Bars. Ah, thats better. Its a beautiful view. I wonder if i can see mt. Rushmore from here. Geico. Fifteen minutes could save you fifteen percent or more on Car Insurance. [ male announcer ] the parking lot helps by letting us know whos coming. The carts keep everyone on the right track. The power tools introduce themselves. All the bits and bulbs keep themselves stocked. And the doors even handle the checkout so we can work on that thing thats stuck in the thing. [ female announcer ] today, cisco is connecting the internet of everything. So everyone goes home happy. Meyers supermarkets saved the Indianapolis Colts from a blackout uss donating thaez 1200 tickets to military families. Also a group of businesses chipping in to buy the remaining tickets for the Green Bay Packers game. Larry, ive got to ask you, do you have a Favorite Team out there . Yeah. The new york giants. Trouble is theyre not in the game. But your report is fascinating, how these businesses have come in to always at the end. This is fascinating stuff. And boy, is it going to be cold. Many thanks as always to cnbcs seema mody. Now lets move on. Call it fed chair Ben Bernankes last hurrah as he took the podium for the final time we think today. So what did bernanke say . Lets ask cnbcs own Steve Liesman, who was inside the aea Conference Today during the bernanke speech. Good evening, steve. Good evening, larry, from philadelphia at the American Economics Association annual meeting where fed chairman ben bernanke gave his last major policy speech as chairman. He is scheduled to leave january 31st if, as expected,ing janet yellin is confirmed by the senate next week. The fed chairman said that the headwinds that had restrained the u. S. Recovery since the financial crisis have abated. The combination of financial healing, greater balance in the housing market, less fiscal restraint sxfrks continued Monetary Policy accommodation bodes well for u. S. Economic growth in coming quarters. Maybe more interesting than his comments on the u. S. Economy was his forecast for better Economic Growth abroad. He gave some of his most upbeat outlooks on the economies of japan, europe, and the united states, suggesting that all three this year could be growing for the First Time Since the financial crisis. But the fed chairman said the recovery is incomplete and pointed to elevated unemployment levels as something to watch more in addition to slow productivity growth. The fed chairman said just because the fed decided to taper recently doesnt mean any change in the feds outlook for interest rates. Larry, back to you. All right. Many, many thanks. Cnbcs own Steve Liesman. Now, lets bring back cnbc contributor jim peth cukis, who has generally been a supporter of bernanke qe. Jimmy, bernanke says it worked. Do you agree . I think it i do agree to the extent i think it offset some of those headwinds that he was talking about. Whats interesting is that he has really blamed congress for not doing more, not more fiscal stimulus, but i think what people dont recognize, that if congress had done more fiscal stimulus the way bernanke apparently wants to, do he probably would have done less qe. As long as he had that 50 inflation target he would not have don q e if there had been like a second giant stimulus package. So wed probably have been in the exact same place had they done that. Even though he keeps harping on that, im not sure it would have made much of a difference. Its an odd paradigm if it wouldnt have made much of a difference but theyve got all this excess reserves to get rid of. Jimmy, what about this proposition . We are now entering into a multiyear tightening cycle. Okay . Speed is unknowable and the timing is unknowable. But basically, thats his gift to janet yellin, is it not . So heres his gift to janet yellin. Getting out of qe and getting out of this lowrate environment as you mentioned, a multiyear rate cycle. I dont know how fast its going to be. A lot of these wall street economists think next year is going to be almost a boom year. Well see. Also, hes left her with a fed that really like never before is under political fire. From republicans. So she really has i think less leeway than perhaps some of her predecessors. So the fed has to do some very difficult things in a very difficult political environment. Is yellin going to have any trouble getting confirmed monday . She got 34 no votes in a procedural vote. There are some people saying shes going to get 40 no votes so, harry reids going to have to use this new 51vote rule, not the usual 60vote rule. Shes going to have trouble . Is her credibility going to be knocked down . Thats interesting. Thats sort of what i was getting at, is unlike previous fed chairmen, which they were basically guaranteed a good number of votes, no republican certainly going into an Election Year wants to be seen voting for janet yellin. So shes not going to get a ton of republican votes. I dont think thats going to hurt her credibility at all. To me whats going to hurt the feds credibility going forward, if people dont understand what the fed is trying to accomplish. And even though bernanke spent a lot of effort with transparency, communications, press conferences, a lot of people still dont understand exactly how the feds going to unwind itself from qe. And they really dont understand the exact limits of janet yellins optimal control policy or really what that means. Just quickly, jim, still no sign of monetary rules. No monetary gdp rule. No commodity price rule. No hard dollar rule. Still no rules. And i just think thats a problem. I think its a huge problem. Janet yellin had said some things in the past which led me to believe she may have considered some sort of rule. Apparently thats not going to be the case. Its going to be up to the discretion of her and the fine governors and Central Bank President s to determine what Monetary Policys going to be. I think thats terrible for markets. Its terrible for expectations. If i could change one thing, i would go to some sort of role. We can disagree what that role would be. But it would be better than just going to pure discretion, which to a great degree is what we have now. Thanks, jimmy peth cukis. We appreciate it very much. Now, folks, the Midterm Election fight is gearing up and big money is already being spent on the battlefield. Question, can the gop win the senate and will the Koch Brothers make that happen . The free market friday panel back to tackle it next up on kudlow. [ male announcer ] this is the story of the little room over the pizza place on Chestnut Street the modest first floor bedroom in tallinn, estonia and the southbound bus barreling down i95. This magic moment it is the story of where every great idea begins. And of those who believed they had the power to do more. Dell is honored to be part of some of the worlds great stories. That began much the same way ours did. In a little dorm room 2713. This magic moment welcome back to the kudlow report. So could 2014 be the year that republicans take back the senate . They need a net gain of just six seats and democrats are defending 21 seats, which means the gop gunning for incumbents in conservativeleaning states like arkansas, alaska, north carolina, west virginia, louisiana. Today the Koch Brothers backed americans for prosperity launched a multimilliondollar ad campaign against three vulnerable democrats who supported obamacare. Theres one newcomer to the list. That is New Hampshires jean shaheen. Take a listen. Its the lie of the year. You can keep your insurance if you like it. And senator shaheen kept telling it. The truth is thousands have already had their insurance canceled. Families are paying more for Expensive Health plans and facing hourlong drives just to see a doctor. You can keep your insurance if you like it. Tell senator shaheen its time to be honest. Obamacare doesnt work. New hampshire families deserve better. All right. Our free market friday panel is back. Democratic strategist Richard Socarides has really got his work cut out for him on that one. And we welcome back radio host mark simone and hugh hewitt. Hugh by the way has a new book out called happiest life. Richard, i dont know how democrats get out of this, the big lie. Its a dagger in their heart. If you liked your insurance, your doctor, you can keep it. How are they going to get around this . Can i just tell you . The republicans have zero chance of taking back the senate. Its going to get closer. The margin is going to get closer. Six senate seats. It could be very close. Could be 5050, could be 5149. But look, the Koch Brothers are targeting all the democratic women. This is part of the republican war on women. Theyve got three women Democratic Senators this has nothing to do with health care. Theyre pouring millions of dollars in it. I do not think the republicans are going to take back the senate by targeting women and using the money of the extreme right to try to hes very clever. Foremonger these election pz p. Socarides is a very clever guy but to suggest this is a war on women lets come up with two names for richard to consider. Terry lynn lannon in michigan who is surging and is going to be the upset special in the senate race, and in colorado amy huge upset. Amy stevens in colorado. Its awfully hard to wage a war on women when in fact women are waging a war on democrats and they are waging the war on democrats because their health care is poor. My friend Mary Catherine handler came up with the term doc shock. Women more than men are going to experience doc shock when they find their health care has collapsed. Try and sell that product all you want. Its the edsel of politics. Let me just get mark in here because hes always factbased and entirely neutral in his judgment. All right. Let me just ask you, how does a democrat worm out of this promise that obama made and everybody made it right downtown line . Because the Koch Brothers, smart group, good advertising, theyre just going right for, it right for the heart of the issue. And richard, met me say this foup if you like your senate seats, you can keep them. Thank you. I will keep them. All of them. Frame that. Fabulous. Everybody losing their doctors nobody going to the hospital they want. You know whats going to be a big issue, nobodys even thought about this, the light bulb is going tonight big deciding issue here. As of right now youre not allowed to make a regular light bulb or import it into this country. A light bulb weve known all our lives. The squiggly thing now. Nobodys going to like. If you break one in your house you have to call in a hazmat team to get rid of the thing. Thats going to start to dawn on people, what happened here, the government tells you what light bulb you can use . Im not sure im following all this but what i will tell you its called overregulation. Im interpreting for him. The Republican Campaign to retake the senate will be based exclusively on what they perceive will be dislike of obamacare. Ill tell you, if polls and the rest of the country. I will give you this. If at the time of the Midterm Elections obamacare is hugely unpopular, you know, ten months from now, i dont believe it will be, but if it is hugely unpopular it will be 50 it could be 5050 in the u. S. Senate. But the democrats will not lose control. It could also be 5347. Hugh, let me go to you on another issue. Republicans are far from united on this. Okay . The Koch Brothers i think doing the lords work going after the vulnerable democrats. Women. Democratic women. As you know, a lot of fiscal groups, American Action clubs for growth, are going after republicans, and also im reading socially conservative group the council on national policy. Ive spoken to them. Its a good group. Ed meese is heading up a project for them. Theyre going to go after republicans who are, they believe, going soft on the social issues. So how does the gop get past these civil wars . The good news is our terrain is not open to any of the sort of things that hurt us so badly in 2012. Were not going to have any divisive primaries of the sort that plagued us in indiana and missouri. Mitch mcconnell is going to be the nominee. Hes going to win handily. It looks like in South Carolina that Lindsey Graham is going to be the nominee. Hes going to win handily. Meanwhile, people are looking at saying im going to put my money into tom cotton beating mark pryor in arkansas. Im going to go up to alaska and be with Mead Treadwell to take out mark begich. So whereas democrats wish they could poll what they did in 2012, which was clever and divisive for our side, i dont see it happening. I think the stakes are too high and the destructive impact of obamacare and, by the way, our foreign policy. We are going to have a mess in iran. Syrias over 130,000 dead. Hezbollah is close to getting the kind of weapons that forces israel over the line. Its a serious election cycle. Rhetor rhetorics not going to beat the republicans like it did in 2012. I think youre right. But who knows . Some of these primaries may be divisive. Thats an issue. It may not be insuperable and it is not going to be about the war against women. Nice try, though. Really nice try. Ive got to go. You can hang around with me if you want to continue this discussion. Richard, mark, hugh, stick around because most americans agree that we need some tax and immigration reform. Pro growth. And we could use it now. But without the right leaders in washington its impossible. A new column in the New York Times by my colleague john harwood points out that under the leadership of Ronald Reagan we did actually make both immigration and tax reform and in the very same year with a divided country both do we miss reagans good old days . Wow. Our free market friday panel returns to discuss all that and much more. Does partisanship and gridlock mean all hope is lost in washington . Well, it may seem that way, but a quick glance at history suggests otherwise. In 1986, when my former boss Ronald Reagan was in the white house, republicans controlled the senate but not the house. Sound familiar . Well, despite divided government that year, bipartisan majorities in both houses passed major tax reforms and changed the countrys immigration code. So the question this evening is can they do it again . This time with president obama at the helm instead of reagan. Were back with Richard Socarides, hugh hewitt, and mark simone. Hugh, i want to go to you on this because i dont know if you read horwitzs column or not. It was a good column. He argues there was more consensus on issues, more problem solvers, and a better attitude of bipartisanship, not to speak of the fact that reagan himself was a pretty good deal maker. Do you agree with that . Is that stuff missing today . It is. I was also in the Reagan Administration in the white house and the agencies and there was a great deal more of the old bulls in the senate who would do deals whether it was orrin hatch and 2ed kennedy. I think its not dead that yum grace could come forward. There are some, for example, opinion makers like archbishop gomez in los angeles, arch bishop shapoo in philadelphia. They want immigration reform. Theyre generally perceived as conservatives. Paul ryan is working quietly behind the scenes. But the president needs to change his approach. The president is a divider. Hes not a uniter. And when he decides to change his approach, you might find some progress made on these most intractable issues. Let me raise one point. As harwood points out, back in 86 the tax reform package which i think was a tremendous progrowth effort, was regarded universally as revenue neutral. Revenue neutral. Take breaks away from individuals and corporations and lower the marginal tax rates. I would argue it worked. Now, today the president and democrats insist that any tax reform be revenue positive. And they know that is a nonstarter with the gop. Why . Why . It blocks everything. This country needs to rejuvenate business. I mean, everything is a nonstarter with everyone now in washington. I mean, look back, you know, my old boss, bill clinton, right . I mean, he in the second term especially made a lot of deals with newt gingrich. He was great. He looks better and better every day to me. I know that youre a secret clinton im a secret clinton admirer. Not so secret. But look, its become impossible to do any kind of deal in washington because the extreme right in the Republican Party, the tea party folks, have taken the moderates, the reasonable people in the Republican Party hostage. I mean, the speaker would like to do a deal on immigration, but john boehner is not going to get i mean, look what happened to marco rubio when he tried to do something on immigration. He got crucified, right . So how are the republicans i mean, you could get obama to do any number of deals on immigration. Immigration is a great example. I mean, he wants a deal on immigration. Harwood tells he wants to deliver a deal on immigration. Harwood tells a story in this column about bill bradley sitting down with al simpson, senator al simpson of wyoming, former senator bill bradley of new jersey, and he had a list of 22 questions. And he went down and he asked simpson the questions. And they agreed on 16 of 22 whereupon bradley says okay, you have my vote because 16 of 22 is enough. Now, i am unaware of any cooperative bipartisan personal relationships like that today. You know the other thing about Ronald Reagan, hed been a governor for many years, he probably negotiated dozens of agreements. Hed been a union president. How many agreements did he have to negotiate . You now have a president whos never been a manager and has never been in a negotiation in his life. All he knows how to do is plug in the teleprompter and lash out against something. Hes never negotiated anything. I just think that that is not, you know, on its face a realistic position to take. I mean, barack obama may not be the best negotiator. He may not be the most cordial, friendly person to republicans in the congress. But the main stumbling block in washington right now is not barack obama. Not harry reid. Not the leftwing democrats. Its not even john boehner. It is the extremes on either side. Dan rostenkowski in other words there, was such a thing as a moderate democrat who was willing to do business. Where are they today . Theyre afraid. Way to the left it seems. Daily kos attacked today the 15 Democratic Senators whove signed on to a new iran sanctions bill which is absolutely necessary. What richards really referral to is occurring on the left, not on the right. And in fact when the new mayor of new york drives off the highway, goes 15 miles out of his way to run over the right wing which doesnt exist in this city as far as i can tell, that is indicative of we got the why the president insists on that rhetoric, why richard brings it up, the tea party are just ordinary americans oppressed by a sense that the government is imposing on them this is a great point followup. Diblassio and obama, whats the linkage . Whats it mean for Democratic Party politics today, diblassio and obama . It means former secretary of state clinton is going to go way left to get the nomination and lose in 2016 because richards party has gone thats a key point. Youre an observer of these are two guys with no Management Experience but they yell the right slogans out there, they attack the right like crazy, they talk about the two cities, the two americas, but theyre the two guys with no Management Experience who couldnt solve the problems if they tried. Weve seen this with obamacare. You think the diblaseio message, soft on crimee doesnt like business first of all, its not soft on kram. Of course it is. The whole stop and frisk argument that ray kelly successfully implemented do you think thats a national message, richard . No, i do not. Its not a clinton message. No, it is not a clinton message. And it is not a message Hillary Clinton will embrace if she tell me more about that. How does she get out of that the de blasio phenomenon is very specific to the fact that mike bloomberg, who did a great job for 12 years, people are ready for a change and he capitalized in a very left leaning democratic city and ran a Clever Campaign and well see how he does. But a very divisive campaign. I personally think that he will be a better manager than most people think he will be. But well see, right . But this is not a message that the Democratic Party or Hillary Clinton is going to embrace. Does Hillary Clinton go it is a very unclinton message. Elizabeth warren slash de blasio slash obama, or will she do what richard is suggesting and be more like her husband . If she ever got to the white house shed be more like her husband. But the fact is when you have 15 Democratic Senators sign a bill to stop the president from appeasing iran, the party has gone too far to the left. And hillary is going to have to run to the left to forestall an Elizabeth Warren challenge or a challenge from any other number of lefties out there. Its gone over to the edge. And this is what happens i think were seeing a little perhaps Hillary Clinton endorsement right here. I think Hillary Clinton was a much stronger position in 08. Younger, fresher, no baggage and a rookie came out of nowhere and took the nomination from her. Its all compared to what. Its all compared to what . It sure is. And i have to tell you, ive been a new York Resident for a long, long time. De blasio was really my chin crashed on the desk. It just crashed. And the speeches of his supporters with this plantation stuff and class warfare well, its only going to get better. Its only going to go up from here. It wont because de blasio came and defended them in the media. Not quite. Richard socarides, very clever, folks. Very clever. But severely challenged in his political analysis. Mark simone, always neutral and factbased. And my pal hugh hewitt. Great to see you. All the best to his new book, the happiest life. It is available now. Now on clrpt clfrpt, the markets had a lot to chew on today. Disappointing car sales. Oil prices heading lower again. And of course Ben Bernankes Farewell Speech. Our investment experts will look at your money next up. [ cellphones beeping ] [ cellphone rings ] hello . [ male announcer ] over 12,000 financial advisors. Good, good. Good. Over 700 billion dollars in assets under care. Let me just put this away. [ male announcer ] how did edward jones get so big . Could you teach our kids that trick . [ male announcer ] by not acting that way. Ok, last quarter. [ male announcer ] its how edward jones makes sense of investing. We are the thinkers. The job jugglers. The up allnighters. And the ones who turn ideas into action. Weve made our passions our lifes work. We strive for the moments where we can say, i did it we are entrepreneurs who started it all. With a signature. Legalzoom has helped start over 1 million businesses, turning dreamers into business owners. And were here to help start yo welcome back to the kudlow report. Im seema mody with this news alert. 31,000 union machinists in Washington State are voting today on a contract to build boeings new 777x. Boeings offer would cut some pension and Health Care Benefits for workers. Union leaders are telling them to reject the deal. But boeing says this is the unions last chance. If they turn down this offer, boeing will build the 777x somewhere else. Boeings stock ending the day slightly higher. And larry, we could get the results of the vote later this evening. Something to watch. All right. Great. Maybe the dotcom will be carrying that. Seema mody, thank you very much. As always. Lets talk some more about stocks. Market closed mixed today on the heels of Ben Bernankes positive economic comments. Im joined now by lee munson, chief Investment Officer portfolio llc and jim la camp, Senior Vice President of investments at ubs. Lee munson, i know car sales were soft today. Okay. But almost every other stat tells me were coming into the new year with a lot of Economic Growth momentum. In your judgment, as that true . But b, why is the market so sloppy this week . Well, i think this week i wouldnt chalk it up other than not a lot of interest in knowing where to go. Not a lot of people waiting for those minutes. But it is true. If you look at last year and look at the end, the ism manufacturing was great. Jobless claims are going down. Were getting people employed. So just remember, youre going to hear stuff like remember last year in march theyre talking about walmart had bad comps. We were talking about last august job numbers werent that good. But overall the trend is always your friend, larry, and the top thing is profits, profits, profits. They keep increasing. So we want to ignore people who want to talk about peak profits. You want to ignore people who want to talk about top line Revenue Growth as if thats the only thing on the planet. Jim lacamp, i basically agree with lee and i think the profit storys going to be pretty good, maybe better than people think. But you make a point in your notes that i looked at, the uncertainty factor, lets take obamacare, for example, on taxes and regulations and whats going to happen to Insurance Companies, whats going to happen to businesses, you know, hiring, hours worked, because the business mandate, it doesnt kick in until the end of the year. But businesses are going to start planning on that. Is there an uncertainty tax on the stock market right now even though the economy looks better . I love to argue with lee but i agree with what he said. I do think there is uncertainty. Last year it was about whether the fed was going to taper or not. This year its not going to be about whether they taper. This year its going to be about whether the bond market riots or not. And whether those tenyear treasury yields go up too far too fast. Then on top of that how much is the sticker shock for obamacare really going to be . Its going to be tremendous. Not to mention, larry, top earners already have a whole lot of tax increases set for them for those making over 250,000 this year. So those are some headwinds that were going to face. I think the market is going higher this year. Short term or overbought, sentiments too high. I think ultimately the market does go higher but these are some issues were going to have to wrestle with. And lets point out one other thing. Copper prices not doing so hot. Energy prices you mentioned are going a little lower. Emerging markets broke down today. Chinas markets not doing so well. Some of these markets sending up flares that we might have to be worried about overseas before too long. Il le i also, lee, im thin the fed has entered and will enter this longrunning tight ening psye enning cycle. Its a big shift. We see weak commodities, a stronger dollar, basically falling gold price, falling oil prices. Quickly, i only have a few seconds, whats the fed impact going to be if im right and in fact if they move even faster . Okay. Jim lacamp had me last year. He was right. It was too early for emerging markets. But now that we have europe thats going into crease liquidity i think its going to pick up the pace from the fed. So remember, feds going to taper, europes going to increase, thats the case for emerging markets. Gentlemen, sorry, we need more time to discuss this. Europe, well get to it. Lee munson, jim lacamp. Thats it for this evenings show. Thanks for watching. Have a wonderful weekend. Everybody keep warm out there, and well see you on monday. 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