but we missed the first half trying to download the docs. which turned out to be the old-new docs... rather than the new-new docs. then bob dialed in from home and his... dog starts barking. so jen jumped in with her "two cents"... which katy missed because she was buying shoes online. and then i hit mute... to talk timelines with my team. getting lots of dirty looks through the phone in the process. - overall... - a great call. - great call. yeah.

introducing a better way. learn more at cisco.com/newways [ dog barks ] right now, 1.5 million people are on a conference call. 750,000 wish they weren't. - ( phones chirping ) - construction workers are making 244,000 nextel direct connect calls. 1 million people are responding to an email. - 151 accidentally hit "reply all." - ( foghorn blows ) that's happening now. america's most dependable 3g network bringing you the first wireless 4g network. - sprint. the now network. - ( whoosh sound ) deaf, hard of hearing and people with speech disabilities access www.sprintrelay.com. tdd#: 1-800-345-2550 including who i trust to look after my money." tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 "the dust might be settling... tdd#: 1-800-345-2550 that's great, but i'm not." tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 "i guess i'm just done with doing nothing, you know?" tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 "oh, i'm not thinking about moving my money. tdd#: 1-800-345-2550 i am moving it."

tonight on "the kudlow report," stocks stocks stocks another big gainer today, plus super bear nuri biniroubini recapitulates. can the tech rally survive and henry paulson gets the first kudlow award for financial bravery. flatfooted and tin horn and pathetic. the new health care plan is a sick joke with new yorkers paying a 50% top tax rate and the cbo says spending will surge anyway. are those guys kidding us? it's so bad it will never pass, that makes me bullish. fasten your seatbelt, everybody, "the kudlow report" begins right

now. good evening, everyone. i'm larry kudlow. welcome back to "the kudlow report," where we believe free market capitalism is the best path to prosperity. bravo for stocks, falling jobless claims and henry paulson today.y. stocks stayed up ins the marvelous surprising rally that has taken the dow up 7% so far this week. aagree with my pal, jimmy cramer, big superstars are recapitulating. tech generally led the banks this week but commodities and retailers are coming on as a sign of economic recovery. jobless claims fell 95,000 in the last two weeks. if that number can hold up, it might mean that unemployment will peak much sooner than lower, jobs could quit falling. it could be a huge plus, fasten

your seatbelts on that one. better earnings are driving this rally.y. i am still fully committed to the bank stock story. we'll look ahead to tomorrow's earnings for citigroup and ge capital. cit is not too big to fail, isn't that knowing score one for free market capitalism, stocks are okay with the story. three cheers for henry paulson on today's congressional show trial. i am going to give him and award later in the show. you won't want to miss it. he's a stand-up guy in contrast to the republican and democratic "politico"s who looked and sounded just pathetic today!y! those guys are looking for something that just doesn't exist. then finally, the democrats health care plan is a poison pill for new york state taxpayers, business and the rest of it. this whole thing is so sick, it

will never pass. that makes me bullish. two tech bellwethers that reported after the bell, google and ibm. brian shachtman has the latest from earnings central. >> hello. i won't get into too many details because jimmy goldman will go over in a minute. is there any danger in buying these stocks at these levels. >> look at google. it made 1.5 billion. still sensitive, you take a look at it where it's been, it's had a nice little ride. where these spots, even though it's pulling back now, it's had a really nice run? what do you do? is it topee ibm is a better example because it's increasing tonight after-hours whereas google is down. made 3 billion, raised its guidance, year-to-date up more than 30%, you can see right there. bottom line, if you're not in there, do you buy or toppy? google, you might think you can buy in a dip but don't get that

opportunity with ibm. when it comes to earnings, collateral damage, look at yahoo right now, a situation where after-hours, it's down. why is that? it's being dragged down by google. you can't always assume something in that sector will happen. take a look, look at nokia rim, apple and palm today, nokia hammered on earnings, right? just unbelievable to the down side.. the situation is this, though, part of it is market share. how did some of the u.s. hand seth people hold up? both research in motion and apple to the up side.. palm was down but being down two cents is like a victory for them. there was a story out there that the preio doesn't sink up with itunes which is bad and still only lost two cents. for these guy, it's a net positive. keep that in mind, collateral impact. we want to talk about financials, larry will have his even spiel on that.

it's like trying to understand santelli on a bad day, it can be difficult. jpmorgan beatest mat estimates. you have to understand something clearly, jpm and goldman sachs are considered best in class. time for bank of america, citigroup, huge rang, from 11 cent loss to range, the consensus is for 28 cent process. citigroup, a three cent gain. little chance for profit for citigroup, if they turn one, watch out. different from tech, you would think with these prices and possibility and ranges there, could be room to rise on the upside. which brings us to g.e. listen, we work for the company. >> did you say g.e.? that's right, we work for the company. >> it seems sometimes it would take a jet engine to make this

thing go higher. bottom line is, since the march low, you just saw the stock right there, the range is 16 to 27 cents. it hasn't even doubled off the low, to some colleagues not the case, down 55% in the last year, forget about the positives it's had since the march lows. the point with bac, city and ge, more than tech, it feels like there's room to the upside. >> dead you see the retraction today economic sensitive pro recovery stocks interesting to me, retailers up today, transports up great today. commodities. retailers are doing great. everybody loves to dis them. they had a heck of a good week, retailers, consumer spending, imagine such a thing in america. >> if you're a trader, one thing. i'm obsessed with the banks, when you could have a two cent profit for citigroup, it could be off to the races. >> i think banks have been the

backbone of this rally. we'll come back to the bank story. we have two experts who will debate pros and cons. first up, brian, stay with me. big news from the tech sector this evening, both google and ibm reporting after the bell. with me the silicon valley bureau chief, great jim goldman and senior writer for "fortune" magazine. jimmy, after the bell, google stock went down and ibm went up. explain it us to. . >> let's look at these. reports from google and ibm. the ibm news will resonate through the market tomorrow. the company blows past earnings expectations reporting 2.33 cents a share, beating the street, the biggest on lim's history on lighter than expected revenue. key highlights. raising full year eps guidance from 9.20 to 9.70.

closed 17 dallas above $100 million each and will have $3.5 billion in cost savings. at google the bottom line beat isn't enough to satisfy investors looking for a better performance on the top line. they reported 5.30 cents a share versus $5 consensus. high point, the revenue fell short of some of the whisper numbers out there. ceo eric schmidt on the call said business seems to be stabilizing but isn't sure when a real turn around will come. for the second straight quarter google's payroll shrunk 378 workers. investors liking ibm tonight, google, not so much. back to you. >> jimmy, let me ask you something. what kind of business does ibm have in china and asia. >> big. ibm is huge overseas. those are some of the biggest and important markets this company serves. i know where you're going with this on the whole chinese

stimulus package. this did come up on the conference call. the stimulus package in this country is beginning to reach pretty significant dividends for this company. ibm pointed out 7% of revenue is coming from stimulus oriented package spending, but only 7%. the spending has only just begun, when you're talking about health care and transportation and smart grid stuff, it's only just beginning. >> i understand. i'm going in a different direction, this is not a trip skrup, i want to keep you on your toes. what kind of business in china and asia does google have. >> google is desperately trying to crack the chinese market but met with such significant problems in that country both from the government and the likes of bydou and others entrenched in that market. >> my hunch is even though they both beatest mats is china and asia. i keep arguing for tech stock and others, what we heard this

week, china is the tail that's wagging the u.s. earnings dog. >> i would chime in and say part of it's guidance. ibm upped its guidance, google didn't give any, talking about situations there's not a ton of top line growth, if you have good margins and give guidance, that's what people want to see. >> back into the china story. china reported 7.9% gdp this morning. jimmy, say with us, we'll bring in john forth from "fortune" magazine, first, give me your quick take, google versus ibm, the former traded down, the ladder traded up. i'm blaming china and asia as the big difference, what do you see? >> that's a smart take. i have to go with guidance here. ibm is huge. >> you're never coming back. >> what can i say? i have to be honest. >> we'll have you back in 2012, not a problem, believe me.

>> ibm is huge, their services business is huge, they do big business with governments. if they say they see better up side than they said before, folks get excited about that. google doesn't really give guidance. nobody really knows what the last half of the year looks like. it's harder to get excited about that i don't know, could be china. >> on the balance. i like this china thing. on balance, can the tech rally survive? i ask this because tech has broke an lot of hearts. i think we have a chart, over the last 20 years, tech has fallen 13%, can this tech move continue to move? everybody has really elevated tech.. to be sure, the nasdaq has been great, tech dominated. look at that chart. over the last 20 years, it's actually dropped 12 1/2%. you can see that flatline that goes all the way back to what 2001 or so, so, jon, what's your take on the tech in general? >> i would point out that we're

dealing with a different gal lax say, different universe of companies now than we were dealing with 20 years ago. microsoft 20 years ago versus now, you might look at it different. can it sustain the rally? my gut has to say, i doubt it. look at march, look at now, pretty much everybody who's anybody in tech is up 25-50% since the march lows. that said, if you sell tech, where do you put the money? i look at tech, look at companies like ibm, companies like cisco, companies like intel. they're very well run companies. you have to believe when this entire global economy turns around, they're going to do well. the question is, when does that happen?? right now, i don't think there's enough convincing evidence that will happen soon enough for the rally to continue. >> the other big guys intel was a barn burner. last one, what about microsoft, they're going to report soon. a lot of questions about microsoft, just as there have been many years, what's your take on microsoft? >> i don't know what microsoft is going to report.

i think i see good things for microsoft. >> i have to hear you on hewlett-packard and cisco one more time. speed of light, hp. they're knocking dell out of the ballpark.. we have these lousy dell machines in the newsroom. hp, do you like it or not. >> i like hp because they have a stronger consumer businesses and consumers are buying more pcs than businesses. cisco, i like them because of technology, router and switching business not doing the best but looking for business in web ex-and that's doing well. >> john chambers, one great

american, jon fortt of fortune. and i'm kudlow of cnbc. coming up, kudlow banking on banks, i love the story a zero interest rate and steep curve, even a banker can make lots of money in that environment. i will stay with it. we'll look at so much more this evening, i have to give my henry paulson award still to come. we have stocks stocks stocks, green arrows across the board again today, our gurus help you find the right place to keep your portfolio riding this rally, plus roll out the red carpet, this is going to be the henry paulson award, financial and economic bravery. i'll tell you why paulson 100, and those dingbat democrats and republicans on the investigating committee get zero. "the kudlow report" comes back, bravo for paulson, bravo for slowing jobless claims and bravo for this stock market, it is so bullish i love it! announcer: what's your cialis moment?

when she gives me that look. when at last we're alone. when we both decide. announcer: today, guys with erectile dysfunction can be ready with another dosing option from cialis. cialis for daily use is a clinically proven low-dose tablet you take every day, so you can be ready anytime the moment is right. so relax and take your time.

tell your doctor about your medical condition and all medications and ask if you're healthy enough for sexual activity. don't take cialis if you take nitrates for chest pain, as this may cause an unsafe drop in blood pressure. don't drink alcohol in excess with cialis. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long term injury seek immediate medical help for an erection lasting more than 4 hours. if you have any sudden decrease or loss in hearing or vision stop taking cialis and call your doctor right away. announcer: today, you have options: cialis for daily use or 36-hour cialis. ask your doctor if cialis is right for you,

you know me, i remain steadfastly optimistic about the banking story, give me a zero interest rate on steep upward sloping treasury curve and lot of mortgage refi, even bankers can make money under the

circumstances. we have big earnings report for ge, bank of america and citigroup. joining me the author of the very cheerful sounding, "the ultimate depression survival guide" and senior portfolio manag manager. hello, gentlemen. martin, i love the banks. before you even get to tomorrow's earnings, let's have quite fisticufffisticuffs. zero sprns borrowing and what do you think of this. >> this is when you recommend a no. you have three big problems in the banks. number one, the rot, the toxic assets keep piling up behind the scenes at banks like bank of america and citigroup. foreclosures keep marching on. we have foreclosures up 5% in the last month, over 33% the last year.

that's problem number one. problem number two, the risk, banks like goldman sachs and jpmorgan chase. these aren't banking businesses, they're gambling operations. jpmorgan chase has trillions in de riv tins and morg-- derivati. jpmorgan chase has three times capital tied up and gauoldman g sachs has ten times its numbers tied up in risk. >> save some for later. so the rot and risk, this is just our opening gambit, before we get to tomorrow's earnings report. rot and risk, what do you make of it? >> i think it's overstated in

his argument, one thing they y have been doing, ceo curve like you mentioned cures a lot of that stuff and will do so and we know the fed will keep the interest rates on the short end very low. look at the margins on these banks that have already reported. jpmorgan had the highest since 1994. they're earning their way out of this. this will happen tomorrow with bank of america, it will have a great interest margin, probably ignored. these guys can really make money in this environment. >> let's stay with that you mentioned bank of america tomorrow. we'll give them equal time. bank of america tomorrow, citigroup tomorrow and we also have ge. i'm thinking it's ge capital. give me a come quick hits on that and then we'll get back to martin. >> i think you will get surprises on both ends. ge capital, we've seen bond prices improve dramatically over

the last three months, this quarter. with that said, you will see more improvement in the financial business as a whole. i think you will see a nice surprise on ge capital side. bank of america, i think will have a very similar type quarter we saw with jpmorgan. they will have a nice big beat. they have diverse operations in asset management. it's also helping, everyone's ass asset management, we're not thinking about this, the march levels were extremely low and had the best quarter in s&p since 1997. you have a real spike in asset management. lots of places to be making money. >> faster than a speeding bullet. ge capital, bank of america and citigroup. >> you have a lot of less bad news coming out. if that's what you want -- >> is this a confession? is this a capitulation? are you the noreal robouni of

banks? are you relenting on your pessimism? >> no. you don't want to invest in less bad, you want to invest in industries that are getting better. less bad is not for my money. you could have minor pleasant surprises to the up side that's a selling opportunity. these bank stocks have come up tremendously. the time to recommend them is not when they had a huge rally wlern, when they're in the gutter. >> you would get out? >> absolutely. >> back to david, big story in the "wall street journal" today, bank of america and city are operating under something called memorandums of understanding, essentially, the regulators, fdic and fed in control of the currency worried about risk management, worried about capital and boards of directors and management themselves.

should we be worried about that or maybe this is a good sign, the memorandums from the regulators. >> i don't think we should be worried about it. the amount of risk being taken out of their loan portfolio the last six months have been tremendous, the loan loss reserves have ballooned in all these different banks. because of these memorandums, the loans they're writing are very very good loans, i'd say finally, yes, they've come up in price but still trading at book value and some cases below book value, not like they're trading at three times book or anything. they're still very cheap. >> favorite bank, david, favorite bank. >> right now, i think the most money can be made in bank of america. >> bank of america. i will hold you to that. thank you so much. coming up, the first kudlow award for financial and economic bravery. that's right, mr. paulson a former lineman from dartmouth showed his stuff today.

i loved it. the politicians were pathetic. plus, folks, stocks stocks stocks, our gurus will stand by to beef up portfolios and your profits. we have a heck of a good bull-bear debate. is obama care really a sick joke a terrify iing 57% tax for somen new york. this is so awful it may be bullish because i don't think it will ever pass. that's the best i can do for the political story. this is a liberal interlude. the question is, can they really get their stuff through? i kind of doubt it. we'll get our stuff through all evening.

mr. evans? this is janice from onstar. i have received an automatic signal you've been in a front-end crash. do you need help? yeah. i'll contact emergency services and stay with you. you okay? yeah.

onstar. standard for one year on 14 chevy models. know that connectivity is about reaching further, faster than anyone else. together, we're helping to shape the exchanging world. nyse euronext. powering the exchanging world.

former treasury hank paulson was grilled on capitol hill about the bank of america and merrill deal. take a look at some of this. >> i believe it was appropriate for me to explain to mr. lewis, the government was supportive of bank of america and it felt very strongly if bank of america exercised the mac clause, that would show a kcolossal lack of judgment and jeopardize bank of america, merrill lynch and the financial system. it was also appropriate for me to remind him under such circumstances, the federal reserve could revoke its authority to remove management and the board of bank of america. i intended my message to reinforce the strong view expressed by the fed and shared by the treasury, it would be

unthinkable bank of america take this destructive action. >> unthinkable, boy, did he get that right the way he barked back at these dingbat politicians. i am giving hank paulson the very first cud loy award for financial and economic bravery. here it is, get a good look at this. bring this camera in for mr. paulson's award. let me tell you why. this whole business, did you put a gun to ken lewis' head for the deal?? he said to these guy, straight up, the kind of guy he is, yeah, i put the wood to lewis and paulson was right to do it, he didn't flinch or back off. all these "politico"s are looking for a smoking gun. i don't really understand it. like looking for a needle in a haystack f. these "politico"s found a needle, it would be so rusted and useless at this point in time, they would throw in the towel. here's how goofy they are, half

of these guys want to defend ken lou wins and half want to fire ken lewis, they can't make up their minds they're desperately looking for stuff. reality is paulson working with bernanke and sheila bair at the fdic and yes, tim geithner at the new york fed and yes, president george w. bush who supported all this, they did what they could at a time of great peril, when the entire financial system was in danger of utterly unraveling even with the credit freeze we experienced and caused a deep recession. did they do everything right, heck, no. we can debate this forever. in wartime, you have to just keep moving. that's what paulson did. he was the guy behind this rescue package, not just for bank of america and merrill, but getting the loan guarantees from the fdic, getting the interbank guarantees for the entire banking system.. the t.a.r.p. money was supposed to go for toxic assets, couldn't get it done, wound up injecting

it as capital and unfortunately, the banks are paying back t.a.r.p. and that episode will come to an end. most of all, the former darth mouth lineman and ceo, former treasury secretary hank paulson was tough, he stood up, said, i did it, glad i did it, it helped save america. by the way, take a look at bank of america's share price since early march. look at the recovery with merrill lynch, turns out it was pretty good deal now, wasn't it? shareholders are still alive. neither of those companies is either a ward of the state or in the trash can of history. think of that. bravo, mr. paulson, here's your award, one more time, i've interviewed him many times, look forward to seeing him again a great honor and pleasure. coming up on "the kudlow report," profits, profits, profits, the backbone of this

stock market rally and stocks are up for the fourth day almost 100 points. and trying to talk sense into the ultimate bear, gary schilling. and is obama-care a sick joke? 57% tax in new york, wall street may stop showing up for work in new york. this bill is so bad i believe it will never pass and that makes me bullish. access to favorite courses chef's meal with pommes frites perhaps a night at the theater with extra special seats

additional hotel night, our treat you world in perfect harmony: priceless look for world on your mastercard to get rewards and offers that matter to you. when she started forgetting things, i was hoping it was nothing. grandma! what a nice surprise! mom, it's sunday. that's when i knew i couldn't wait. mom's doctor said these were signs of alzheimer's, a type of dementia, and that prescription aricept could help. he said it's the only treatment proven effective... for all stages of alzheimer's. studies showed aricept slows the progression... of alzheimer's symptoms. it improves cognition... and slows the decline of overall function. aricept is well tolerated but not for everyone. people at risk for stomach ulcers... or who take certain other medicines... should tell their doctors... because serious stomach problems... such as bleeding may get worse. some people may experience fainting. some people may have nausea, vomiting, diarrhea, bruising, or not sleep well. some people may have muscle cramps...

or loss of appetite or may feel tired. in studies, these were usually mild and temporary. mom. talk to your doctor about aricept.

major index staged a late rally to finish higher by 1%. pretty much across the board. maybe robouni's recapitulation helped? maybe not. ibm and google reported blowout profits after the bell. ibm stocks surged, google's fell. the question, is this rally sustainable? will we break to new highs for 2009?? what about profits on the economy? let's go straight to our market gurus, gary schilling and robert dahl, vice president chair of equities at black roxx.

what's your take? is it sustainable and are the profits good enough to keep stocks rising? >> no question, it's early in the second quarter reporting but the news so far pretty good. we had a number of companies a pretty high percentage do better than expected. a lot has come because cost cutting efforts are working a few of them, thankfully big visible companies are doing it on the top line. that's the surprise, what we keep our eye on, revenues relative to expectations and forward guidance so far is sketchy. i think the news so far, it's early, is reasonably good and why stocks have moved out of their lethargy and had a pretty good week so far, hope it continues. >> gary schilling, welcome back. neuroio robouni said he didn't really change his forecast but

he's looking for high unemployment next year and slow growth. mario whitney cap pit you to late on banks. are you, larry schilling, great friend of kudlow report, are you going to recapitulate on "the kudlow report." >> of course not. i think the recession will run through the first half of next year. we still have the consumer. that's where the action is right now. not the financial area. they agreed to bail out the big banks wards of the state. now the consumer. the consumer is basically in a retrenchment mode, means they spend less, reflects in less production, less labor income, more retrenchment and self feeding. the stimulus so far is doing no good. in april, people got a big increase in after tax incomes, they saved 104% of that increase and it went down and may, saved

90%, all this is doing is increasing government deficit and increasing consumer saving and no effect on the economy and high income people did not get any of that tax cut. >> they're the hardest hit in this recession, high income people the hardest hit and now pummeled by taxes and more taxes. >> those people are normally the big savers. even the middle income and lower income people normally don't save a dime, they were saving like crazy. >> back to bob, i want to put on the chart, if you buy into longevity, jobless claims, leading indicator of the labor market fell again, down almost 100,000 in the last two weeks. robert dahl, you heard mr. schilling, what's your rebuttal. >> i would argue the recession is in the process of end k, i would agree with gary we won't have robust growth because the consumer and financial system is de-lever averaging, we're impressed how quickly the sa savings rate has moved up and

won't be long before consumers are spending out of their incomes, won't get us out of robust growth but out ofs the negative gdp numbers. >> what about business?s? out look for business, i hold this old 19th century economic view it is businesses that create jobs that allow for consumer spending. >> no question businesses have the flexibility, more than they have in most recessions despite how teach this one is. we all know the balance sheet of many of these companies outside the financial sector have held up pretty. we had good free cash flow coming into this, many companies still enjoying positive free cash flow. you're right, that does give them flexibility when they have some more confidence and that will take some more time to spend mother and hire some workers. >> mr. schilling, where are you on the business situation? >> business is reflecting what the consumers do. if the consumers are not spending, they're stuck. you translate that into profits,

here's the deal. you look at the four quarters, including the first quarter reported, s&p 500 operated earnings were 43 dollars a share. we're saying $40 for the year. in other words, to have anything higher than where you are now, you've got to have a strong economy to pick up in earnings. if we're right at 40 dollars a share and you put a generous and i do mean generous 15 pe on that. normally market balance is 10-12, we put 15 on 40 dollars a share, you end up at 600 on the s&p 500, about a third down from here. >> that's your guess, s&p will fall a third. >> bob, we're running out of time, your rebuttal. s&p 500 will fall by a third by the end. >> if s&p 500 are $40, gary is right. they won't be $40. i believe they'll be in the 50 sometime this year and looking at a higher number next year and multiples can stay where they

are, as earnings move things higher. i think we'll see a thousand before on the s&p 500. >> what's your favorite single. >> technology, leading the way up. >> what is your best? clearly not stocks, i picked up on that. >> short stocks, long on the dollar, short commodities and i'm back on my 30 year treasuries, the yields got up to 4.8%, i think we'll see 3% by the end of the year. >> 3% on 30 year treasuries. you like the dollar? you like bonds and the other. >> i don't like commodities and don't like stocks. >> you're basically in the deflationairy camp. >> that's right. i think that's where we're headed. >> one last word, you heard im, you want to buy the bond? the dollar, short commodities. >> reinflation will be deflation. there'll be a big tug-of-war but reinflation will win. >> gary schilling, thank you very much. bob, thank you very much.

>> coming up, is obama-care a sick joke? pardon the phrase. if so, does that make chris dodd one of the chief pranksters, he talked with us a short time ago. before that, let's check in with my great pal, dennis kneale and see what he's working on for the top of the hour. >> this stock rally, it's for real. where should you go shopping for tech and financial stocks and the 60% tax for high earner to pay for obama-care, will that kill the recovery. >> and paulson in congress today, the most infuriating sound bite of the day. >> you got it, dennis kneale, the insightful anna lytic dennis kneale at 8:00, top of the hour. we'll be right back. undefeated professional boxer floyd "money" mayweather

has the fastest hands boxing has ever seen. so i've come to this ring to see who's faster... on the internet. i'll be using the 3g at&t laptopconnect card. he won't. so i can browse the web faster, email business plans faster. all on the go. i'm bill kurtis and i'm faster than floyd mayweather. (announcer) switch to the nation's fastest 3g network and get the at&t laptopconnect card for free.

the stage is set for health care showdown with senator chris dodd, democrat for connecticut. he is at the center of the storm. our own john harwood spoke with senator dodd a short time ago. is this package too big to fail? is this package too big to succeed? >> reporter: well, i think it

could be either one, larry, i don't think we know yet. i talked to senator dodd both about health care reform and financial regulatory reform a subject you care about a lot. another thing striking about his comments was the way he went after the business community on their complaints about the proposed consumer protection agency. do you think business is tone deaf on this issue. >> it's a culture. i find it amazing, what planet are they living on, they don't understand what's happened, you have 10,000 foreclosures a day, 20,000 jobs lost a day in this country, health care, people being wiped out, retirement incomes, 401(k) disappeared in warp speed and turn around and say, you have no right to be insisting on some protections. >> reporter: there was some good news for business in the chairman's comments. we talked about the house democratic health care plan and senator dodd slammed the democratic plan in the house for its so-called pay to play tax on

employer employers. >> it's ridiculous. we're not going to do that we did ours with pay to play provision 750 bucks per employee over 25 employers. 70% of employers pay less than 75 people. that you can handle makes sense. this level of tax we're talking about i think will be met with a lot of an taggism. >> those are welcome words for business and republicans. at the same time, senator dodd who just forced that democratic health care on a party line vote said there's only so far he'll go to accommodate republicans in a bipartisan bill. >> does it look clear to you at this point this is in the end going to be a democratic bill that goes through the reconciliation process. >> i hope not. i still believe -- >> you think it will be. >> not necessarily. we're sitting in a room here a few weeks ago by a one vote margin i got off the credit card bill, one vote, 11-12.

i got it off the floor and debated it, it passed 1-5, the same bill. would i prefer it bipartisan, you bet it will. i think that sustains you for a longer period of time given the choice of a bipartisan bill that is weak an doesn't do much for my peek at home or a bipartisan bill that gets things done and excessive quality, that's where i'm going. >> i think this is hang thing balance in particular awaiting negotiations between republicans and democrats on the senate finance committee, if they can't come to a agreement very rapidly, i think senator dodd will prevail. >> just today, the budget office contradicted dodd and said it will increase spending substantially. dodd said it will cut cost, dodd is wrong. >> that congressional budget office analysis was only part of the bill. it didn't include revenue or

savings provisions in the analysis. >> talking about spending, spending's going up not down. >> they were only analyzing, larry, the coverage provisions in the bill, not the things that democrats have proposed in either chamber to save money in cutting, say, reimbursements to provider and medicare or any revenue provision this is a come up with. it was partially -- it was only part of an analysis. it is true it will be difficult for democrats to get scorable savings that they're proposing. this was only a partial analysis. >> i understood that. i didn't read it all but they said basically the so-called savings aren't there. when you expand entitlement, you get more spending. >> did i get dodd right, he has no objections to higher tax rates on successful earners in capital earnings and different zmeends dodd said the 5.4% tax on million dollar incomes in the house may be too high, not as

host sti host still to 8% pay to play for employers. >> we'll see how that goes over. i think that was sick joke on the "new york post." new york state here, 57% tax rate. i think the whole democratic story is self de strucking, i think chris dodd is not being realistic. take a look at the polls on this.. people do not want a government takeover of health care nor do they want higher taxes and higher spending. "the kudlow report" will be right back with an expert, mike tanner, of cato. we'll look at this bizarre central planning super bureaucracy chart that will be in this bill. (announcer) this is nine generations of the world's most revered luxury sedan. this is a history of over 50,000 crash-tested cars... this is the world record for longevity and endurance. and one of the most technologically advanced

automobiles on the planet. this is the 9th generation e-class. this is mercedes-benz.

once again we look at this health care thing, is obama-care a sick joke? we have a cover on the "new york post." there it is, 57% tax rate for successful new yorkers and that doesn't even include the small business tax problems. i think the democratic tax and nationalized bill is so bad it might actually be bull lish because it isn't going to pass. let's look at this road map. this is what you call health care reform, it makes me did zichlt i will bring in my pal, mike tanner, director of health and welfare at the cato.

i don't know if you have a tell prompter, if you can see, if you have a monitor. i want to note this, this is incredible. no human being can possibly understand this chart, an organizational chart of the house democrats health care program. yes, this is put together by the republicans but i think it has a lot of accuracy. two things bother me, choice health care administration, that really bothers me and number two, bureau of health information. those two things, mike, let's tackle that before we get to taxes. this tells me there isn't going to be any choice, this tells me you can't visit your doctor, get your own operation, this tells me bureaucrats will make decisions. is it true? >> that's pretty much the case. bureau of health choice, essentially, what they're going to do is set out the standard for the type of health insurance you can buy. they will settle this into different categories, high, medium and low plans, say what

each of those plans has to have, in terms of benefits, and those are the type of plans you will have to buy. you will not be able to craft an insurance plan to meet your specific needs at all. >> mike, investors business daily is reporting on the editorial page in the house bill, after this new government insurance plan is passed, if it ever gets passed, if you lose your insurance because the business doesn't take it, you cannot buy a private insurance plan, you must go into the government plan. is that true? >> it's not that you can't buy a private insurance plan but you can't buy the same private insurance plan you had before you lost it. you can only buy one of these new plans that meets the government requirements for what's going to be in the bill. you can buy it from a first insurer but it won't be the same plan you had before you might have been happy with. >> i thought president obama said you can keep your own plan under any circumstances. >> he might have been a little

bit off on that. in fact, the white house spokesman says that's not really meant to be taken literally. for all those americans forced off their employer provided plans into the new government run public option, about 2 out of every 3 people with health insurance, they're not going to have any choice at all. >> they all have to move into the federal plan. we've known about the taxes, new york city state, front page of the "new york post," talking about a 57% top tax rate, off the charts, doesn't even include the small business tax, all the big states will suffer this. i want to ask you this, today's "washington post" this afternoon, head of the cbo, douglas, he says the house bill and senate health bill from chris dodd do not propose the sort of fundamental changes that would reduce the trajectory of federal health spending.. is it possible this great reform is going to increase spending rather than cut it. >> oh, absolutely.. and it will drive up health

insurance premiums for millions of americans, particularly those younger and healthier, they will pay a lot more in insurance premiums under this proposal. >> let me get this right, why are we doing this? what is this all about? not a single promise is being kept, we'll be worse off, not better. >> this is about ideology, the obama administration's belief government can do everything better than individuals or private sector. >> is it going to pass, quick forecast up or down. >> 50/50 right now. >> 50/50. thank you. we appreciate it. much more on "the kudlow report." don't forget to catch me tomorrow morning on "the call" with melissa and trish 11:00. announcer: what's your cialis moment?

when she gives me that look. when at last we're alone. when we both decide. announcer: today, guys with erectile dysfunction can be ready with another dosing option from cialis. cialis for daily use is a clinically proven low-dose tablet you take every day, so you can be ready anytime the moment is right. so relax and take your time. tell your doctor about your medical condition and all medications and ask if you're healthy enough for sexual activity. don't take cialis if you take nitrates for chest pain, as this may cause an unsafe drop in blood pressure. don't drink alcohol in excess with cialis. side effects