tonight, the government health care insurance reform option was defeated today in the senate finance committee, but is it really dead? and what about the ten tax hikes still in the baucus bill? and what about a soviet style jail sentence if you don't pay them. we'll ask senate republican whip john kyl about all of this. and a swifter and faster exit strategy from excess money creation. will this repeat the mistakes of

the great depression? or will it promote economic recovery? art laffer and bob mcpierce square off. plus, sheila bair taxes banks $45 million to refill the insurance fund. rice and moore debate obama's middle class tax hike. and the ceo of lord and taylor tells us if anyone is doing any christmas shopping. fasten your seat belts, everybody. "the kudlow" report begins right now. good evening, everyone. i'm larry kudlow. welcome back to "the kudlow report." senator schumer's public insurance amendment in the senate committee health care bill was defeated today, but is it really dead? our chief washington correspondent john harwood joins us now with the full story. hello, john. >> hey, larry. we've been talking about this

public option. it's been moving in the house. today was the first big test in the senate, in the finance committee when liberals led by chuck schumer and jay ro rockefeller proposed separate amendments making the case that the private insurance market simply isn't working. >> we need this option because the insurance companies have failed to meet their obligations. in this whole matter of how do you unroll health care reform. the insurance companies are protecting their profits and putting their customers second. >> now in the six hours of debate that followed that statement from jay rockefeller, you had a lot of traditional republican democrat argument. of course, democrats have the votes now in this congress. it went down, the two amendments for members of schumer and

rockefeller's own party. >> the question is, how do you effectively provide competition. i favor an alternative that i would call the public interest option that would be strong, not-for-profit competition to the for-profit companies. but not one that is run by a government agent spip. >> now, for now, that option of private co-ops in kent conrad's proposal remains in the senate finance committee bill, but it's not necessarily the last word on your question, larry. is the public option really dead. look for an amendment from olympian snowe either in committee before they finish or on the floor to have a so-called triggered public option, which in some ways would be less than what conrad was proposing but might be more acceptable to liberals. if they say the private insurance market doesn't work we'll have the public option to

kick in. we have several more leak wooeks to play out this question, larry. >> what about senator kennedy's old committee which senator dodd was running. have they finished their work? is the public option in that piece of legislation? >> well, senator dodd and the liberals on that committee are for the public option. they still have to marry their proposal with whatever comes out of the finance committee before it goes to the senate floor, but i believe if the co-opes come out of the finance committee, that is likely to be the vehicle that goes to the floor. then the question that's going to be, does senator snowe have the votes to go to that triggered public option? it appears clear there's no way that a straight public option in health care legislation is going to pass the full senate. as max baucus said in the committee hearing today, i know how to count. >> great stuff. we appreciate it very much. now let's talk about this. we have republican whip senator jon kyl.

he voted to reject the public option. an internet ad said the democratic plan would hit americans with a slew of new taxes. before we get to senator kyl, let's take a look at this new republican ad on tax hikes. >> barack obama and democrats promise that health care reform will lower costs. but their plans deliver increased taxes. taxes on tests, scans and x-rays. new taxes on charities and small businesses. a doctor's tax. taxes on your health insurance. even taxes on medical supplies. hundreds of billions in new taxes. >> all right, there you have it. that's a new gop ad getting quite a lot of attention on the internet. welcome back to the show. >> appreciate it. >> let me ask you. this is from "the washington post" late this afternoon.

from senator chuck schumer, quote, we're going to get at this, meaning the public option. we're going to get at this and at this and at this until we succeed because we believe it so strongly, he said. and he said that the more people hear about the benefits of the public option, the more they're going to like it. so i want to ask you, you heard john harwood, i'm sure. is the public option dead? >> well, it's not dead, but i think john harwood's report is pretty accurate. it's hard to predict everything that happens around here. i think at the end of the day, it's a hard sell. they come up short and there will be some substitute that most democrats will rally around when the public option ends up failing. >> if we go to senator conrad's idea of some kind of cooperative, which i believe would be government financed, at least initially, or if we went to senator snowe's idea of a trigger mechanism down the road for a government option, does that still threaten the government takeover of health care? >> sure. i mean, the question here, this is a solution looking for a

problem. what is the problem? the president says we have to have a public option to keep the companies honest. so then some say well, but we need more competition. the primary reason that you don't have a lot of competition in some states is that they have very low population and there frankly isn't a very big enough risk pool. so you add one more company, this time a government-run company. does that help anything? no, it simply dilutes the risk pool further. the real reason for any of these proposals is to get the government's foot in the door as a prelude to a single-payer system. several members of congress and others ultimately acknowledge that fact. i suspect some of my colleagues whose names you've mentioned here genuinely believe they have a good plan here that wouldn't necessarily lead to single payer, but we believe that's where it's headed and it's wrong. >> so the threat of government takeover is out there one way or the other. let me just ask you, from this republican ad and just

jennerically. there's a lot of tack hikes in the baucus bill. and particularly for putting mandates, insurance coverage mandates on vinls and businesses. what caught my eye from a wall street journal editorial and other commentary. if an individual opts out of this insurance plan, if they just say, i don't want to buy insurance right now. apparently they face a $25,000 fine. or imprisonment, or both, all for something that senator -- that president obama keepi ins saying is not a tax. the federal government may fine you and you could go to jail. that sounds soviet style to me. >> the bill itself calls it a tax. the president says well, i would rather call it something else. the bottom line, the legislation calls it a tax and it is a tax. it's collected by the irs. if you don't pay it, there are dire consequences. so, you know, there are several things wrong with this, but the first and foremost is, this is supposed to make insurance cheaper for people.

and yet everything about it makes it more expensive. if you have the public option, they lose their insurance with their employer and go to the public option because you have fewer private plans subsidizing the policies like medicare and medicaid and now the new government option. they're all going to have their premiums raised. the congressional budget office itself in a letter to us said that premiums will be higher in the private market after this bill passes. so whether it's taxes, fines, or premiums, the cost is going to go up for americans. that's not forward progress. >> now what about all these other taxes, i mean, from the gop ad. this stuff is is in the legislation. tests, scans and x-rays. there's a doctor's tax, a health insurance tax for the gold plated. also a tax on medical device makers. i had the ceo of medtronics on yesterday. he isn't too happy about that. we're going to tax health care to death. that's what it sounds like.

can this be stopped, will this be stopped? >> well we ear sure going to try. all those taxes get passed on to who? the consumer in the form of a higher premium. you may think you're putting a tax on medtronics and the other device manufacturers -- by the way, that really helps with their invasion and raising capital for new research on products that are going to help us, doesn't it? but the bottom line, they have to pass that on. the bottom line is the consumer ends up paying all of these costs and yet another reason why this plan doesn't make insurance more affordable. it makes it less affordable. >> all right, so, the price tag is $900 billion maybe. a lot of people think the so-called savings in this bill, especially the medicare cuts are never going to come to pass. the tax thing is about $250 billion, and may be rising. i'm not hearing still, at this late date, i'm not hearing, for example, a pro market reform like making insurance interstate. so people have real choice. i'm not hearing that. >> you need to tune into our

deliberations, larry. it's been repeated about once every half-hour or 45 minutes or so. republicans every time we talk about this talk about aur alternati alternative, which are targeted to specific problems, specific solutions for specific problems. you mentioned one, interstate sale of insurance. associated health plans, malpractice reform which will reduce the cost of malpractice and reduce the cost of delivering medicine. all of these are reforms we talk about constantly, but i think you're right. a lot of it hasn't soaked through yet. and part of it is the media doesn't choose to cover the republican alternatives. >> health savings account may get hurt from this bill. medicare advantage may get hurt -- >> it gets killed. that's right. >> what mentioned tort reform. i don't hear anything about tax cuts for individuals to shop around. i don't even hear -- for the truly uninsured, i don't hear anything about tax refunds or some kind of vouchers for them to shop around.

in other words, it's all government, all the time. i don't see any free market choice. is that unfair? maybe stuff is going on inside the committee that i and others don't know about. >> i didn't mean you should watch our all day boring mark-up process either you're right. the democrats have only offered government solution ppgs the republicans offer amendments that have private sector solutions but they're reject pd .they go in the wastebasket and so you don't hear enough about it. but we will keep talking about our solutions to problems, rather than a massive takeover of a system which for most people works quite well. and i think the biggest fallout from all of this is that for most americans instead of being able to keep what they have and enjoy the benefits of that, they're going to sacrifice what they have so that we can solve some problems that could be solved at a very low expense in more targeted ways that wouldn't

require this massive government intervention in health care. >> senator, last one. we appreciate your time as always. the health care thing is becoming a big mess. the polls are showing it's more and more unpopular, the idea of a government takeover, which as you say all roads seem to lead to that outcome. here's what i don't get. now president obama taking a special trip to denmark to lobby for the olympics to help inside chicago politics. to me this is so utterly unseemly. but i want to ask you your political thought on this.

there's articles out there that this is about the chicago group running the white house. we've got health care flobs this country, high unemployment number. all he can do is lobby the olympic committee? >> this is a smooth move on his part. support for you program will go up. maybe this is smarter move than you're being given credit for. again, i'm more focused. we're going right back in into the mark-up. i'm focused on trying to make progress on health care than caring about his travel schedule. >> senator kyl, you're terrific.

>> tune in, john boehner shares his thoughts with me on health care and tax hikes and the economy. plus kay bailey hutchinson will be here to share why she's looking to leave the senate and is this move a sign of a future presidentialed by? that's john boehner, house leader, and that's kay bailey hutchinson running for governor in texas. coming up here tonight on "the kudlow report." our dynamic duo, robert reich and steve moore will debate obama care's middle class tax hikes. is that going to be great for the economy? you're watching cnbc. we are first in business worldwide. and i'm not going to copenhagen. i'm staying right here for the rest of the show.

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here's today's supply side minute. we're talking about health care tax increases. supply side smik kmiks shows if

you tax more we're going to get less of it. let's switch gears. today's home price index, increased for the third month in a row. that's terrific. after a 40%, 50% drop in home prices in recent years, sales are picking up. that's great. markets work. but here's what i don't like about this story. government-directed tax preferences for housing. everyone is always whining to me about the $8,000 tax credit for in new buyers. or the popular mortgage interest deduction for purchasing homes. and let's not forget, maybe the big one, home sales are basically capital gains tax free. that passed in 1997. . and many people believe it helped create the bubble. why not get rid of the capital

gains tax for everyone, including investors of stocks and bonds. why direct it only to housing? let's quit double taxing investment, which is what capital gains does. but for everybody. and while we're trying to give all these preferences to housing, what about manufacturing? what about transportation or the aforementioned health care or any other sector in the economy. along with some better policies on capital gains and elsewhere, we could be cutting business tax rates across the board for companies large and small. and for all individuals and businesses, why not a simple low flat rate tax? okay? somewhere between 15% and 20%. get rid of all of the special preferences and deduks in the code. stop favoring one sector at the expense of others. and incidentally, stop the construction of k street lob lobbyists who love to get these preferences in there. let's make the tax code simple

and fair and pro growth to unleash prosperity. let's stop the political direction of the economy and let's substitute a market direction to the economy. a flat tax will do it. once again, provided with the incentives, if you get to keep more of what you earn and invest at the lower tax rate, if you tax something less you'll get more of this. if you tax the whole economy less, not just housing, but the entire economy less, you will get a much more prosperous and healthier economy. and at a time when we're worried about economic growth, we ought to be thinking about that. that's my beef with housing tax preferences. a flat tax rate is a much better idea. all right, let us move on. another fed head today, dick fisher talks about a swifter and faster exit strategy from the fed's excess money creation. this follows from kevin warsch of the federal reserve board and his op-ed piece late last week.

so those guys are thiting about it. our question tonight, a quick and rapid exit from mad money creation. will it repeat the mistakes of the great depression? or will it actually promote better economic recovery? a squareoff on this important note after this very short break. if you tax something less you'll get more of it. let's do it for everything in the country. not just housing.

all right, let's do some fed watching and watching. a swifter and fast er faster -- repeat the mistakes of the great depression? we have robert mctoir. this is getting to be a very breasting story. when it comes to tightening monetary policy, we'll move with alacrity that will be equal in speed and intensity to that which we pursued accommodation, he said. he used to run the dallas fed. kevin warsch almost said the

exact same thing. wouldn't that promote economic growth. it's a very delicate balance they're going to have to reach. >> what leads you to that conclusion? >> they keep talking about getting rid of the excess return. in the great depression, they had excess reserves in the fed balance sheet. they could have tight er contro. the bankers themselves considered them necessary. the bankers are leaving the excess reserves at the fed

voluntarily. they're not being held there by any other thing. if you try to mop them up, it could cause a contraction similar to what happened in the middle of the great depression. >> 1937-'38 you're talking about? >> they raised reserve requirements towards the end of 36, beginning of 36. . they were doing much better but the fed screwed it up with that move. >> do you disagree or disagree with the historical, monetary analysis? >> well, it's obviously they did exceed reserve requirements. but i don't think that's the cause of the second drop in the great depression. if you look at what money supply was doing, bob, during that period, 33 through 36 through 37 it's rapid supply at that time.

the price level went up 15%. >> double digit unemployment. >> excuse me, you're completely right, excuse me. despite that as well, nay raised taxes in 1936. they raised the marginal tax rate from 63% to 79%. they increased taxes on the state and gifts and they raised the payroll tax in 37. they did all of these. although you're right, i wouldn't have done the reserve requirements. growth was really quite rapid. >> what's your response to this? >> you forget about tax policy, the inflation that developed from devaluing the dollar. why are you so single mindly

obsessed over this excess reserve business? >> i thought that was the topic we were discussing, larry. i agree that a bigger mistake probably was this newfound desire to have a balanced budget in the middle of a depression and all the tax increases that took place. and yes, it was a result of the devaluation of the dollar or the revaluation of gold that led to that. >> so look, if we want a stable dollar as the world bank had, as dick fisher and others have said. if you want a steady dollar, let's hope tax rates don't go up. let me just ask you, wouldn't we want to create fewer dollars. isn't there an exit strategy that might promote the economy?

>> a lot of dollars have been needed. as velocity moves back towards normal, we need to create fewer dollars. the dollar will strengthen. >> here we have reserves. you're clearly note suggesting that the excess reserves -- i mean, i look to your work. you're my hero in this area. what you wrote a year ago i think is exactly right. it's a danger if a lot of future inflation. at all times the monetary phenomenon. it's all high powered money.

it to me calls for reserves in this type of circumstance. >> dh roberts and the british monetary economist who talked about money sitting and money on the wing. right now, the money is sitting and it's not causing inflation. if it takes wing, and starts being used to make more loans and deposits and so forth, it will become inflationary. at that point it's got to be mopped up. >> but m 1 is growing fairly rapidly. it's growing quite rapidly. there is a move for money growth that's quite rapid. >> let me inject this. m 1 is growing at double digits. but look, kevin war says let

financial market, indicators and asset indicators be the guide. i worry, if the fed targets the great depreg and if the fed targets the unemployment rate, they will never absorb the excess money and we will never get the job done. that's what concerns me. >> they don't have an exit strategy and i don't know how they do when you've got this level of unemployment, bob, how can they withdraw reserves 16 fold. i mean, it's just such a huge -- they would have to sell about $1 trillion worth of bonds to bring it back into tight reserves when you have 10% unemployment. how are they going to do that? >> last word. >> i'm not sure, but let's just remember those reserves are there voluntarily by the banks. and there must be a reason they're there. they're there because banking is not out of the woods. >> it could be they created so many of them. i will say this. the fed funds future market, as of the close of business today is predicting a 0.75% fed funds

rate by the middle of 2010. that is three-quarters of 1%. currently the rate is between 0 and 0.25. they're talking about a mild increase. a, is that right and b will they do it? i don't know. thank you for this discussion. we appreciate it. coming up next, our dynamic duo, robert reich and steve moore. they're going to debate the middle class tax hike. once again i say from the supply side, if you tax something more, you'll get less of it, as in health care. $$$$$$$$$$

steve moore is the co-author of "the end of prosperity. tax increases pretty much across the board. what will the tax hikes be on health care and secondly on the whole economy.

>> i looked at the joint tax committee that scores these proposals. the reduction and deduction on medical expenses, that hits the middle class right smack in the jaw. about 80% of the taxes, bob, are on people who make between $50,000 and $200,000 a year. what about the president's promise that he wasn't going to tax the middle class? >> first of all, most people including the middle class are going to come out far better with regard to health care they can count on than they are right now. and you guys are calling a tax increase almost anything. is medicare a tax insdplees is social security a tax increase? when states require people to buy insurance for their double aubls, is that a tax insdplees.

>> yes. >> you're saying everything is a tax increase that provides a service back to people, simply because government has something to do with providing that service. that's absurd. the fact of the matter is that people right now in this country -- let me just finish. right-wing republican vbs having this show to talk about their views for the entire hour. i just want to say one very specific thing, and that is this is popular. the "times"/scbs survey said 95% support the president's plan. that's where most americans are. >> that's one poll. but a rasmussen poll shows 675% of independents oppose it. >> look, we can -- my only point is that americans right now understand. they didn't need anybody to tell them. they're having a terrible problem with private insurance companies.

>> here's the problem -- bob, bob opinion let me one of the points you said. right-wing republicans are making these attacks. max baucus calls these things a tax. he calls people who don't buy this insurance and get a penalty a tax. so these are -- you promised that you weren't going to tax these folks. >> what kind of a rebate, what kind of subsidy to provide to people who don't have insurance now who will be required to pay insurance. the whole goal of this bill is to make sure nobody comes out behind and actually everybody has enough money and can afford universal health care. >> here's the problem. you're right, there are subsidies and there are tax

credits, but those for individuals who make over $60,000 a year and family make over $88,000 a year. those are middle class families. >> that's being debated right now, even as we speak. and there are people who are debating that in the senate and the house. >> how are they going to pay for it? what wr's the money going to come from? >> look, i know bob reich, you accuse me of being a supply cider. i plead guilty. >> you should wear that proudly pop i'm guilty, too. >> if you tax -- listen, let me just read this. you're taxing health test scans, x-rays, you're taxing doctors, you're taxing health insurance, medical device makers. you tax something like this, you're going to get less of it. yords, steve moore, my argument is all these health care taxes will generateless health care, fewer health care services, fewer health care products. and that is an unintended

consequence. >> there's one good example of this. one of the major rays to pay for this is to tax health insurance companies. how do you think, bob, that they're going to pass the tax obs to the policyholders who make premiums more expensive. >> right now, health insurance companies are making out like been a git dits. why not dax them? somebody's got to pay obviously for this. >> but if you tax them, somebody is going to pay for that. >> i've got tot go. cut and run. not sure we settled that but we'll try again another time. thanks so much. >> bob reich wants to tax the middle class. >> looking for cash to refill the coffers for the deposit insurance fund. but at what cost to the banks and the economy? we have bill isaac when "the kudlow report" comes right back.

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will the insurance fund's payment plan become a double tax on banks? mary johnson joins us with the full report. >> the board approves a plan that will add $1 billion to the i shurns funds. it's going to cost the banks but

not the taxpayers. here's sheila bair. >> we're proposing to improve our own liquidity position without borrowing from the treasury. >> the proposals aim to do two things, first get the deposit insurance fund above mandated levels. and two, give the fund added liquidity to deal with anticipated bank failures over the next three years. with $10.4 billion in cash, the funds close to falling below those mandated levels. add to that, bank failures through 2013 are going to cost the fund $100 billion up from its prior forecast of $70 billion. >> at the end of this year, the banks will prepay their annual assessmentments for 2010, '11 and '12. in 2011 they are going to be increased by three basis points or 1/300th of a percent. this year, there are going to be no additional assessments.

overall, there's been a generally enthusiastic response from the banking community. >> i did talk to some industry sources. they agree with you. they've calmed down. i don't know if this report is correct, but fwank of america is going to have to pony up $10 billion, wells fargo $3 billion. jpmorgan, $2.5 billion. and citigroup, just over $1 billion. so that's 13, 15, we'll call it $16 billion. >> are those for the three years? the whole three years? >> well, i don't know. i think so, but i'm not sure. >> i think it's probably for the three years. the one thing they liked again -- and please jump in on this. if they do this, they take it as a deferred tax asset which they

place on a quarterly basis. all the banks know they're going to have to increase funding to this insurance fund anyways. sooner or later. the banks like it somewhat better. no one wants to pay more, but if you need safety, you're going to have to pay for it one way or the other. >> there is the government safety at the end. . >> and it's a higher guarantee as well now. $250,000 as opposed to $100,000 now on deposits. >> i'm more than happy to have mary host the show. we're delighted to have her reporting and hosting and co-hosting. but i want to ask you, can the banks handle this? other people are saying it's a drain on liquidity. we want them to be a liquid and b make loans. >> they have three bad options

and someone to assess the bank, which takes it out of capital which will reduce their ability to lend ten times every dollar that goes out. that's a bad option. the other option is to simply borrow from the treasury which the fdic has done previously. and it's authorized to do up to very big sums of money. it can borrow a lot from the treasury. the problem with that is the banks are so beleaguered right now, there's just been a political firestorm over this t.a.r.p. bill and people are saying you're bailing out the banks and the banks don't want anything to do with the treasury. >> an analyst from wall street says the banks -- the risk here is tax. not only assessment tax, but a second tax for raising capital requirements not too far down the road, iter from the treasury or the fed or the g-20 or some other higher power.

now the government is going to take it away from them. is that an issue? >> it's what they would be doing if they put special assessments on them. >> the big four paying the bulk of it. >> they have the bulk of the assets and deposits. >> are you worried about the liquidity issue? that this is a drain on their basic money? >> no, i don't think so. the banks haven't expressed overt concerns about it right now. they're happy it's not a special assessment which would hurt their regulatory, you know, capital. that's what they're focused on. >> but at the end of the day, uncle sam stands behind it. the fdic insurance fund, there's no lock box. that money they turn over to general cash in the budget in washington. that's the part i don't really get. sheila bair didn't want to do go to the treasury.

>> i think that has to do with what's right for the banking industry right now. the banking industry simply does not want to go -- >> is the banking industry getting better? >> it is. it's not well yet but it's getting better. >> positive yield curve, zero interest rate, even a bank kerr make money. >> thank you. you make a great co-host. anytime you want. and you make a great expert guest. thank you. coming up, the ceo of lord and taylor tells us if anyone is doing any christmas shopping at all. hope the banks loan them money for christmas shopping. fithe same tools the pros use, so you can be a disciplined trader. by selecting from eight advanced triggers, your order gets executed, even when you're busy. and with trailing stops to help you lock in profits and minimize risk, you can be confident in your strategy, no matter which way the market moves. find out why more and more active traders

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welcome back. believe it or not, the holiday shopping season right around the corner. will our barn burner market recovery translate to higher retail sales? one can only hope. here to tell us all about it is brendan hoffman, the president and ceo of america's oldest department store, i didn't know that, lord and taylor. before i get down to the nuts and bolts of this, i think we have a picture full screen. you're doing this promo, this cross promotion with dexter, there it is, dextering lord and taylor, killer fashion. what is "dexter"? a show? serial killer who goes after other serial killers. and you're cross promoing it.

who's your new customer here? this is pretty wild stuff. i can't say as i've seen the show. but you must know all about it. >> it's a great show. and yes, it's about a different sort of serial killer. the important thing is he's always well-dressed. >> do serial killers shop in lord and taylor? >> i couldn't tell you. they don't announce their presence when they're there. >> does the audience shop at lord & taylor? that's more to the point. >> we certainly hope so. it's a neat promotion for us. we did a whole windows display right now in our fifth avenue store. that's part of the process now to get people back in the stores to make it fun, to add some entertainment value to it as well. >> it's a younger demographic you're trying to get in? >> absolutely.

>> we think we have merchandise for everybody. and the promotion with dexter is one of those things. >> are people in the stores? >> we're building up momentum. august and september with a few days left, i think we're going to be up 5%. we're clearly seeing the customer come back. >> fair enough. how deep are the discounts? we're certainly doing the best we can. i keep thinking by working closely with our partner, the vendors and the brands and preplanning the promotions, we're able to do so at an acceptable margin. so we have no complaints.

>> at the deep discounts you can still make money? and you're doing online things too? >> yeah. the customer is looking for multichannel experience, whether it be through the web or the catalog. we launched our website a little over a year ago to give customers basically a longer time to shop. they're shopping into the evening. and it's turning out to be a great platform for us. >> so if i watch this serial killer show "dexter" i can go online and shop for, what, "miami vice" type clothing? >> it's a little more contemporary than the "miami vice" clothing of 20 years ago. >> that's about the last time i tuned into that stuff. but i appreciate that. you hear and read everything. retail sales, job, unemployment. a lot of problems. on the other hand, i think most economists think the economy is turning up up and we're going to get positive growth. how do you assess the christmas shopping season? we're looking into october. and before you know it, it will be thanksgiving, blah, blah, blah. how do you see it, my friend?

>> i couldn't agree more. we're cautiously optimistic it's going to be better than we feared a few months ago. we're starting to see the positive come. the weather starts to get colder. i think people will continue to shop. >> lord & taylor, america's oldest department store. i think that's pretty cool. join ugh, 11:00 a.m. tomorrow. as always, this is "the kudlow" report. we want lots of retail sales, lower prices and much lower marginal tax rates. thanks for watching.