good morning. a made for tv solution, perhaps. president obama host ago bipartisan summit on health care today. and americans across the country can tune in and watch from home. back on the hot seat, fed chairman ben bernanke has returned to capitol hill this morning. and investors are looking for more clues on the central bank's next move. and the markets at this hour have u.s. equity futures under a bit of pressure after yesterday's rebound as "squawk box" begins right now. >> welcome to "squawk box" right here on cnbc. i'm becky quick along with joe kernen at the cnbc world headquarters. carl is in washington this

morning where president obama is hosting a televised health care summit. we'll have more from carl on that story. but joe, that's not the only news in washington today. >> no, it's not. we may pipe in that music with carl down there and he'll be looking good. he'll have his jacket on. >> he always looks good. >> yes, he does. also in washington, carl is there, but also this other guys that's going to show up. that's not really what all the scuttlebutt is going to be about down there. it's about carl. but ben bernanke will come back and testify on the hill today. yesterday he pledged to continue record low interest rates for, in his words, an extended period. >> one of the greatest challenges of extraordinary policies that we've both taken is at some point, we want to return to a more normal stance and finding a way out that's credible and understandable and clear is very important for confidence.

>> today's senate banking session and the fed's semi-annual report on monetary policy and the state of the economy will begin at 9:00 eastern. i don't know whether we're going to do that music or not. i don't know whether we were going to, but -- >> we are now. >> but i requested it and i think the import and the serious and the gravity and the gravitas of the person we have down there, i think it's a legitimate thing to -- >> really? because the same laws of gravity apply here as they do in new york. >> across -- we learned that. probably across the entire universe and all the multi verse, carl. but you're looking fine, my friend. thanks. >> are you excited about what's going to happen today? >> it's going to be an interesting day. you know, dpies, today's event being called many things. a last ditch effort on health care, a hail mary pass or as one republican said, a six-hour photo open. either way, the saga of health

care to the president's speech to congress to scott brown's election are all going to culminate today. the president is going to moderate. democrats and republicans will make some opening remarks and work there way through four different topics. controlling costs, insurance reforms, reducing the deficit and expanding coverage. kind of sounds like a nerdy version of jeopardy. we will see if the white house brings any new compromises to the table, like tort reform, although the likelihood of a smaller, so-called skinny bill still looks pretty remote, guys. we have a whole lineup of insiders on the show today. help us understand what's going on. senators judd greg, john barrasso, bob corker. from the white house, stenny hoyer, eric cantor. also john har would be b will be here to talk about whether or not this high political drama is just for show and if democrats are simply going to press on with reconciliation. guys, i can't hear you, but here

is the front of "usa today." this new poll from usa today and gallup talking about how three out of four americans do not predict the president and congressional leaders will reach an agreement. we all know what has happened to the overall poll approval ratings of the democratic bill. and bottom line, joe, they are against a reconciliation in any form by a pretty wide margin. we'll see if today simply sets up that process, which will be an entirely different story. >> i guess you can't hear us, carl. >> i've got you now. >> oh, you do. already. because in recent sessions, it's not just the op-ed pages twieg to clean what will happen between "the wall street journal" and the times, this is moving forward, everything looks great in one article yesterday, the big bill is coming. but i look in the journal today. has he already got a fallback proposal ready? that seems to be what the journal is saying, that the new tag has paid few dividends and

that the fallback proposal for a skinny bill is ready. >> i did hear the white house making some commentary saying database because republicans had pushed pretty hard, that he had put out the proposal on monday and they were offended that they wouldn't be able to work on this. >> but he did that for democrats, too. >> yes. he said he's walking into this more like a mediation, where you take a beginning stance, you have to start somewhere. but that was not the way it sounded at the beginning of the week. >> and there's details here. it would cost less than a quarter of the $950 billion that we're talking about. it would only cover 15 million, not 30 million. they've got details of this fallback proposal with a quote from rahm emanuel -- >> skinmy plans? >> i don't know if this is a skinny one, but white house chief of staff rahm emanuel didn't devise the smaller policy, but he argued that it wasn't feasible to pass a comprehensive bill. and they're quoting@of the conservative blue dogs that the

last time he only had a five-guy margin. you heard paul ryan yesterday. what did he say? >> he had down 2 to 12. >> 2 to 12. three is all you need to switch. >> that's true. and, you know, it's interesting, we're already hearing things like that story in the journal today. on the other hand, there's a lot of trickle out here in washington about other things in the past that were passed through reconciliation like cobra. of course, the bush tax cuts, welfare reform back in '96. so they're -- i think they're setting up a bunch of different scenarios, depending on how today goes. >> i saw something on one of the websites about president obama back in 2005 referring to the way bush used reconciliation as really a nuclear option, totally unjustified in this case. >> right. but conversely -- >> and it's on which side of the aisle. >> conversery, there is a piece in the times today about judd greg who tried to use it to trial in the arctic wildlife

refuge. >> and remember you love the filibuster when you're the party out of power but when you're in power database. >> same with the line item veto. >> and that's why evan bayh suggested bringing down the threshold to beat a filibuster. maybe that will help get things down. >> i think you can count the approval of congress on your hands now. you don't need your feet any more. and you may be less than two hands. we're at ten. you may go to single digits on the approval. >> journalists might be more popular? >> i'm not saying that. >> that's really -- >> thank god we have lawyers, because we can at least feel good about ourselves with them at the bottom. anyway, "q," who is going to join you today? is john going to be there? >> yeah. harwood will be in and we'll talk about whether or not this is a steppingstone, formality. >> yeah. we had a little kabooki theater yesterday. >> i heard a political scientist

saying this is going to be a political theater, but it's a good thing if you get all of america watching. >> bottom line, i think people will realize what a problem it is, no matter what, just hearing this conversation today opinion. >> i think they might watch for a couple of minutes and go back to jersey shore or -- >> i'm interested. i want to see what happens. >> jersey shore? >> no. >> well, you're from there. >> oh, yeah, mr. you live in new jersey, too. how many times have you been down to point pleasant? >> i have been there once, but i have not been seaside. >> carl is in washington today and carl, we'll check back in with you. you've got a lot of big guests coming. we want to talk about some of the corporate headlines out there, as well. coca-cola is reportedly close to intieg most of its largest bottler. coke would buy coca-cola north america operations and reports say that the rest of the bottling companies would remain independent. a deal could be announced as early as this week. this transaction would be pretty

notable. we're going to check in with beverage analyst david silver at 7:00 eastern for the latest but a lot of people say this is a big about face. maybe it has something to do with the way americans' taste has changed over the years. >> need more flexibility. >> need more flexibility. it's not necessarily the pop that are still is issue. >> peppily started the ball rolling on this whole idea in the last year or so. but it has to do with you warehouse some and send other -- >> you warehouse stuff because it's the high volume stuff or vice versa? >> middleman costs you can cut to some extent. but it reminds me of the way the investment bankers say, you know, you've got to buy this company. and then, you know, two years later, you've got to split this company off.

and it reminds me of the same thing. >> well, the only thing that's interesting is this idea that americans' tastes are changing. seriously, you walk in and you buy either water or green tea a lot of times. >> let's go, what's our sound bite? >> soda is why you're fat. >> warning, soda is why you're fat. >> thank you. thank you. that's the common perception. i mean, i see someone drinking a high test coke any more and if they're not rail thin, it's like, can't you cut that out? those are in the empty calories, my friend. coke zero is fine. but high tech soda -- you should really enjoy something. for 180 calories, you ought to get something for your money. eat a half a filet of fish. especially when you have those options like coke zero. exactly. that's like 15 minutes on a treadmill. >> although if you talk to

coca-cola or pepsi, they would argue back that it's not what is making americans fat. they say it's a lack of exercise. >> sitting for three hours a day. >> i know. we understand. anyway, let's get to the overseas markets right now. chloe cho is standing by in singapore, but we'll start with louisa bojesen who is standing by in europe. >> i agree with you completely on the green tea a bit. the only thing i find, though, if i'm traveling in asia and you drink it, it tastes great. however, here in europe, it tastes like cat. banks are leading the way in many a markets right now. the performers indicate banks are on the screen there a bit higher after telecoms after we had earnings out this morning. basf, the world's largest chemicalmaker. speaking of which, let me show you a chart of how basf is

trading. higher by approximately 4%. they say we will see profit gains for them this year. volumes should go up in chemicals and plastics, for example. one noteworthy thing, though. they did cut their dividend for the fist time in six years, but that is basf for you. on the other side of things, rbs and credit agricole are there, too. the royal bank of scotland trading in the uk up by almost 7%. but the loss still slank and they're calling an end to bad debt. subsequently, the chief is foregoing his bonus as we're seeing a lot of big bank chiefs doing on this side of the pond. how is it going there, chloe? >> hi, louisa. the shanghai composite was exceptional. i'll get to that in just a bit. overall here in asia, a lot of

investors interpreted ben bernanke's comments about interest rates staying low for an extended period of time as a sign of weak growth going forward. plus given that we've had weak consumer confidence numbers, terrible housing numbers, this on top of the debt woes weir seeing in the euro zone. the nikkei losing steam on the back of in auto parts suppliers are getting raided by the u.s. fbi. of course, we also had after the market closed some more recalls in smaller numbers from nissan, suzuki and kospi, as well. shanghai, up two days in a row. back up above the 3,000 handle. interesting thing today was that, of course, the pboc leading the auction yield unchanged for a three-month

build, this just a few daes ago. so a lot of investors over there on the mainland markets seem to think maybe the pboc is going to take it easy as far as the 250i9enning mode is concerned. plus, we have some comments sighting the need, reiterating the need to keep a stable exchange rate. talking about a shaky recovery picture and they say that the pick up that they've been seeing on the mainland market, especially as far as exports are concerned since december, they say the inventory bounts and not necessarily true growth coming from the other developed markets. let me send it back to you, becky and joe. >> chloe, thanks very much. let's get to the trading day and is talk to a couple of guys that might have some insight. mark harris, cohead of global research and capital markets. we're going to focus, i think, on equities there. jay bryson is from wells fargo securities global economist. yeah, i'm just interested in the

front page piece on spain. and i guess a lot of these things aren't implicit, but unlike us, if you're a member of the euro, of the european union, you can't just issue a bunch of -- you can't just print money to get yourself out of this mess because that's germany's decision. i mean, it's a real -- a lot of these things are coming home to roost. how is spain now going to handle this? is this going to be dominos? >> well, you know, it potentially could be. it kind of reminds you of thailand back in 1997, being the first one to go. the problem with a lot of the european countries is they don't have an independent way to stimulate their economies right now. monetary policy, as you point out, is in the hands of the ecb. most of their exports go to each other. they can't have a deval ewation or depreciation in their currencies. so you're looking at no way to stimulate the economy. >> right. they can't devalue their currency to get people to the

post delsol i think what it is in spain. it's a nice place. they can't make that cheaper. all they can do is spend money, which adds to the deficit, or cut taxes, which adds to the deficit. so they're, like, in a box. >> they certainly are in a box. i guess one way out of it is -- and these are all slow, structural, painful sort of ways is you have to have wage cost coming down over time to make your exports more excessive and/or the euro has to depreciation versus other major currencies to help stimulate exports and we've already seen that. >> i didn't see the time. >> how the banks that helped hide all this debt are now betting against the countries, betting that they're default on these indexes for the credit default swaps betting that greece will default on some of these things. >> you've got to be -- you've got to look at the situation and take the side of the -- >> the most likely scenario.

>> yeah. i saw the unemployment. that's $1,000 a month or $1,500 a month in some of these places, as well. that's part of the wage pressure there. even if you're not working, you're still on the doll in spain, sort of, too. it's a mess. what does that mean for us, jay? >> that means for us that we're going to have a trade book who will be looking at rel ufrly slow growth on the the next few years. i think at the end of the day, someone is going to be coughing up money over there, whether it's germany and france to stabilize things in greece and/or portugal or maybe perhaps in the imf. but i think somebody someone is going to come through with a stabilize package to help those countries out. >> mark, there's a lot of stuff that would factor into whether you like u.s. equities. is this on your radar at all or are there other things that take precedence? oh, i think it's on our

radar. i'm not sure it's necessarily on main street's radar, on every retail investor out there, but certainly from an institutional standpoint, portfolio managers are well aware of the issues based on the downturn that we saw in equities when everything in greece broke and everyone started worrying about portugal and spain. but i think this year is going to be as much about not just portugal and greece, but hopping around to different sovereign related issues. this is the problem today. where should we be looking? where should we think about the problems? put these scores on across all of the factors. there are more issues than just those guys. i mean, you know -- you're friendly to the markets in the u.s., right? you think 3% growth here and -- >> yeah, certainly. >> and you like the economically sensitive stocks? >> absolutely. you know, to that point in the end, the u.s. comes out looking relatively good in the grand scheme of things.

again, against a school of ugly sisters, perhaps, but i think we're not looking so bad. this is a year where we think we can get out 7%, 8% equity gains. we think even if it's stimulus driven, we're going to get 3% plus gdp growth. then add on to that. the first half of the year is about defensives. we've been there so far. going into the back half, i think it's going to be a traditional play. let's think defensive, let's think health care. other areas like that i think are going to be the better place toes be. but again, 7%, 8% yields, not such a bad return in the equity world this year. >> and then next year, similar? so you at this point, even though we've moved 60% or 70%, you think that that is not a bad place to employ some fun? >> again, the lowest hanging fruit is clearly gone. the idea that we had fish in a barrel to shoot last year, 40% to 50% gains is gone.

but you know, annualized returns, 6%, 7% on a yearly basis, that's not going to feel too bad. >> and mark, it could have been ugly, there could be five or six ugly brothers and a really good looking brother. it's not just sisters, right? >> yes, you're right. >> that is exactly, in a truly diverse world, yes. sisters, fathers, yes, good point. a lot of times, the losing girl flts bachelor becomes the next bachelorette, right? >> very fair pop culture point. thank you. >> thank you. we get mail immediately, mark. i'm just protecting you. thank you, mark. thank you, jay. all your brothers were handsome. >> yes. i have the odd one out. >> there you go. >> all right. you've got four of them. and anyway, back down to carl, he's in d.c. and he's got what is come up next.

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>> welcome back. it is expected to hit much of the northeast today. it's time for your business travel forecast. scott williams joins us.

37 degrees, so it's rain when i was coming in, scott. i guess, what happens? it cools down and then we get snow, right? >> yeah, absolutely, joe. we'll be keeping an eye on those temperatures. the colder air is coming in from the south and southwest. we'll see the changes eventually in new york city. we'll see it changing back over the rain at times and back over to a heavy, wet snow. philadelphia is reporting light snow. syracuse, big hamilton, this is where the heaviest amount of snow will fall. watching the system here, heavy snow, interior sections of the northeast, gusty winds. new england, mainly rain. as we move along the costal sections, that wind will be picking up later on tonight and during the day on friday, as well. we'll still see some lingering effects of this storm. we'll see heavy rainfall to

begin with in many areas. boston, 1 to 2 inches of that rainfall. as you move archbd to worcester, 2 inches. then we'll see heavy snow on top of all of the rain that will fall with this system. so new york city could pick up 6 to 10 inches. philadelphia, 6 to 10, as well. binghamton, that is where we'll see over a foot of snow. carl. >> that is a lot of snow. thanks a lot, scott. an unprecedented event in washington today. the president is looking to get health care back on track. our chief washington correspondent john harwood joins us this morning here on set. always good to see you. have you ever seen anything like this in modern day politics? >> no. this is our own wintry mess in washington. health care reform has gotten bogged down. the president is hoping to turn a corner. he got a vote from scott brown on the jobs bill the other day, and now the president -- i think they believe that they can make

a public argument that in the same way when the president performed before the house republicans a couple of weeks ago, that gives him the higher ground in the argument. and we'll see whether they can pull that off. he's going to have strong opposition rhetorically from people like judd gregg who will be on here in a moment who has strong options to the plan. but i don't think anybody should be fooled into thinking this is genuinely about cooking up a new plan. it's not. this is about making a public argument for the plan the administration and democrats believe in and trying to see what the strategy is for moving forward. >> in the super bowl after halftime, sean payton comes off with an on-side kick and surprises everybody. is there an on-side kick here from the white house? >> if there is, i would think it would be something like an initiative on tort reform, for examp example, one of the republican priorities. you saw in the president's plan, they took out the nebraska deal,

they took out the special treatment for the unions that some people had objected to. there are some issues like tort reform, like buying insurance across state lines, that's reflected n plan, not the way that republicans would put it in. there are ways what? that big plan we've got, ten years, $1 trillion, cover everybody or cover 30 million more people. we're going to ditch that and do something much smaller. >> so the piece in the journal today about this fallback bill, covering 15 million for a quarter of the cost, what's that about, then? >> well, this is the kind of plan that is man mallist and the white house had talked about from the fwining. there's been a lot of discussion from rahm emanuel to counsel the president and think about whether he wanted to go for the whole enchilada from the beginning. there's a way that you can cover kids, you can take medicaid, expand it up to 150% of poverty.

you can get a significant portion of the people, just not nearly as many for a much cheaper cost and if the democrats fail to hold their party members together to pass the big plan, you may see them moving to that. >> so if today yields no real concrete results, which i guess there's a high likelihood of that, is it a game on rec sellation, comprehensive plan story or is it this smaller, skinnier bill that rahm emanuel favor story? >> i think it's the first. i think what democrats are doing right now, the president's initiative that he laid out this week tracked republicans and democrats to figure out what is the final bill that they could get through the house and through the senate under reconciliation. i think that you're going to see that that vote counting process accelerate and the leadership in the congress ultimately coming to a decision we can get to 18 in the house and 21 senate or we can't. if they can't, then you go to

the skinny bill. >> joseph? >> yeah. john, i was listening to what you said about the ben nelson and the unions. to say that they dropped both, do you think that is fair? ben nelson gets to keep what he got, but everybody else gets it, too, and the unions get to keep what they got because it's up to 27,000. that almost -- i don't think roberts gibbs could have put it any better than you just put it by explaining it that way, john. do you think that's a fair way of explaining it? >> yeah, i do, actually. >> you didn't get rid of the ben nelson deal, john, you just gave the same deal to everyone else. and you didn't -- right, but -- >> and you're not taxing the cadillac plans of the unions. they still get -- they don't go up to 27,000 excludes the unions. so they both get to keep the benefits of the deal making, john. they didn't get rid of those deals. >> yes. but part of the objection, joe, to the deal making is it's special deals for an individual

senator, like ben nelson like holding out and saying, if you want my vote, treat my state differently than other states. if you treat all the states the same, there's not a lot of juice in the objection. on the cadillac tax, you're right, they have weakened that provision and weakened the potential cost control that you could get from that provision. but again, when i say special treatment, what i mean is there was a carveout for collective bargaining agreements that didn't take effect at those higher levels until several years down the road. and it's a perfectly correct argument to say, hey, you've gutted this provision, at least in the near term. >> the same results. the unions still get what they wanted. john, we had some -- the numbers people say objectively it's three. others say it's 12. how can the prospects for a

smaller scaled back bill might be high when the prospects seem to high that it won't go on in the house. >> wait. i lost you in the math. 2 to 12? what are you talking about? >> we had paul ryan say 2 to 12 is in the house. >> the pelosis lost 2 to 12, we think. >> there's a push and pull here. if you lose some people, because of provisions that have come of the bill, you could lose from liberals -- >> that was net. that was a net loss of 2 to 12. >> that's the discovery process we're finding out. paul ryan knows more about vote counting in the house than i do. >> that would mean that this bill that the president proposed earlier -- >> or would you lose more left democrats than you would gain moderates or liberals? >> if they can't get 218 with the large bill, then you go back to the skinny bill because democrats realize they need some accomplishment.

the question is, what is that accomplishment going to be? and i think they're making a full-court press to figure out how they can get the 218. if they can't, they can't. >> do you think this is about selling it to moderate democrats in the house? is that the -- >> the events today? yes. >> yes. i think that's a lot of it. >> and if i'm a moderate democrat and i voted for it the first time and now i'm waffling, am i likely to vote for it again because i'll lose both sides if i change my mind or do i fought want to be like john kerry? >> well, you're identifying one of the key problems here. you have a consistency issue, right? so members want to not look like they're flip-flopping. on the other hand, you have an america are you listening to me issue? and so one of the arguments republicans are going to make is we've seen over time, the plan is polling worse and worse want so republicans are going to go and say to the democrats in congress, what part of no did you not understand from the

american people? and that'sha democratic leaders are trying to push back against and say, yes, there may be bad polls, but the polls are reacting to caricatureses of the plan. that's how you win the political argument and that's what they're saying to members trying to get their votes. >> we've got lots to cover this morning. we'll talk more about the history of reconciliation and what that means. eel you'll be with us all morning long. >> yes. still to come, senator judd gregg will join us. he's reached out to the white house with a bipartisan plan he introduced a long time ago.

president obama hosting the bipartisan summit on health care today. we're joined by judd gregg. he's not attending today. he said last night this will be a bit of a kabooki dance going on. thank you for joining us. >> thank you for inviting me. >> what makes this all theater? >> i hope it isn't all theater, to be honest with you. but i think if you look at the position that is happening, if you look tt at the president's proposal on monday, it's obviously this is about trying to get the high point from a public relations standpoint, i believe. because the president's proposal on monday didn't speak to republicans. it spoke to his left in the house. he said to the house, here are some ideas that address your issues such as we will raise the level of deductibility for insurance, this price control mechanism which basically sets in price mechanisms on insurance, which is a basically

absolute industrial management to all of us. >> there's a lot of critics on that one. >> so these are not ideas that are going to moderate on the republican side. they were supposed to resinate on the lib rat side. so if you're going to put out a paper like that on monday and go to a meeting on thursday where you're supposed to be attracting bipartisan support, you're basically saying we're looking at our left, we're not looking at the middle. >> so what is the game plan given that today would be expected to yield no clear results? >> well, i think john harwood was right. they're probably going to move to the reconciliation group, but they've got real issues there. it's a budget exercise primarily. and so under reconciliation, for every line that is tested on the issue of does the policy exceed the budget implications? >> is so-called bird rule, right? >> the bird rule. and it goes through a birdbath.

every line is subject to that having. if it's determined that policy exceeds budget implications, then that line is subject to a point of order and they have to hold 60 votes to keep that section in the bill. so it becomes very much an exercise of parliamentary procedure. and you can end up with a swiss cheese type of bill because there would be so many holes punched in because of these parliamentary attacks based on the language of the bill. reconciliation is by deaf in it nigz chaenging the law that already exists. when you reconcile, you say we're going to cut the tax rates. the tax rates are 39%. we're going to raise them to 39%. there has to been an existing law. what they're trying to reconcile is the senate bill that passed the senate and hasn't passed the house. the only way they can reconcile it is change it. they have a big problem getting the cart before the horse rather

than the horse before the cart. >> do you think reconciliation is an option, then, or no? >> i think they're going to try it. they did it christmas eve. why wouldn't they do it again? >> joe. >> thanks, how are you doing, senator? >> very well, sdwroe. you? >> i'm fine, thanks. you know about politics a heck of a lot more than i do, but i think after massachusetts, you try and figure out which way to go forward and then you have that session where the president looked pretty good with the republican. and i think the fervent believerses in this plan on the left really do believe that the shortcoming has been that the american people don't understand it and that the message hasn't been transmitted to the american public the way that it should. so once they saw what looked like some points scored, they said, you know what? we need to get the president out in front with these obstructionists where he's on

the podium and he looks presidential and we need to do it again and again and again. that's what this is today, isn't it? >> you're much better as politics than i am, joe. basically, this is an exercise in having the president posture their position, which is that you should cede a $2.5 trillion new expenditure in government, national expansion in government intrusion in the marketplace, that you've basically taken the private sector insurance and force it on to some kind of exchange will have inevitably mutate into a public option five or six years from now. that program is still viable the way they think. >> if only the public understood it. and you know what? they could have heard the way you said it in sort of in your mind it sounds so bad but it's music to the ears of the far left. that's where they want to get. >> you're right, joe. there's a genuine belief among many in this government that the way you grow prosperity is you

grow the government. there are those who believe that the market doesn't function well, the government does function well and the way you create prosperity is through the government. that theory is at the center of this health care plan. >> senator, what would be your idea of something that al works today? what would have to be on the table in proposals to make you walk away from this thinking it was a successful meeting? >> i actually sent a set of ideas up to the white house. i came forward with a proposal last may. we call it cpr because we have to have witty names down here and that's not that witty. but anyway, it has the whole package in my opinion. it used the market to try and energize control of the costs of health care. it focuses on getting health care costs down. it allows everyone to participate in the health care insurance plans, but it's not a

excessive requirement in the sense that they aren't plans that have all sorts of bells and whistles on them. they're basically a stripped down, catastrophic plan. and it says to the provider groups, listen, if you provide quality and value, you get rewarded. if you get quantity and reputation and costs, you get a disincentive. >> have you gotten any calls on that? do you think that will be part of a compromise, if there is one in the making? >> i have, actually. i give the white house credit. rahm emanuel talked to me a couple times about it. but it did get dropped in the cutting room floor because it was just the opposite of -- >> so you don't sense any new life in it given where we are today? no. and that doesn't surprise me too much. where we are today is on the path of a reliving area.

unfortunately, where we are today is we have a government we can't afford and they're proposing to expand it radically. and at some point, we've got face up to the fact we can't afford the government we have much less expand it. >> you're not going today, are you? >> no, i'm not. >> i think you said you're not sure how will your ideas will be received. >> well, you know, i sort of look at this like a game between the pittsburgh pirates and the washington nationals in september. it might be fun to watch, but it isn't that fruitful. >> coming up, we have much more on our agenda today. if you've got more questions, e-mail us at squawk@cnbc.com. when we come back, we've got the picture from the futures pits. we'll be back right after this.

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welcome back, everybody. we're going to be getting jobless claims and durable goods. the key economic reports before the bell. let's get down to the cme and talk to jason roney of charma capital. jason, we could see some action around these jobless claims today. this is an important number given the weakness we've seen in the economic numbers, right? >> definitely. we've seen weakness in consumer confidence. we're looking for that economic data to trend back up to support the asset prices at these levels. we had stocks corrected 10% in three weeks, basically, and now we're essentially at the halfway point. we've got back to 50% retracement in the dow and the s&p. from here, we very much need the economic data to improve to go any higher. >> the commentary you heard yesterday from bernanke on the hill, did that sooth some

concerns people have? >> i mean, i think in the end we saw a quick spike down after the discount rate from last week. but in the end, there was really no change to that and i think the market was priced for that. that rates will stay low for an extended period of time. the biggest overhang for the markets right now continues to be really anywhere the economic data is, but mostly where the euro zone concerns are. if you look, you know, yesterday the euro was up on the day and so that helped the s&p finish higher. if you look for the year, interestingly, when the euro closes higher, there's only two days this year where the s&p finished out. so, you know, it very much is a function of. then we come in tonight, euro/yen is at new lows for the year. so that is another risk off type trade and we'll likely see pressure on equities. >> do you think that's why we see the weakness we see this morning in the futures? >> certainly in the futures this morning. you know, it's very much a function of equities want to go higher. we've seen, we're up more days than down this year, but the

velocity on the down days is much more severe. we've seen the rate of change on the down days is much greater than that on the up. it goes back to the concerns that we have in the euro zone. the economic data here is staying okay, but as long as euro and then specific risk crosses like the euro/yen remain at the year's lows, it makes it much harder for equities to overcome hurdles to the upside. >> is there a because we're so focused or worried about contagion between what's been happening in greece and beyond? >> and we're still sensitive to credit risk in general. if that credit risk of greece were to spread throughout the euro zone, that will blow out spreads again. the market is much more quickly reacting to knee jerks there. >> what do you think the knee jerk reaction could be if it comes in stronger than expecteds it's are, we could probably retest yesterday's low in the s&p. the main levels to hold on the downside of the s&p is 1080.

if we were to recapture 1114 on the up in side over the next week, that would signal new highs for the year are coming. that would get us back to positive prices. those are the main areas. it's really the next five days, a key point of u.s. economic data because we get chicago manufacturing tomorrow, the ism on monday and then employment next week. if those were to trend like we've seen the consumer confidence and home sales yesterday, you'll suddenly be talking about double dip in another week. >> thanks, jason. again, you said 1080 and 1114? >> 1114. >> thank you. we appreciate it. back down to carl. when we come back, inside and outside the beltway. headlines catching our attention when "squawk box" continues. plus, senator johns barrasoo, eric cantor, steny hoyer and kathleen sebelius talking health care when we come back.

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still to come, we will have more of the day's top stories. plus, we have a virtual who's who in the world of washington power players. up next, though, bailout watch dog elizabeth warren. plus, one day after testifying before congress, akio toyoda will visit a toyota plant in kentucky. fill phil lebeau caught up with him and we'll have that conversation

when "squawk box" comes right back.

wall street taking cues from cash. what happens in the halls of congress affect your portfolio. day two of bernanke testimony takes center stage. "squawk box" is there. we are speaking to our nation's lawmakers about the future of our country. from washington to wall street, the second hour of "squawk box" begins right now.

good morning. welcome back to this multi-city edition of "squawk box." i'm joe kernen along with become becky quick. carl quintanilla has made the trek to washington, but may not be able to make the trek back. it's the train, though, right? >> the train, yes. you guys are looking for 6 to 10 inches of snow in. >> yes. it's got to get colder because it's 37 but that supposedly is going to happen -- >> late this afternoon. if you get on the train early, you may be okay. you may be okay. >> but it's -- 70-mile-an-hour winds or something? >> snowicane. >> crazy. the winds will be blowing depends on who you talk to. today's health care event is a ka b -- all those poerngz we spent talking about health care, the town halls last summer, the president's speech on the hill, scott brown he's election going

to culminate in today's six-hour meeting at blair house. the president will moderate. democrats and republicans will make opening remarks and then they'll work through four areas. we'll section if the white house brings any new compromises to the table. the journal this morning write about a smaller fallback bill the house is preparing in case the current proposal doesn't get enough support. elizabeth warren will join us. and we'll talk more about the summit with senator john barrasso, minority whip eric cantor will also be here. what did you think about the last hour in terms of what judd gregg, what harwood things about today's proceedings? >> well, i think it's going to be something people are talking about how this is all theater at this point. i would like to see something actually get done. i would like to see some sort of

agreements that people can agree on. one thing people say, yes, health care costs are too expensive and there needs to be a way to get more people covered. how you get to that is the mess in all of this. >> max baucus is quoted in "the times" saying, just having them at the table with the cameras on will force them to burrow into the issue and maybe that -- even just hearing how some of the problems, how severe they are in years to come, maybe that's something of a public service to the american public. >> you know what i think. after massachusetts, anyone -- any of the waivering house guys that could go along with it feel like they're walking the plank. and they had about a month to figure out which way to proceed. and this was -- you know, this is one way after the house meeting where the president looks pretty good with the other side. but when you say last ditch, you know, that's -- you know how i -- that seems like a last ditch attempt, but i would be very -- it would be hard for me to believe that the -- that they

can keep enough of those guys -- >> so you don't think that -- >> last ditch on this. >> -- if i'm a house member and i voted for it, if i change my mind now, i don't alienate both my right constituents and my left constituents together at the same time? >> i think that maybe -- the ones we're talking about waivering have been hearing from one side more than the other. because there are a lot in red states. they were swept in. and i think the mood has changed. we saw it in virginia, new jersey and massachusetts. >> to your point, some people are saying, keeping the same vote because you voted one way the first time is lie being caught by your wife kissing a woman and then figuring, well i'll go all the way because i'm already caught and the marriage is already over. >> people are saying, look, if it doesn't go -- if we go along with it, we're still -- either way, we're in tough shape in november at this point. >> it's sad commentary that it

gets caught up in this political level. the fact you wouldn't be able to be for something before and then against it now, the idea we wouldn't be listening to each other, not still making compromise, that's a black and white painted -- >> i guess there are still arguments about what the people actually want or if the people understand the plan or not. if the people have voted with their feet and phone calls, should you not be representing the people? >> maybe the plan on the table is not one that people like at all. >> so maybe get a plan -- >> maybe do something different. >> with 17% of the economy, don't you think you should do it with both sides of the aisle? >> and don't you think we should be sitting down having discussions at this point? >> both sides -- >> i think both sides are wrong. one hand trying to do too much without listening to the other side of the aisle. the other side saying, forget it, we're going to stop and not do anything. i think both sides need to get together and find some sort of a

plan. >> the naysayers would say you need to address the cost side, not the coverage side. for some people, this has been their holy grail for seven years. they don't care how you effect it. some people, that's not -- >> what they've done in massachusetts and that hasn't turned out so well. >> and things are out of control in terms of how much it costs in massachusetts. >> we'll talk more about it this hour. in the meantime we've been watching something else that's been coming out of washington. toyota's president apologizing to lawmakers on wednesday. ending the day actually in tears. even after the testimony by akio toyoda, questions still remain about the possibility of acceleration problems because of potentially malfunctions with the electronics. cnbc's phil lebeau caught up with mr. toyoda last night and asked him about that very issue. >> reporter: you acknowledge there is the possibility that there may be a problem in the electronics. does it worry you that there

seems to be a disconnect there? you can't find a problem yet there may be a problem? >> translator: well, it's not that i have any sense of skepticism that there may possibly be an issue. that's not what i'm saying at all. given the level of present day technology, and we have tried everything we possibly could, and i can state today that our vehicles are completely safe. having said that, there are many different ways in which vehicles are utilized. there are many different people who use vehicles in their own way, and the duration of the usage of the vehicle may vary. therefore, when we combine these factors, you know, it is possible that certain phenomenon i'm trying to say is together with dealers we would like to continue our effort and try to listen to what the customers are telling us and try to, you know, move along with the changes or -- and then further improve our vehicles. >> you can hear more of this interview in the next hour of

"squawk box." phil will be live this morning at the toyota plant in kentucky, where mr. toyoda will be speaking to employees. fed chairman ben bernanke back on the hill this morning as investors try to get more of a sense of the central bank's exit strategy. our guest house is jim paulsen. great to see you this morning, jim. plaquerock's chief, bob doll joins us, as well as bob, it chief economist and we have a lot to be talking about this morning. this seems like it could be very likely an inflexion point. markets trying to figure out which direction to take. bob, why don't you tell us about where you see the economy right now. have we turned the corner? >> as you know, i think the economy is on a self-sustaining expansion. that said, i think, unfortunately, we're having the first real winter in a long time and the seasonals aren't prepared for it. so i think the risk here is we'll have some data that looks daur and will look much better

on the other side of this snow. >> so much better on the other side of this snow. what about the markets, though? >> well, i'm not sure that the market can't look through some of this, but in the short run, you know, we get a big number next week. and the employment report for february was taken in the week of the giant snowstorm in the ml mid-atlantic. in january of 1996, that's the last time when we had a big snowstorm, the week of the survey. the initial estimate was down 200,000. >> wow. so this really can an impact. you've got -- >> it can have an impact now. the initial estimate for february of that year was up 700. >> so it -- >> so it's got the potential for a real whip saw simply because of the way -- you know, we've had five al gore winters. this is a real winter and i think it could confuse the data. >> we could see a bounceback.

jim, what do you think we'll get with the jobless numbers and sta the type of thing that could propel the numbers? >> we certainly have the potential for that, having confusion with the data that might last more than a month here with recurring storms. but i think the market's well aware of this, too, in some sense. a lot of times when things work out this way, there's confusion, sometimes it's been fully sko discounted and by the time the numbers come out things turn out better than expected. i think the biggest statistic here in the next 60 days, week in and week out s going to be job numbers because either they're going to show up now in the next couple months or we're going to be talking about double-dip recession. that's where the mentality will go. >> it's going to be where the statistic that's going to be the most folks talk about. >> bob? >> in that january '96 event, you had two economists in the new york times the next day

saying we were clearly dipping and that was 30 days before we presented an up 700. you have the weather affecting the data. you have people saying we're going to double dip. people like me saying it's a self-sustaining expansion. if the data is weak double-dippers won't acknowledge the weather. my line is don't confuse double-dip with a snocone. >> we have so much with what's happening in greece and what we've been hearing from ben bernanke. jobs seems to be what most people are talking about. >> i have a hard time disagreeing with that. it's a key number. we've seen build up in productivity, we've seen some evidence of left inventory disgorgement, we've seen hours worked improve, temporary workers. the next thing logically is some hiring. i hope the month of february would be it. i agree with bob, the snow is probably not going to make the case. so i think we have to wait

another month before we see sdeenlt job growth. people, i think, are in a sour mood. they're looking at the glass as half empty. i think we're going to have to show them some good news to get moods improving. >> bob, that sounds like an argument for loading up in the stock market right now. if you think that's the case. sta what you're doing? >> adding it to weakness does make sense. i don't think you are to be a hero. easy money was made last month with 20/20 hindsight. when you get the one step back, i'm not against adding to risk asset. agree. >> in a big way? you're not talking necessarily cautiously? >> no. look, i think this is -- i think with all the headwind we have, you mentioned greece, we haven't talked about china, the jobs thing, the political environment. i don't think you have to be a hero and run in with both feet. put your toe in the water is maybe the best way to put it. >> jim, what do you think? >> i just think we're going to have run and fills but the under

toe, the vast majority of the information and data suggests we're well in a recovery here in the united states and globally. it's not likely to turn back. we may pause with weather, but i think if the market gives you an opportunity and sells off on that, i think it's a good buying opportunity. >> bob barbar berra, bob doll brought up big concerns, how do you not worry about greece, how do you not worry about china stepping back and not wanting to finance our debt as much, how do you take these things and say, you can set these off to the side? >> there's always a long list of things to worry about. obviously, on the greece side, doi believe they'll have to patch something together because they can't afford to let greece default right now. but, you know, it is turning the queen mary around. and i think the momentum now is on the positive side. so i would like through the weather. i'd also point out one of the other bear cases is that the u.s. would have an inflation problem before it had a period of strong growth.

i thought that didn't add up. i thought the last inflation number was excellent. bernanke can sit there and say, you know, it will be an extended period of easy money. if you get the good numbers on the other side of the snow, with easy money and no inflation, last time i looked, that's a very good opportunity to be in the equity market. >> bob doll, bob barbera, thank you for joining us. jim will be with us for the rest of the program. we'll talk to the rest of you very soon. if you have any comments or questions about anything you've seen here this morning, go ahead and e-mail us at squawk@cnbc.com. when we return, gmac, the focus of a hearing by the t.a.r.p. oversight panel. elizabeth warren will join us from washington to preview that hearing right after this break. time now for today's aflac trivia question. the first african-american to serve in congress, hyram rhodes refls was sworn into the senate on this day in 1970.

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now the answer to today's aflac trivia question. the first african american to serve in congress hiram rhodes revels was sworn into the u.s. senate on this day in 1870. what u.s. state did he represent?

the answer, mississippi. gmac executives testifying before the congressional oversight panel today. the hearing will focus on the lender's plan to repay $17.2 billion in taxpayer money. elizabeth warren is the chair of the panel, joins us now from washington. good morning. >> good morning. >> i think we -- do we -- we were having some problems. >> i think you're having problems focusing right now which is why they're not showing elizabeth. we can hear. >> you we'll pretend it's a phoner and we'll focus on jim paulsen. we like to look at him. i think now we've lost the audio. >> we lost the shot entirely. >> is that a bad omen? >> no, it's good for you because

we're going to focus on you and you can talk and smile at the same time. were you happy with that 25-basis point move? i was happy. if you can start taking things away, it's good because you can. >> i'd never like the zero interest rate. >> that's like japan, right? >> i think it's -- it's done more psychological damage to the economy than it's helped fundamentally for credit sectors. the quicker we can get back away from that, i think the better it is. it gives us a sense we moved off the depression. >> what makes you feel good, 2% or -- >> i think the fed could lift rates 25, 50 basis points without doing anything really fundamental in the economy. not really affecting anything but moving us away from zero and helping lift confidence. even the fed now believes we could move away from zero. i think that would be helpful. in addition, to the extent the fed wants to show some movement early in getting short rates off

zero, i think that could be the best thing they could do to keep long rates from going up once they stop their mortgage purchases at the end of march. so i think both of to would be -- are good things, if you will, rather than bad. >> that sounds like a fair analysis. why do you think the fed is so reluctant to do that. is it because they're worried the market gets spooked? >> i'm not sure they are. i think what they did earlier, in the last few days, is sort of a step towards -- >> although bernanke just said yesterday we'll have low rate for an extended period of time. >> he could raise rates right now to 50 or 75 basis points and argue they're still very low and could stay low -- >> so you're going to lawyer up -- okay. that's interesting. >> i think he could legitimately say that. 50 or 75, they're not -- >> you can't run for office because if unemployment's still going -- let's say that that rate goes back up because people come back in the work force. you can't do anything. you can barely do what he already did if we go above 10%

again, politically. >> i agree. we just came off 5.7 fourth quarter. early numbers, but let's say we do 4ish in the first quarter. can the fed sit at zero with a 5.7 followed by a 4 gdp? >> yes. that's how we inflated the housing bubble, we stayed at 1 for how long? >> that's what's going to happen. there's going to be a call about reminder of another bubble round if after you go to average back-to-back 4% quarters and you still do nothing to start the tightening process. i think there will be a lot of pressure to build. i agree, if unemployment is going back above 10 -- >> you think it's going above 10? >> statistically, it could, because of the weather effect for a short period. do they think we've peaked? yes. >> we're adding jobs, not losing jobs on a net basis? >> i think so. i think we'll get out in june and july and find out we started

creating jobs in november and never quit but the revisions haven't come through yet. that's often what happens. >> looks like we have news just sitting. >> coke, this is -- you know, "the wall street journal" went to great lengths to say that this isn't a done deal, could still fall apart, but it didn't. coca-cola and coca-cola enterprises are now agreeing in principle for ko to buy the bottling operations in norway and sweden and to obtain the rights to acquire the german bottler. is that just one of the press releases, beck? it will generate immediate efficiency? transaction expected to be created to earnings per share on a fully diluted basis. also it's going to buy the north american bottling operation from coca-cola enterprises as well. this looks -- >> that's the key. north american business operations, 70% of cce's

operations are those north american ones. this is a deal that we've been talking about this morning because, again, it was written up in t"the wall street journal as something that was expected although it could have fallen apart. this is now an official deal. this isn't about face for this company. this is something that recently as a few months ago coca-cola was still saying, it would not follow pepsi's lead on this. people are tying this back satisfies because of the changing taste for american consumers. >> they say it right here. our north american business structure has saved essentially the same. the same cce was founded in '86 while the market and industry have changed dramatically. we are converting passive capital with this transaction into active and giving us direct control over our investment in north american to accelerate growth and drive long-term -- >> apparently, this is a system that works as long as soda is still the driving situation that americans are drinking soda. as you get water, green tea,

other solutions, it was a little more own russ to try to get those products to market as quickly when you didn't have control and ownership of those operations. this is changing just that. >> i think miss warren, hopefully we have her now. gmac executives testifying before a congressional panel. i can see you, hear you. we're going to focus on the lender plan. the whole gmac idea, you get to combine a mortgage lender with one of the automakers. right there, in the last year, it sounds like trouble. >> and i think it's turned out to be trouble. gmac is one of the 19 stress tested banks, couldn't raise capital on its own. it got bailed out three times. and the program it got bailed out under is not the capital infusion program to the banks, which had some strings attached to it. but under the auto program.

but it didn't go through bankruptcy the way the auto companies did. so, it's kind of in between and didn't have the same kind of oversight that we saw in other cases. so that's what we're holding a hearing about today. >> and what do you want to know? what do you wanted to find out? what do we need to do from here? >> right. those are the two questions we want to know. the first is one put very much to treasury about what treasury was thinking about when it did this bailout? why it did the bailout in the particular way it did with so little restriction over gmac, with so little requirements that gmac have a plan going guard. and then what we want to ask gmac about is, what is your plan going forward? how exactly do you plan to pay us back the $17.2 billion of taxpayer money that you have? >> yeah. i know that there were some people that said, geez, you look at cit, some other companies, they were left to sort of twist in the wind and then, you know,

cerberus with gmac, that seems like kind of a sweet deal some people thought, right? >> well, that's what we want to push on. what kind of a deal was it? and what was the rationale behind the deal? you know, gmac really does stand in a unique position. sort of not fish, not with the banks exactly, and not fowl, not treated like the auto companies. it slipped in between and we think that's a good reason to have a hearing and press on what's going on. >> i guess you could make the case that it was systematically important because of the dire straits the housing industry was in at that point, right? >> well-being we're going to ask treasury if that's the case they want to try to make. >> because you don't immediately think it's too big to fail, do you? suddenly the foundation of the global financial system didn't depend on gmac's viability, did it? >> it's the 14th largest bank in america. it does have the special

relationship with the auto industry. you know, is it does a lot of auto financing and it does a lot of financing with dealerships. so the real question s, did we do this bailout and it's really part of the auto bailout? that is, bailing out gm and gmac are deeply interbetweened and can't you one without the other. i really ask that as a question, one of the questions we'll be asking today. or are we doing this bailout because we thought it was a bank and one of the banks that was systematically important? and if so, what are the numbers that support that? >> i'm getting nervous for the people you're going to be grilling today because i can tell -- i'm just looking at how you're answering these questions and you're not -- you're not -- you're very skeptical about a lot of this. does the idea of the power of the uaw have any -- they've gotten some good deals from this administration and other areas, right? >> let's remember, the bailouts for gmac came under both administrations, bush administration and obama

administration. you know, what i want to know is, what was treasury thinking when they gave away american taxpayer dollars? >> well, are we going to get these back? >> that's what i want to know. that's what i want to know. where's the plan on this one? that's what we're going to be pressing on today. >> i think i might call in sick if i were ron bloom and a couple of these guys. anyway, good luck. we're with you on this. and transparency's always good, even if it's uncomfortable, right? >> you bet. >> see you later. still more to come on the coca-cola deal. i want to make sure this is for real. yeah, okay, coming up at 8:45, we have coke chairman and ceo who will be joining us in a little bit, along with john brock of coca-cola enterprises. this is the deal of the day. now official. we'll be speaking with them coming up in the next hour. stick around.

welcome back to "squawk box." still to come, we'll preview today's health care summit in washington. senator john barrasso, eric cantor on our guest list. later, steny hoyer and hhs secretary kathleen sebelius, all of that coming up. also, more of phil lebeau's interview with toyota president and ceo akio toyoda. his thoughts on the company's recalls and the road to rebuilding it's reputation. first, though, a look at this morning's headlines. >> first, let's take a look at the markets. they have been under pressure today. the he cequity market futures. the dow the worst levels of the

morning, down by 63 points below fair value. earlier we talked to a trader at cme who said part of this is because the euro has been very weak. over the course of this year on days when the euro's been weak it's been hard for the markets to rally. it's only happened two times. keep an eye on what's happening but right now the dow futures down by 61 points. it is now official. coca-cola is buying the north american operations of its largest bottler. coca-cola enter surprises acquiring bottling operations in norway and sweden, and shareholders will get a $10 a share special dividend. rival pepsico has made similar moves. last year it did a very similar moving striking deals to acquire its two largest bottlers. we'll be talking to ceo muhtar kent of coca-cola and john brock coming up at 8:45 eastern time about what this means for coca-cola, how will this will change what the company can do. gm's hummer unit appears headed for a shutdown after the sales to a chinese manufacturer

collapsed. the manufacturer pulled out after it failed to get clearance from a chinese regulators. they say will will work with dealers on a orderly shutdown and continue to honor warrants. ben bernanke is back on capitol hill after giving his sem any annual economic testimony. he gets to give a repeat performance to the senate banking committee this morning. that's something that the street will be watching. steve liesman is here. let's get a preview of day two of bernanke's testimony. senior economics reporter, we were just talking about bob weir again but you'll talk about leisman at this point, right? >> i'm going to be talking about bernanke. . i think becky's selling it short saying it's a repeat performance. i like yours better. >> how am i selling this short? >> i don't i think it's a repeat in that it's the same thing. >> you think he's going to make news and say something

different? >> it's a little different. he heads into day two of the testimony today. it's the sem any annual testimony to congress. he delivered a clear message on rates yesterday. they will stay low for several months. overlooked in that testimony yesterday, and sure to get more attention today, beck y was fed chairman's pitch to keep the fed as a major banking regulator. the senate is considering stripping those powers as part of a broader overhaul of the banking powers now in the state. >> the crisis has once again done straighted the federal reserve's ability to identify and address diverse and hard to predict threats to financial stability, depends critically on the information, expertise and powers that it has by virtue of being both a bank supervisor and a central bank. >> again, unremarked in a lot of the news reports yesterday, bernanke gave a concession to lawmakers in his speech saying he would let legislation to become public but he want to keep borrowers at the discount window secret.

bernanke openly disagreed with the president about the so-called voeklcker rule. he supports a much more limited proposal, which, by the way is part of the house bill that would let regulators ban risky behavior by banks. things that cheered markets is his lackluster view on the economy. it was a yes but we. we have growth at 4% but fueled by government spending and inventories. job losses are slowing but hiring remains weak. financial markets improved, the chairman said, but bank lending is contracting. tomorrow, big day, big day. >> what? >> charlie evans, president of the chicago fed will be right here. on set, "squawk box," tomorrow morning, 8:00. >> this is big. we'll get to talk to him about what he sees happening, where things are had headed. >> my point today is i think

today is much more about regulatory reform because that bill is now in the fate. they're openly considering that. where the house passed that bill yesterday, a lot of focus on jobs, deficits and debt. i think a little more focus today on regulatory reform. >> thank you, stef. >> the epicenter, we sent carl quintanilla down there. >> good morning to you. the health care summit beginning at 10:00 a.m. lawmakers will meet at blair house to try to hammer out an agreement on health care reform. joining us, one of only two positions in the senate, republican john barrasso of wyoming, joining us from the hill. senator, good morning to you. >> good morning, carl. >> is it a badge of honor to be invited or a scarlet letter? >> well, i'm hoping i can add my perspective, i have practiced medicine for 25 years, been chief of staff of the largest hospital in our state in wyoming. additionally, my wife is a

breast cancer survivor. she's been three operations, two full bouts of chemotherapy. we have seen health care from all different sides. i think i want to go and talk about things from a patient perspective, what we need to do to improve patient care, headlight care, quality, availability and affordability. >> right. >> and right now, people are worried about the cost of care. >> obviously. so when democrats and the president come out during the meeting, and explain what they have in mind to help fix those very problems, how are republicans going to keep from looking obstructionist and by saying no? >> everyone wants to improve health care in this country. there's bipartisan agreement with that. it's a question of how to do it. i think washington doesn't do big things very well. i think we need to take a step by step inkra mental approach and focus first on the cost of care. when i have town hall meetings and you ask people what they think, they think if this whole

big bill passes they think the cost will go up and, care goes down and the cost of spending in this country is also going to rise significantly. the most worried are the seniors, because they see $500 billion being taken away from medicare, the program that they rely on, to start a whole new government program. so to me it's more about making sure we maintain what we have, the best health care system in the world, and expanding it to include more and more people in the step by step process and get the costs down. >> if the president comes in this morning and offers something dramatically smaller, we're told this is unlikely to happen, but if they did, for instance, do something bold, a skinny bill, so to speak, would republicans be receptive to that or is there too much political risk in giving the president a victory on this issue? >> i would certainly be receptive of something that goes in a step by step fashion that gets costs down and allows us to cover more people. but this massive overhaul is not the right way to go. you don't change one-sixth of

the economy, something that affects everybody personally and get it right in a single bill. we need to do it in a step by step fashion, making incremental progress and focus first on cost and then expand coverage. as costs go down, more people will be able to be covered. you know, i think you ought to allow people to buy insurance across state lines, deal with abusive lawsuits, i think you need to give people personal responsibility opportunities if they get their blood sugar down, clis r cholesterol down, they ought to benefit by paying less in insurance premiums. we need to allow small businesses to group together. my big concern, when you look at the national federation of independent business federation, they think we'll lose 1.6 million jobs over the next four years if all of these mandates go through. >> today's meeting's been described by some as a kabucki dance. do you think there will be any substance of discussion or are we just running through the hoops? >> i was optimistic when the president called for this.

then when i say harry reid say, it doesn't matter we're going to cram something through the sfat and down the throats of the american people, when the american people are overwhelmingly aposed to this. the last ten polls across the country, less than 40% of americans support this bill, support this approach, support such a major dramatic overhaul of the health care system. i think they're taking -- making the wrong decision here. >> well, given that, we'll see how today's meeting goes. senator, good to have you with us. >> thank you, carl. >> john barrasso, republican from wyoming. we have much more coming this morning. we also have a list of stocks to watch, including a huge upward move for coca-cola enterprises after this deal with coke is announced. it's official. "squawk box" will be right back. up next, minority whip eric cantor has been critical of the health care bill. will today's summit bring together both sides of the aisle? we get his thoughts on today's events and whether or not a deal can be reached.

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welcome back to "squawk box." and now live from the nation's

capital, carl quintanilla. >> okay, we are just hours away from the president's health care summit. now with his expectations for the meeting, congressman eric cantor, minority whip, who will be in attendance. he joins us on set. congressman, great to see you back. >> good to be here. >> i was saying during the break, i'm not sure expectations could be any lower for the meeting. the president called it his opening bid. but i guess the question s who is he bidding with? republicans or members of his own party? >> you know, carl, it really shouldn't be about republicans or democrats right now. this health care battle is about the american people. it's interesting to look at where we've been over the last year. i mean, the people have spoken out again and again. the town hall meetings, the election after election, i think people have now decided they don't like this plan. so, when we go if there today -- >> but they want a plan. >> there's no question. i think everybody wants to try and improve the status quo on health care. i mean, republicans are going

today because we do care about health care. we want to make it better for people. and we want to bring down costs. we just don't care for the president's bill. so, i'm hopeful we'll hear some backtracking, if you will, by the president to say, hey, it's time for us to really get off of this bill and try and begin a way and a path we can improve health care for folks. >> when you say backtracking, what would impress you in terms of something offensive on their part to reach a compromise? what would get your attention? >> what would get my attention is i think what the people of this country are looking for is an admission by the president that he's actually hearing what people are saying. >> that is, the bill's too big? >> that is, the bill is unacceptable and the bill doesn't work. and so if we could hear the president say that, that i hear you, maybe our intentions are good. it's just the way we're doing it doesn't convince nor can it convince the american people that that's the way. so we're willing to now go ahead, start over and look at ways to do a more modest step by step approach to try to bring

down costs right now. that's where people's heads are. that's what they need for their health care right now. >> if the white house comes in today and says, all right, all your ideas on tort reform, they're in, but we still want to cover as many people and we still want the spending package to be as much. not enough? >> no, no. again, it is the bill itself. i think the american people rightfully have decided that it cannot accomplish the goals in a sustainable way. that's the problem. it's not a workable bill. if you care about people's health care right now what we need to do is to focus on the cost issue so that we can have people continue to receive the health care they like. not take it away from them and have washington decide what's best for them. >> do you think this is -- i mean, this has been called a kabucki dance, a six-hour photo op in the last 24 hours. does that explain your views? does that illustrate your views of what this is today?

>> whether it's a dance, a press opportunity, whatever, it is an occasion for us to go in and to see whether the president and his party are willing to listen to the american people. that's been the stunning thing to me over the course of the last several months. how is it that this white house can continue to ignore what the public is saying in. >> how is it this bill is still alooifd? it was called the old monk who was poisoned and shot and just kept on living. >> the amazing thing is the president and his party have extraordinary power and it is the beauty of american democracy that has stopped this bill from passing. they don't need republican votes. they control both houses here. obviously, the white house, so something to me should strike this white house to say, enough, let's stop and really begin anew and try and address the quality issues and cost issues in a sustainable way. >> clearly, they wouldn't be pressing so hard on this if they

didn't think -- if their vote count didn't make them comfortable. you're one of the best vote counters in the city. where do they stand right now on the house side? >> right now on the house side, carl, speaker pelosi does not have the votes. you know, there's a lot of talk in this town about inevitability, that they're going to use the reconciliation process to jam this thing through the senate at a 50 vote threshold. the problem is, they still need 218 vote in the house and they don't have them. >> what do they need? how far are they down? >> i think if you look at the issues that are out there, the -- they are down significantly. they could be down 15 to 20 votes. >> really? >> yes. >> so easily, definitely double digits? >> yes. as each day goes by, i think the moderate democrats are hearing from their constituents that reflect most of this country that doesn't like this bill. >> joe, that's more than we heard yesterday. >> i know. get a guy like can totor, you'r

down there and i know you hear scuttlebu scuttlebutt. i like gossip. i want to know what's going on in the halls of power. you have a strong, savvy guy like rahm emanuel who seems to get it, right? it looks like axelrod wins out and has the president's ear and he decides to go with him. is it ideological fervor that the country just doesn't understand what's good for it in terms of going ahead with this? what do you think they're thinking? or let's give it one more shot with this. the republicans look kind of bad in that. you were there. did you -- you weren't stanning at a podium cutting people off. you didn't look nearly as good as the president at the last meeting. is that what this is, one last stride to get this ideological idea through after seven years, the holy grail? >> joe, i hope it's not but it sure seems the case that the president nor the speaker want to give up on this attempt to

really, really transform the health care we know in this country. but what i think is going on is people understand that things may sound good. i mean, recently the president came out and said, we're going to put in place a new regulator here in washington to make sure there aren't excessive premium increases. you know, that's great. nobody wants their premiums to go up. but you can't magically go and say, it's going to happen. i think the american people understand that. and they're very doubtful now that the results that are promised can be delivered. that's why we should start over. >> is it that or they want to skim your plan? would you be in favor of a skinnier plan like rahm emanuel has proposed? >> a skinnier plan will be tested in the details of that plan. it's how they do it. >> a lot has been written about personal chemistry in congress. evan bayh says you don't hang out socially. the president didn't know jeb's name in baltimore. do you like each other?

do you know each other? >> i've been in several meetings with the president, i've had dinner with the president -- >> is that part of the problem, do you think? >> there's certainly an err of lack of working together, sure. that's the political nature of this town. i do think that there could have been a lot more inclusion on both sides in getting where we are today. we'd probably be a lot better off and so would the american people. >> people talk about reagan and tip o'neill and even clinton and gingrich in contrast. we'll be watching. thanks for stopping by. eric cantor. in the next hour, senator bob corker, mark warner will face off on regulatory reform. pe seem to be making some headway. house leader steny hoyer will join us and from hhs, kathleen sebelius. we have the battles covered from all angles when "squawk box" continues. my mother made the best toffee in the world.

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journal, it did happen. the journal said the board might meet and it might happen wednesday evening unless something were to scuttle it. nothing scuttled it. the deal basically intact. coca-cola buying the operation

of coca-cola enterprises. joining us, coke has argued recently, even mr. kent said that the way that they do it with the independent bottlers is still the best way to win in the marketplace. obviously, when we talk to him, he's not going to say that at 8:45, david. what's he going to say? >> that's going to be a great question. he complete 180 from what he said, even at his analyst conference a few months ago and even on his fourth quarter conference call. they said that it was -- they liked the way their bottlers were situated. they liked the way everything was set up right now. that they were going to be able to grow the system with their bottlers. now we hear the announcement today. and it's not really taking over about 70% of coca-cola enterprises, and really selling off two more bottlers in scandinavia and sweden, so it's

interesting to see that now they think they can milk a little more profit out of the north american bottlers than cce was doing. >> is it cutting out middle men or -- i know that they're saying that some of these bottlers don't have the equipment to manufacture these other drinks that are getting popular in small volumes. do they get the flex iblgt to do that but how do they cut out middle men and increase margins with this? >> well, in some ways you're going to be able to ship all of these products they really produce in atlanta and at their various bottling centers throughout north america. they'll be able to ship these directly to warehouses instead of going through the bottlers which then has to go straight to the retailers. so that's where they're going to be able to save not only the fuel cost but the actual distribution cost. in the long run -- in the short run, excuse me, it could actually lower cost for the

consumer. i don't think you're going to see too much price cutting. but they will -- it should help out coca-cola's bottom line is specifically in the bottling area. and if this model does work, you could see that coke will then become a little more active on the bottling front around the world. >> you think indra, do you think she's strutting around a little bit today saying, yeah, i knew this was -- i knew -- they're doing what i'll doing now. theys ared but now they are. she did this long ago, right? or at least before coke. >> oh, absolutely. the acquisition of pepsi bottling and pepsi americas is expected to close any day now, by the end of the first quarter of this year. and she has to be walking around with her head high now. chin probably sticking up a little bit saying, look, you guys all -- you all mocked me a little bit before because they won be able to do this. >> all right. thank you, david. >> thanks for having me.

>> see you later. up next, reviving health care reform. the white house summit set to begin. one of the attendees will be house majority leader steny hoyer and he'll join us right after this. a guy named his own price, wants a room tonight for 65 dollars.

we don't go lower than 130. big deal, persuade him. is it wise to allow a perishable item to spoil? he asked, why leave a room empty? the additional revenue easily covers operating costs.

65 dollars is better than no dollars. okay. $65 for tonight. you can't argue with a big deal.

white house putting health care front and center today. and that has the heavy hitters heading to "squawk." health and human services secretary kathleen sebelius, . n making financial bank regulatory reform. mark corker and bob warner will talk to us about crossing the aisle in an effort to reach a deal. let's make a deal. and we have breaking news on the way. jobless claims and durable goods both coming up at 8:30 a.m. eastern time. "squawk box" begins right now. ♪ riders on the storm the flakes are starting to appear as all the politicians head to that meeting.

but it's also snowing. it's starting to snow -- >> this is in new jersey. >> you get it? the flakes are starting to appear. yeah i did that myself. but it's also snowing a wintry mix that may bring a major snowstorm to much of the northeast. a snowicane expected to get really heavy overnight into friday, which makes it so pleasant to drive in at 3:00 in the morning. after you shovel yourself out. and to one's plowed anything in that morning. >> i back in so i can plow right out. >> you know, carl -- welcome back to "squawk box," first in business worldwide. i'm joe kernen, becky quick is here and carl is in washington covering the white house health care summit. i pulled my -- for the first time ever, i pulled my wipers up because i -- >> i thought you were going to say your shirt. >> no, no. i thought everybody else had done that -- >> i do it every day and i forgot. >> you do that? >> yes. >> why do i do that? >> then your wipers don't freeze

to the windshield when you come back out. >> turn on the defrost, they unfreeze. >> 15 minutes later. >> a stitch in time, i'm all prepared. our guest host, jim paulsen. he thinks he's going back to minneapolis. >> it's fun watching you deal with it, that's all i have to say. >> what wh you leaving? >> i'll probably be here tomorrow. >> guest hosting tomorrow. as long as you're here, we'll get two for the price of one. we're only going to pay you for one. no, we don't pay. why would we pay when he gelgts to sell his wares for two hours, right? >> right. >> undercut from the other directions. in one way, out the other. >> chief strategist at wells capital management. we've got breaking news on the way. jobless claims and durable goods ahead of the numbers, the futures are down after pretty good move yesterday. bernanke basically said, we're never going to raise rates in the next 80 years. but other things making headlines. >> for starters, it is official, coca-cola is buying the north

american operations of its largest bottler, coca-cola enterprises. coke looks like it will be trading down $1.20 to $1.50 from where it closed down. coca-cola enterprises looks like it will open sharply higher. we'll be talking to coke kei muhtar kent and john brock of coca-cola enterprises. coming up at 8:45 eastern time. one day after testifying before congress, akio toyoda will visit a toyota plant in kentucky today. phil lebeau caught up with him yesterday. >> reporter: do you feel as though you convinced the skeptics in congress or in washington that toyota has fixed the problems behind these recalls? >> translator: i believe that i was able to tell everything we know at this point in time. however, when it comes to this unintended sudden acceleration,

i believe there are basically four possible reasons behind them. and one is related to the electronic throttle control system. and secondly, it might relate to the structure of the vehicle. thirdly, it might relate to the way in which people use the vehicle. and fourthly, it might relate to the parts and components. >> you can catch that full conversation with mr. toyoda on cnbc.com. jim paulsen is our guest host. one of the big factors for the markets has been jobs, what's happening with that picture. today we get jobless claims coming out. this is a number we've been watching very closely over the last several months. >> yes, we're kind of stuck around this level here. we're going to have weather impacts now and whatnot. but if we -- depending on which side we break out of these claim number, ultimately in the next few weeks, if we have to go back up towards 500,000 or break towards 400,000, i think is going to set the tone for where the stock market's going to go in the next few months. >> it's all about jobs. it's not about these other factors trying to draw our

attention, whether it's bernanke speaking, what's happening in greece -- >> i don't think so. ultimately i think it's about job and the undertow of the economy. we have all of these side issues but what's really gotten the market up 70% is really been the under tow of recovery of the u.s. economy, despite all these other issues that could be hurdles against that. i think that's going to continue. i'm optimistic, primarily because we've had such a good profit recovery. at the end of the day, it's profits that create jobs. so whether they show up, you know, this morning or next couple of weeks, i think they are going to show and ultimately i think that's very good news for the stock market. >> obviously, a lot of that talk's been coming out of washington. that's where we find carl, back right now with a very special guest. >> the clock is ticking down to the president's televised health care summit today. for house minority whip eric cantor, expectations on a bipartisan bill are very low. >> republicans are going today because we do care about health

care. we want to make it better for people. and we want to bring down costs. we don't care for the president's bill. so i'm hopeful we'll hear backtracking by the. the to say, hey, it's time for us to really get off of this bill and begin a way and a path we can improve health care for folks. >> when you -- >> here now with majority's expectations for the meeting, h stoyer joins us from the hill. >> good to see you. >> i keep going back to halftime, where they took the colts by surprise, is there anything in the offing from democrats today? >> i doubt that's going to be the case. i think the american public probably know pretty well what to discuss and that's a discussion of one of the most serious issues confronteding our country, that's the cost of health care, availability of health care to our families and to our businesses and the cost to our country.

the americans i talk to all over this country understand that health care needs to be reformed. and i think most republicans will say the same. i think the american public are going to hear a full open discussion of each side's views and hopefully they'll see some areas of accommodation and agreement. i'm looking forward to that myself. >> you know better than most how the bill's been polling, trending over time. i wonder what would be wrong with some kind of surprising attention-getting compromise, concession, that shows republicans you're serious and almost shames them into compromising with you. >> you say that. many, many of the republican ideas are included in the senate bill, the house bill and the president's proposal compromise, which he just put on the table monday. so there have been new ideas put on the table. there are significant areas of agreement in terms of

discrimination against young people, of families, of limits, many of the things we've talked about in our bill, republicans have talked about, as well. i think the american public will see that. i'm hopeful they do. and i'm hopeful there will be surprises on the republican side as well. frankly, there's been not much response when i've talked to some of the republicans about what areas of real compromise there would be. now, there are obviously very limited proposals the republicans have made. i want to talk to you about the polling data because i think the republicans talk about that. and i think americans are rightfully concerned that there's not agreement, seems to be conflict, they're concerned about what direction we're going and whether it's going to affect them positively or negatively. but when you ask americans about the individual items we're addressing, uniformally we're getting 60%, 65%, 70% on the individual items that are in the bill, including the fact that

americans think it needs to be comprehensive. you get very high numbers. when it comes to the process and looking at what's happening in washington, they're not pleased. very frankly, i'm not pleased either. >> does that mean americans are seeking a more incremental approach than over a comprehensions ive bill? >> actually, the polling shows they think it needs to be bigger rather than smaller. they know this is a big problem. they know costs are escalating for them, for their businesses, for the country. they know that's not sustainable for their families. so they know there needs to be big changes. they want to make sure those changes don't adversely effect them. if they got their insurance, they like it, they want to make sure they don't take it away and we're certainly not going to do that. you know what the bill does is provide what republicans have advocated for. that is a free market open, transparent marketplace for people to purchase insurance. if they can't afford it, it gives them some help to do so.

so i think that americans basically are supportive of the principles of the bill. they're concerned about what, i think, perhaps, is the process and the confrontation, the conflict, which gives them unease, as it should. >> yeah. how seriously should we be taking reports of a fallback proposal? a smaller bill, a quarter of the costs to covering 15 million people, if in fact the big one doesn't get the support it needs? >> obviously, the president has indicated he wants to have a comprehensive bill to keep costs down and make affordable health care available for all americans. that will bring costs down, including those who have insurance now. but the president, like all of us, understands that in a democracy you do the possible. you do what you can create consensus on and you can pass. and you do the best you can. so i think the president's open

to that. the president, and i certainly agree with that, believes if we'ring really going to effect the reforms that republicans and democrats have talked about, the only real way you could do that is with comprehensively dealing with this problem. the republicans, for instance, make health care accessible to 3 million more people. we do it for 30 million people. that makes a substantial difference in the cost because the more people you have in the program, obviously, the person cost, the family costs, comes down. >> yeah. republicans say at least on the house side the vote count is not going your way. >> i don't think that's accurate. i don't know why they say that. i don't know that they've been polling our members. we haven't heard any member say that they've been asked. i think we're in good shape. >> define good shape. i think good shape is being able to pass a bill. >> today? >> not today. we can pass a bill.

we passed a bill. some people were doubtful of that. the senate passed a bill. we've moved further than any of the other seven presidents who tried to move this forward. teddy roosevelt said we needed comprehensive health rare reform. many presidents since that time have said the same. republican and democratic presidents. and this bill has moved further than any bill to date. so, i think that if and when we reach compromise and i'm hopefully we will do that between the house and senate, we will pass a bill. >> joe? >> thanks. i know when republicans say a government takeover of health care, that -- you know, that's a talking point. you hate to hear that. but, let's -- let's say that's not even true. but don't you think -- part of the backlash from the country or massachusetts, whatever you -- there is a feeling among most people that government isn't particularly effective at doing big thins.

can you acknowledge or concede that that's probably the underlying cause for all of the angst in the american public right now? maybe they just don't want that much government involvement in health care? there's an incremental way to do it with the private sector, to make things more competitive and to address cost issues and to cover everyone with some help, but it doesn't have to be, you know, this huge once in 70 year holy grail that certain members of your party want. >> well, nobody's talking about a holy grail here. this was a complicated issue. we're going to make incremental change as we go along. and, in fact, to some degree, this is inkra mental change. we're not changing the basic system of health care insurance in the private sector, gwynn by private insurance companies, clifrd by private doctors and private hospitals. this is a private sector system. all we're doing is creating a market so people can access and exchange which gives them the transparent information they need to make the best buys and bring costs down.

but let me say this in items of this government-run. i don't believe anybody's come up to me and said, get rid of social security. nobody's come up and said, get rid of medicare. nobody's come -- no veteran has come up and said, let's get rid of the veterans health care system, which is a system where you have government docs and government hospitals. >> but, leader, a lot of people think of david walker has said, you look at the future of this country based on what our commitments are for social security and medicare and it's completely -- i mean, it's daunting what we're going to have to do. and to completely, you know, axe pand it and add another one before we fix the ones we've got, everyone wants to cover 30 million people. is this the right way to do it without dresing the cost side first? >> well, you know, it's subject to debate. i think it's the right way to do it. i think we've -- and both senate and house we've addressed it

slightly differently. but i think we have addressed it. in the private sector using a model i think will work. david walker, he's absolutely right. we have to look very carefully at both -- all the entitlement programs, and all the other programs to make sure they're affordable and sustainable over the long term. i agree 100% with david walk other that. >> you don't like the bill the way it's propose add right now. he thinks it's putting the cart before the horse. >> i didn't say i gree with him 100% on that. i said i agree with him 100% on the proposition and have worked very closely with david walker. he would tell you that. and he would, i think, tell you that steny hoyer is one of the leading add vovocates in congre. >> do you -- leader, do you -- >> he's right on that. >> do you want both sides to play nice today on tv or do you

want fireworks? >> well-bei, i think both sides the american public wants to see, correctly, civil discussion and debate. and both sides putting forth their proposition so the american people will get a chance to see what they're talking about, what each side believes will be the effect of what they're proposing. this will be good for the american public. a further learning experience for the american public. very frankly, for the members who participate in the meeting. >> we look forward to watching it even as you're in it. leader hoyer, thanks for your time today. coming up, we have to shift gears to financial regulation reform. senator bob corker, senator warner reaching across the aisle. coming up. also coming up, we'll have coke and the deal of the day. ceo muhtar kent and coca-cola enterprise ceo john brock will be our special guests to talk about the strategy behind this mega deal that is official this

morning. "squawk box" will be right back.

a lot going on in this town this morning as conversation on financial regulation continues. at the center of discussion is the plans created by senators corker and warner. this isn't the first time the two have come across the aisle to collaborate on policy. first here, senator bob warner and bob corker. good to see you both. i want to read you something from -- actually, a couple weeks ago. they said it looks like financial regulatory reform is getting back on track now that free market thinking senators who actually have real world business experience, and they name you two, have agreed to work with dodd. are things moving along pretty well, senator? >> i think things are moving along. i think senator corker and i are relatively new guys in the senate. we had this weird sense we got hired to actually get stuff done. that doesn't mean sacrifice your principles but if you can find common ground, that's a good place to build policy. >> was this blow-back at first when you agreed to do this? >> you know, we've been working

together for a year. we've had bipartisan meetings with everybody from allen greenspan to alice, bringing them in to talk with us. not at all. it's worked very well. mark's a great partner. >> so walk us through -- give us a report card. where, to the degree you can, where are discussions and where are the hiccups, where's the low -- >> i think, first of all, bob was too generous on that comment. he took some arrows. we both took arrows but he particularly. he stepped up and said, regardless, even if some of the largest negotiations had broken down, he still wanted to see if we could get a good bill without sacrificing principle. he's been a great partner through this. i think what we both decided, as business guys, we both said, you know, the american taxpayer should never again have to hear the term too big to fail or ever have a process where we as taxpayers are put at risk to shore up financial institutions. we need to make sure that if there's going to be a resolution

process, that it's so painful that any rational management team will want to go through a normal bankruptcy process rather than counting on somehow the taxpayer to prop them up. >> resolution authority is making some head way? >> no question. mark and i shook hands two days ago. it's being put into legislative language now. both a systematic risk based and also resolution. look, i said this earlier, but a couple weeks ago one of the best news i saw was one of the credit rating agencies was actually downgrading possibly two of the larger institutions because they thought we might actually put something like this into law, which is outstanding. i mean, what you want is market discipline. you want those people investing or loaning to know that there's a possibility that large institution, and institutions maybe too large to manage properly could actually fail in this country. that's a great step away from where we've been. >> so where will the authority lie? how will it be structured? >> i think there will be a time and place to lay out all the

details. >> this is a great time and place. >> as much as we'd like to break this news this morning, this is just one piece of a bigger bill. i can tell you this much, you know, i think that both the market will react favorably to what we've seen. i think we've put appropriate protections in place. i think we recognize that we don't want people out there roving, rove regulatorregulator. we have to have an orderly predictability. i think the markets are looking for predict in terms of new rules. we'll give them that. >> is it true the white house no longer insisting on a separate cfpa, does that help move things along? >> we met last night. look, i think the best thing to do is to get this done. i think -- >> and we're not helping. >> no, y'all are helping. you always help. but i think, you know, we've sort of agreed that let's get all the policy issues worked out. if we let pieces of it come out one at a time, what happens is, it just attracts a lot of

arrows. i think both of us and all those working on this, chris dodd and others, we want to get something done. best way to do is it to finish up our negotiations, get it into print, let the world see it, let us take the arrows that come at that point in time. although i think we're going to get to a place that is a very good bill. i'm still very optimistic about that. we'll be working through the weekend to get that done. >> you think it's an event for next week, perhaps? >> you know, i'd rather dodd lay out timelines. mark and i met our deadline. i think that we're going to -- i think that through the weekend our staffs will be working with dodd to meet some deadline on other issues. and we'll see. i mean, you know, when you start putting concepts into legislatetive language, obviously, just like in any major deal, you get the legalese involved, you have to work through things. things are going very. i think the financial industry -- mark knows this well. gosh, he sounds like a

republican. i'm going to have to adopt this guy. i think the market responds to predictability. i think right now some of the more major institutions in our country don't know the rules of the road. we need those rules of the road to move on. i think that's affecting our economy. let's get it done. let's do it the right way. and move on to something else. >> at the same time we have to recognize for 18 months after the failure of aig and lehman, and i think, again, back where we started, we both said, it's our job. we got hired to get some things fixed. not just the markets. but for that matter, the american public wants to know we put new rules of the road, so financial industry can continue. but we realize we're never going to have to see again what we saw in 2008. >> senator corker, you brought up a point how you think this might be -- this lack of any clarity is slowing things down. john mack, the chairman of morgan stanley said the same thing last night. this is moving way too slow and they need clarity. you're on the same page with

that but you do you think some of your own senators, republican colleagues, would come on board when you start hearing voices from industry saying the same thing? >> look, i had a meeting with all of the republican senators on the banking committee yesterday. and it went well. i think all of us just want to get the right thing done. something that doesn't create some sweeping new powers on the consumer side that undermine the safety and soundness piece. but, you know, chris dodd and i were in central america last week. i think you know that. our staffs have been working closely together. warner's staff has been working. i think we're going to get to a place soon on a bill that will stand the test of time. and i think there's going to be lots of republicans who come on board. i had a very good meeting yesterday with senator shelby, actually two of them. i think things are beginning to percolate in a very, very good way. hopefully we'll get this behind us. >> i want to get a quick question in. senator warner, briefly like a republican, i want to quash that

quickly. >> you mean the fact that i can read a balance sheet? i actually think -- i think you could use a few more folks on both sides. aisle that can read a balance sheet. >> you think reconciliation should be used in health care? >> let's try not to prejudge what's going to happen today. >> oh, come on. >> hold up. i do wish we might have had some new members, not just the same old faces at this session because i think as we've seen in this example -- >> is that a yes or no? >> some of the new guys could actually find some common ground. >> so that's a yes, we should use reconciliation or, no, we shouldn't. >> you know, if i remember right, medicare, drug benefit back in 2003, reconciliation was used. i sure as heck hope we find common ground. >> you're good. you're good. that's why you're there. >> that shows you why health care is in the weaves and these guys are almost to the end zone. any concerns about it moving back to the house and whether chairman frank would have issues?

>> listen, i've had some consideration with chairman frank. there's going to be some hot button issues. we could look at the end of the day how we better protect consumers and we should not let this become the hot button issue the way in the health care debate. and i think there's a reasonable way to ensure both enhanced consumer protection at the same time, making sure that there's an appropriate balance with safety and soundness. >> has there been something about the process here that's different than health care? i mean, we're getting glimpses of bipartisanship on jobs, on this. i'm wondering why -- >> i've got to give -- again, this is kind of back and forth here, mutual admiration, but we both decided, one, there was a lot we didn't know. we both had business experience. but getting into the complexities of the financial system, i think we both also recognize, man, we mess this up, the unforeseen consequence not just for the financial markets domestically, but for worldwide.

this is too important to screw up. so we're willing to go at it for a year and do our homework. and i think find some common ground. >> we'll be watching. >> and we're not there yet. in five minutes something could happen, may have happened while we're on this program. i'm very optimistic that we can get it done and just as john mack said, and other people certainly that we're talking to and are saying, let's get this -- let's let the rules of the road be known. let's do it in a way that doesn't do damage but strengthens. and i think we have -- look, chris dodd has been a great partner in this. i have to tell you. i have very much enjoyed working with him and his staff. inc. we're going to get there. >> you have the whole street watching. gentlemen, thank you for coming on. beck, i know we have data on the way. >> we do. in fact, two big data point out in a few seconds. the weekly jobless claims report, also durable goods report. rick santelli at the cme group, steve liesman on set with us, as is jim paulsen in the studio. rick, take it away. >> here we go.

durable goods up 3% on headline. that's pretty decent. you take out transportation, then we go in the other direction. down 0.6 of 1%. last month up 0.3 headline was ramped up by a major factor up 0.19 and the ex-transportation moved up 1%. even though transportation was weak, all the revisions were pretty good. now, if you look at 496,000 on initial claims, it's definitely bumping up a bit. it's up 22,000. a bit of a surprise to some. others say, it just shows the jobs. 4.617 million on continuing claims. of course, we will do our homework and look at all the other categories, especially nonadjusted data. the aftermath -- interest rates are still a bit lower. we see pre-opening equities -- or equity futures are also lower. today we all know what's going on, there's going to be all of

our leaders watching out for those of us that can't watch out for ourselves. back to you. >> all right. so that's what's happening down there. i'm going to pass that along. >> you know what, joe, it's really cool. my daughters hate football. i finally figured it out. i'm just not explaining the game right to them. now i know. >> some people think they should govern, other people think they should rule. you know, there's two ways -- two ways of looking at it, right? >> there's always two ways to look at it. the problem is, i think we need a third. >> maybe so. let's get more reaction. steve liesman is back and our guest host jim paulsen. paulsen, you get a number -- he's always so happy and positive. you love the durable goods number, right? >> i do. i'm more drawn to that claims number. that's the only reason -- we've had a few weeks where it's up. and the four-week moving average

going up. is that concerning? that's a hugely volatile number so maybe give it a little time. if we're heading back up to 500,000, it's going to be a tense time in the second quarter. >> wasn't there something, steve, you figured out about january's claims numbers that happened every year or something? or was that some other issue? wasn't there a way to say it's not as bad as it looks? i mean, this is sort of a chronic problem. >> january's always a chronic problem because of the layoffs expected from the holidays. so that's -- >> we're in february now, right? it's still a problem. >> you are losing the excuse for the seasonality. there are still some guys -- >> so i was right? >> you were right? i didn't disagree with you. >> i know. but i want you to nod, because i thought -- >> yes, joe was correct. >> you looked at me like had you no idea -- you looked at me like you had no idea what i was referring to. >> i didn't for the first 30 seconds, i had no idea. >> now you know. a lot of types you're thinking of what you're going to say. >> i am because i'm trying to

digest the data. i'm with jim, because some people said because of the weather, you might get a spike. not because the government offices closed but because this stuff is done over the internet. there are no jobless lines anymore. temporary workers who might have been working were laid off because of the weather. >> and also there was a holiday in there. presidents' holiday. >> and a lot of guys said, let's wait until march. at some point if you put that together with the confidence numbers it gets a little -- >> march is next week. >> right. it gets a little strained to say the situation is improving but the data is wrong. i will say what's interesting is the sequential improvement we've had in manufacturing. the icht sm numbers being up. durable goods number is solid, although i will say the -- jim, the nondefense ex-aircraft was down and under capital goods down 2.9%. >> but it was revised up. >> it had been going up three

out of the last four months. it's unusual to have that consistency. so i think the capital investment story keeps going. what's weird here is what's happening in manufacturing has not shown up at all in employment, from what we can tell. it looks like we had one guy on one time who said, all i've done is i took a shift, but i stopped that shift and i put that shift back. now, normally those numbers show up in jobless numbers. it's going back to where we were. the manufacturing numbers and jobs number. >> i think it's a sign they're willing to make commitments on kaptd spending. there's still some confidence out in the business sector. ultimately that should show up in the job nashmarket as well. it's nice to see some sign of confidence. >> and ultimately show up in the service sector, which -- >> you'll both be right eventually, paulsen. eventually, people come back, but it always takes -- you're

going to have a lot of people at this point saying it's a jobless recovery before it really happens. >> i think we're getting to that. maybe the weather effects in the next few months is starting to impact. >> we have to hold onto the recovery part of that statement, too. >> i mean, you know, the way the confidence -- i don't know what you made of those confidence numbers yesterday -- >> he's not worried about that. >> but a fall by 10 points, i don't think -- i'm not into the minutia of plus one, minus one on confidence. if it falls by ten -- and the one thing consumers know about from that survey. they don't know about inflation. what they do know about is jobs. when they answer job are not plentiful anymore, i think they're speaking directly from experience. >> but i think you did a couple thing. you put a big snowstorm on the job market plans, which made the market worse for a period. and then you put the european crisis in there, confidence goes down. i think if headlines you get a little better. confidence, i think, is laggered and will follow what jobs -- >> are you still in a 3% for the first quarter of 2010? >> i am. i'm a 3% to 4% because i think

there's other parts here. but this number doesn't help that. the jobs number, i think, has to show. >> and you think there's going to be a 2% consumer spending number inside that number? >> coming into this, you know, before -- if you take just the sheer spending numbers we're on a three pace, 3% real pa is in consumption this quarter. it might be less when this confidence numbers comes through but that's what we are on. >> i wonder, joe, if it's time to start thinking that whole double dip story? >> no, no. >> we're not going to do that? >> stop. >> will you let me know when we can? >> talk to paulsen and then i'll pass along what he says to you. i get a lot from him. >> i get a lot from him, too. you want to talk about bob weir some more or -- >> let's go. thanks, rick. jim's with us for the rest of the hour. i was going to talk to carl and becky and just say, it was nice watching corker and warner. i mean, i got -- >> why can't we all get along?

>> bob, both those guys are new. is that what we need to take away from that, term limits or something? both those guys are new. they're talking, they're nice, they make sense. i mean, these guys, they've been there too long, 30, 40 years, leave! >> warner's point about the guest list at today's meeting being the same people who have been fighting about this for a year now, maybe you need some new blood. that was a good point. we haven't heard that. >> they're both new. you couldn't even tell one was a republican and one was a democrat. >> you said you liked steny hoyer, too, who's been there a while. >> i want to call him speaker -- no, i can't say it. he's leader hoyer. he would have laughed. >> guys, you know the white house health care summit is kicking off later this morning. our next guest is inviting insurance company chiefs to discuss their company's premiums. joining us first on cnbc from the white house north lawn is kathleen sebelius, health and human services secretary. good to see you this morning.

we're all looking forward to watching it thing kick off at 10:00 a.m. i'm wonnering, after six hours, when you close up shop for tonight, what will determine whether or not you considered today a good day, a productive day? >> well, i think i'm hopeful that folks are going to come to today, seriously ready to work on a bill that we can push forward and deal with health insurance crisis that is facing way too many american families and american business owners. the long-term health care costs is crippling our country. >> i'm sure you've seen a lot of the polling, the cover of "usa today" this morning, three out of four americans don't expect today's meeting to result in any agreement. how do you get around that? how do you get around the follow-through, then, that this is all a theater act intended to make the republicans look obstructionist?

>> well, i think there are so many good ideas where there's a lot of common agreement. nancy and i have an op-ed piece today in various papers where we really enumerate, you know -- there's a lot of agreement going after fraud and abuse, on creating new marketplaces, on the kinds of things we should be doing for prevention and wellness, not waiting for people to get sick, on lowering long-term costs of health care in this country. those are republican and democratic ideas, creating high-risk pools. i'm just hoping people come to the table and say, yeah, you're right. we supported those. those are part of the bill. we want to be part of this going forward. and break the log jam that has been in place for about a year. >> there's going to be a number of topics covered. controlling costs, right, reducing the deficit, expanding coverage. you're going to be leading one of them. which is it? >> i'm going to be talking about the fact that the insurance market is really failing too

many american families, too many small business owners. and we need a new market. in the meantime, we need to really do some rate oversight of what's going on, that companies are raising rates up to 39%. driving people out of the market, lock, people out of the market. millions of americans losing their coverage every day. >> do you have any sympathy for their plight. as they would put it, nations getting older, young people are not buying insurance, and the risk pools are getting too intense? they almost have to have -- have to raise rates? >> well, the profit statements they're filing. you know, i'm all for companies making a profit. we want solvent insurance companies. but filing a record profit quarter of $2.7 billion, as one company did in california, for the fourth quarter of 2009 and turning around a week later and telling people in the individual market where they don't have any

leverage, they don't have any bargaining power, that their rates are going up 39%, just doesn't match very well. the top five companies in the country had profits that were 56% higher in 2009 than they were in 2008. so, there's a disconnect here. and if the american medical association study is accurate, and i think it is, it just came out, showing that 99% of the markets in metropolitan areas are piely concentrated. they're really monopolies, they're not markets. so before we get to the new marketplace that the president has proposed, that actually a lot of republicans think is a good idea, setting up a new pool market where small business owners and individuals get some leverage with other folks, we need some rate oversight. i want to work with states. my former fellow insurance commissioners and figure out a way to do some more aggressive oversight, so more and more

americans don't lose their health insurance coverage. >> it's certainly a big topic, especially with brawley on the hill yesterday. we look forward to watching today. madame secretary, thanks for your time. thanks for coming on cnbc, kathleen sebelius. next up, the deal of the day. coke striking a deal to buy the bulk of its largest bottler. we have the major players of the strategic deal, coke ceo muhtar kent and coke enter surprises ceo, john brock.

♪ come in she said i'll give you shelter from these storms ♪ ♪ not a word was spoke between us ♪ ♪ there was little risk involved ♪ ♪ everything up to that point had been left unresolved ♪ welcome back to "squawk box." take a look at the equity futures this morning. they've been under pressure all morning long. right now the dow futures are at air worst levels, down about 90 points after we got a jobless claim number higher than the street was expecting. you're talking about up 22 to 496,000. that's a concern. >> durable goods was -- >> better than expected, up 3%. but when you strip out transportation, it's down 0.6%. >> and jobs. >> jobs, jobs, jobs. >> palm has halted weak guidance. >> very weak if you look at in terms of what they're looking for for revenue for the quarter, well below the street's

expectations. >> halted. got all the way back to 18, now at 8. >> 285 to $310 million in gap. the street was at $424 million. that stock is halted. we'll see where that shakes out. the big deal of the day is coca-cola buying the north american operations of its largest bottler, coca-cola enterprise. joining us muhtar kent and john brock. thank you for joining us this morning. we appreciate it. >> thank you. >> thank you. >> muhtar, maybe you could tell us about why this deal makes sense now, because this is a big reversal of coke's strategy over the decades. even different from what you were telling the street months ago. why does this deal make sense now? >> it makes sense because it totally in line with our 2020 vision that we have announced to the markets last year. and we are here together with

our -- with the ceo of coca-cola enterprises, announcing decisive action to suspend strategically our partnership. that's why this makes so much sense. this deal will allow us to capture long-term efficiencies in the critical north american market. it will allow the coca-cola company to convert its passive capital into active capital. allow the pace of innovation to increase the speed of innovation to increase. it will give us the best footprint of production, distribution and sales of the most preferred beverage brands in the largest profit pool in the world of beverage, nonalcoholic beverages. last but not least, strengthen strategically our european footprint, another critical market for coca-cola in europe. it is not a reversal at all. it is actually fully in line. what we have said all along is

that cce continues to be a very trusted, important key partner for us in one of the most key markets, which is europe. that's why this makes so much sense for us. >> mr. kent, i've been trying to figure if out this morning. i will admit being confused by some of the details, but this made sense as a strategy to have the bottlers operating separately in north america back in the mid-1980s because, i guess, consumers' tastes were a little different at that point and because you had a global expansion going on? am i right to assume that? >> no, the franchise structure needs to all evolve because consumers evolve, customers evolve. that's what's happened in the united states. our structure has not -- has essentially not changed since 1986. consumers have changed. customers have changed. we really have to, therefore, evolve our franchise structure. that's what this deal is about. evolving our franchise structure to better serve our consumers,

better serve our customers, and that's why this deal right now makes so much sense. it will add value, tremendous value, to all our stakeholders, all our shareholders. as i said, it will allow us to reap those long-term efficiencies, synergies, so that we can have more fuel for our brands. >> mr. brock, your shares -- go ahead. i'm sorry, mr. kent. >> and there is absolutely an important place, a critical place for us to advance our franchise partnerships around the world. even with this deal, where we are taking over the north american assets of our largest bottler, coca-cola enterprises, totally globally, 72% of our total global volume will still be in the hands of our franchise partners across the world. and that partners across the world and that is a critical element and we are totally aligned here sitting with cce in how we

advance our strategic partnership decisively. >> your shares are going to be sharply higher this morning, higher by about $5.50 it looks like. that's a massive move. where do you see the future of cce at this point? how do you operate in conjunction with coca-cola and what does this mean on your global operations? >> let me reiterate what muhtar just said. we're doing this transaction in a very favorable light with each other, dealing from a position of strength. we had the best year in our company's history. last year our team has done a great job and our relationship i think is probably with the coca-cola company the strongest it's been in our history. the transaction mikes good sense totally in terms of getting the north american business where it needs to be as muhtar has already explained. that makes sense. frankly it allows us to take our very strong european business where we have leading market shares, outstanding brands that

are growing, lower per capita consumption there than in north america so the opportunity for growth is huge and that we've structured this transaction in such a way that the capital structure of our new cce in europe is going to be very solid, very sound. we're going to be giving a $10 per share cash distribution to all share owners as part of the transaction and then they'll own a share in -- one share per share in new cce. we think the growth profile, the growth possibilities for our new, expanded europe, cce, are truly outstanding. >> i was just curious. what specifically made this come about now? like in the last three to six months? is it the change in relative values between your companies? is it the change in cash flow created because of the recession? is it the recovery? i understand that the benefits are there from it but what brought about the deal now?

>> we've been in discussions for a long time over the -- longer than a year about how to strategically transform the business in north america and how to strategically strengthen the business -- our business in western europe. the coca-cola company has tremendous growth potential in all the emerging markets as you see from all our numbers every quarter. what this play does is it takes two of the largest profit pools, north america and nonalcoholic beverages and western europe and creates for the coca-cola system and coca-cola company a wonderful fusion of the high growth of emerging markets and also the cinergy play and profit play from both north america as well as western europe and therefore the time has come to realize those values. >> mr. kent, is it a fair statement to say the growth possibilities for the old coke,

there actually is an old coke, but for the soda, the growth opportunities are still there in europe, maybe not domestically. therefore, you keep the model, the bottling model that worked there but in this country you need nimble -- you need to be more nimble with the smaller niche products and the bottling model doesn't work as well in this country anymore. is that a way to look at this? >> no. our business in north america was in any case structured very differently than the way our business is structured internationally. we were -- we had a totally exclusive coca-cola company operated fountain business in the united states. we have a juice business that is operated by the coca-cola company. we have filling operations, factories that fill beverages operated by the coca-cola company. in international markets all those are operated by our bottling system and therefore what we're doing is taking the

operations of cce and we will fuse those with our operations, realize the synergies, ensure we're best in class and production and service to our customers and that's why this transactions absolutely timely and it will allow us to continue to grow, i may add, in the united states as well as strengthen and continue to grow in western europe, which are two critical markets. that's why this is so important. >> but you did mention that -- >> let me just add one point. we have demonstrated that in developed markets our carbonated soft drink, sparkling business, can grow. red, black, and silver coca-cola strategy in europe is working beautifully. if you look at the past two years brand coca-cola, trademark coca-cola is growing. that same profile can happen in the united states and i think, again, you'll see that changing as we go forward. >> mr. kent, you did mention earlier the changing tastes of american consumers.

can you kind of lay out how they're changing and what you're doing to address that? >> well, i think, you know, it's important to really stress that consumers are changing rapidly everywhere around the world, not just here in the united states. consumers are changing in china. consumers are changing in russia. consumers are changing in western europe and latin america. everywhere, rapid changes. and it is incumbent upon us with the heritage of 125 years to make absolutely sure that we stay ahead of those consumer tastes. and we have a wonderful, strengthened portfolio in the united states and we have demonstrated how well that portfolio is performing, gaining share all the time in the marketplace, and i think this, with this transaction, we will have sufficient amounts of synergies and i call it fuel for our brands that will ensure we keep winning in the marketplace. >> mr. kent, just a little bit more maybe on -- you mentioned

the movement of capital from passive to active form, but is it any reflection on maybe the lack of other alternative uses now for the cash flow whether it's for operating purposes or for other potential acquisitions? are there just not as many coming out of the recession? >> sure. it's a great question. actually, this transactions essentially cashless for the coca-cola company. we are using our equity in cce assuming the debt of cce and then the new franchises that will be taken over by cce in western europe, those will be essentially realized in cash back to the coca-cola company from cce so, essentially, what we have here is a cashless transaction. when i say passive capital into active capital, i mean that capital now allows us to ensure that we can generate the synergies and long-term efficiencies that are critical for us to win in the marketplace. that's what i meant.

>> all right. carl, do you have a question? >> yeah, mr. kent. mr. brock talks about some of the growth potential for sparkling in north america in part because of the marketing steps you've taken over the past couple of years. we know you stuck by the olympics where other big companies, other big multinationals did not. has that paid off? are you willing to, are you ready to take marketing into a higher gear given the economic recovery that we've witnessed? >> i think our marketing has gone into higher gear, open happiness campaign is now very successful in more than a hundred markets around the world, and we -- the properties that we are associated with, the wonderful properties that our brand has been associated with in the world, like the olympics since 1928, like the fifa world football cup in south africa this year, those are long-term plays that we have a very long standing relationship with those properties and our consumers and

our brands benefit from that and it's a mutually beneficial relationship with both the ioc and fifa. >> and i guess eventually, gentlemen, can you tell me how this will change the margin structure for each of your businesses? >> well, from the perspective of the coca-cola company and also the operations in north america, as i said, this will allow us to reap the synergies when we put all those businesses together it will allow us to be best in class in production, distribution, and sales, serve our customers and consumers better with our portfolio and ensure that our brands can keep growing in the wonderful market of north america, the largest profit pool in the world. in europe i think us refranchising critical markets, germany, sweden, norway, almost