the entitlement state is dragging that continent down. is that a harbinger for things to come? and the obama economic adviser warns of a bad jobs' number on friday. he fudges on the volcker plan to limit bank trading and tries to tell us that the president is very pro business. you don't want to miss this. and warren buffett pulls back from being bullish on stocks and enron crook, jeff skilling, goes all the way to the supreme court to try to get himself out of jail. these two points are not unrelated. we'll report on them. fasten your seatbelts, "the kudlow report" begins right now. good evening. i'm larry kudlow. welcome to "the kudlow report" where we believe free market

capitalism is still the best pat to prosperity. tax and spend entitlement time for even bigger government. one of the stars of the so-called bipartisan white house summit was senate republican conference chair, tennessee senator lamar alexander. we welcome him back to the program to tell us where we're going. how and why? mr. alexander thank you very much. it's great to see you. congratulations. >> thank you, larry. >> it have to ask you. i have so many things and i know our time is short. this is an investor-class issue. that's the application of the 2.9% payroll tax on health care, to investments. it will raise the dividends' tax and annuities and it will probably raise capital gains. when you combine that with the end of the bush tax cuts it would jack up the capital gains' tax by over 50%. is this thing baked in the cake? can this thing be beat snn i think it's rattling investors and stocks right now.

>> i think it can be beaten. i think it's up, and particularly. members of the house. we made it very clear to the president we were ready to begin to bring down health care costs and we had a number of ideas to do it. and we didn't want this bill and the american people don't want it. they've been trying to say in every wear they know how that they don't want it. so the democrats try to jam it through with a partisan vote. they're just saying to the american people -- we don't care what you think. so i think some democratic members of congress will stop and think because if it passes it will cause an instant movement to repeal the health care bill. and that will last from now until november and it will characterize and define every democratic race for congress. >> this is sort of shades of -- you know, there's another one as you know coming from the senate bill. 0.9% increase in the health care payroll tax. isn't that anti-jobs? here on the one hand, obama has

a jobs' program that will waive the payroll tax for one year if you hire somebody that's been unemployed for 06 days. that's temporary for one year. this is a permanent income in the payroll tax. isn't that self-defeats? >> i think it absolutely is. the uncertainty of the bill and the mandates on business, the increased size of the government. the increased deficit that will come from just not including, say, doctors and that proposal. all of that is anti-business. the issues before the country are jobs, terror and debt. that's what we ought to be focusing on instead of spending the next two or three months trying to jam through the health care bill and the rest of the year in a political campaign to try to repeal it. >> all this stuff is going to finance, yet, another middle class entitlement. i was reading to get ready for our interview. people earning $90,000 will be eligible for this new entitlement.

that is a middle-class entitlement. we're already in the sink, in the drink and in the bankruptcy for existing entitlements. and as i said at the opening, europe is seeing a new w5e6 of strikes. what are we doing? why are we emulating that? >> well, we should not be. this is a big new entitlement. i had's $2.5 trillion of spending over a ten-year period when it's fully implemented. to shift gears, i used to be education secretary and i'm very much for college scholarships. but the obama administration is adding a half trillion dollars for a new entitlement for college scholarships. as good-sounding as that is, we can't afford that. >> let me go back to the health care issue and he didn't really respond. you said under his program health insurance premiums are going up. >> they are. and i went to the floor of the senate today -- i didn't want to prolong the debate in public

with the president. i went to the floor of the senate because government mandates will require you to buy a richer oh benefit. and it might be a better benefit but it is a more expensive benefit. second, they're going up because the taxes, half a trillion dollars in taxes will be passed on to consumers and that raises premiums. third, they're going up because of what we call cost-shift. dumping 15 to 18 million americans into the government program called "medicaid." and we only reimburse the doctors and hospitals about 60% of what it costs to serve those patients. what do they do? they turn around around shift the cost to the people with private accounts and their premiums go up. young people will see their premiums going up because of the new government mandates that say my premium can't go up very much because i'm older. if you're i think your premium is going right to the top so the president was wrong about that. millions of americans are going to see their individual policies go up.

and the whole purpose here is, we should be making those premiums go down. we're trying to reduce health care costs, not increase them. >> did you see governor mitch daniels' article in the "wall street journal" today. he applied health savings accounts to the government of indiana and he said there were tremendous real cost-control, real cost savings as people became responsible form spending their own dollars and put them in tax-free accounts on health care. is there any future? as i recall, the democratic bills wanted to cut back on health savings? >> they do want to cut back but those are among the steps that we said we would like to take to reduce health care costs. we mentioned shopping across state lines for insurance, small business pooling. getting rid of junk lawsuits and expanding health savings' accounts. the senator from oklahoma spoke about that summit very well, i thought. he said, we have to reconnect the purchasers and what the

purchaser is buying. until we do that we'll never get costs down to the health savings accounts to do that. >> going back to the process, reconciliation, a simple majority vote instead of a 3/5 vote. this is one of the largest, most pronounced changes in american economic and domestic policy. let me ask you this. 51 votes, reconciliation. the byrd rule, it says if you go to reconciliation, 51 votes, it has to be strictly budget item. it strikes me that the health care bill goes way beyond and would therefore, flunk the byrd rule. >> a lot of them will and it will be a big ledge slay 2i6 mess if they try jamming it through using this procedure. the abortion issue, illegal immigration, prevention and wellness, insurance reforms. none of those might be able to

be cared. but because of the archaic rules, we have benefits starting in four years and taxes expiring in five. in addition to that, the senate is not supposed to be a place where the majority rules on big issues. it was created by the founders so it can census rule. and the late senator pat moynihan said that know big social legislation has ever passed in the senate without bipartisan support. and the reason for that, the civil rights' bill, for example, is not just to pass it. but so the country will have confidence in it and accept it. the democrats jam this through with 51 votes, the whole rest of the year will be a political campaign to repeal it. >> universal mandates for coverage? some people think it's unconstitutional. putting that aside, that's social policy, these mandates, is it not? >> that's right. the parliamentarian will rule on

that so it will be a big mess for the next two or three months. when some democratic members think of this at a time when jobs, terror, debt are supposed to be the big issues in the country, are they going to wage down to this and deal with this for every single race between now and november? i hope they don't do that. we get back and take some of these things we seem to agree on last thursday at the summit and begin to take steps to reduce costs. >> the news report this is afternoon, the white house is leaking out, that there's a plan b. all right, a plan b. a smaller plan b that will be unveiled on wednesday. and i guess they're saying, it's going to have some republican ideas like it's going to have tort reform, okay? for malpractice suits. it might have interstate insurance purchases and i was going to ask you about health savings accounts. what can you tell us about plan b? small ball.

is this for real? >> i don't know anything about it and i hope there's a plan b. but first you have to take the 127 page, turn the world upside down bill, and put it on the shelf. it has half trillion in medicare cuts and premium increases and big expansions to the state and it expands the government program, medicaid, and increases the deficit. there's no way to fix that. so you have to put it on the shelf and start over, which we would like to do with the president. i hope that's his plan b. let's take some of these things we agree on and get with it. >> senator lamar alexander, good luck, sir. don't great work, doing the lord's work. i appreciate it. >> thanks, larry. i want to expand and draw on the interview with senator alexander. as per obama care, let me report to us once again about our cousins in europe and britain. i was over there last week on

holiday with my bride. we were in london and rome and reading the newspapers along the way. the european continent is erupting in labor strikes. a general strike in greece. lieu tan za airlines on strike in germany. and the french air traffic controllers are on strike. british airways saying they're going on strike. does this sound familiar? just like the 1970s before reagan and thatcher put an end to union work stopages and economic disruption. but there's no reagan and thatcher on the scene right now, certainly not in europe. instead we're witnessing the bankruptcy on the european entitlement state. and we're also seeing the parent powerlessness of european governments to stop the massive social benefits and to curb union wage hikes which these very governments themselves permitted. now, i'd like to say, this is strictly a euroland problem. but, in fact, democratic washington seems determined to

follow similar policies here at home. and coddling unions is a hallmark of obama policies and, of course, we have our own grease in california and new york and elsewhere. look, raising tax rates just depresses the economy and shrinks the revenue base. gargantuan spending will never be paid for. do we here, in the u.s., really want to imitate the failed economics of old europe? do we want redistributionism and welfarism run amuck? do we want those types of sales taxes that will penalize the middle class? do we want asia to run away with the economic growth prize? i say, "no" to all of this. no, no, no. let me repeat my mantra, free market capitalism on the schley side is the way out. smaller government, fewer services, flat tax reform. a growth solution to limit spending and limit debt and expands the economic pie.

right now washington's gone nuts. it's too much like europe. it's producing a fiscal product that the rest of the country doesn't want. they're going to have to change their striepgs. change may be coming in november. we'll see. that's my piece. coming up, with german chancellor angela merkel facing strong domestic opposition to any bailout of greece, what kind of rescue package can the eu put together? how the market will react. and our own becky quick sat down for an exclusive interview with warren buffett and he says the recovery looks a little bit slug issue i and he's pulling back on his investments. we'll show you what he said when we come back. stay with us.

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warren buffett sat down with our own becky quick for an slewive interview on the state of economy and health care. becky joins us with key details. hello, becky. >> reporter: larry, right now the economy is an innext point and everyone is trying to figure out what comes next. experts are saying maybe it's a double dip and others say maybe we're talking about a quick snap-back. warren buffett is in a unique position so offer commentary on where the economy is. there are may jeer stake holdings in companies like american express, wells fargo, coca-cola, proctor & gamble and he said right now we've made it through the worst of the economy but don't expect a quick snap-back just yet. >> we got passed pearl harbor but we'll win the war and it's going slightly our way at the present time. but the spillover from the financial panic into the real economy was huge. and i would say that, if

anything, it's getting better but at a very, very slow rate. >> reporter: when it comes to jobs, he says washington does not have a lot of options just in terms of what they might be able to do to create more jobs in an effective manner but he has criticism for d.c. and says all the proposals out there for health care, they don't do anything to solve the real dilemma. >> unfortunately, we came up with a bill that really doesn't attack the cost situation that much. and we have to have a fundamental change. we have to have something that will end the constant increase and medical costs as a percentage of gdp. >> he says if his options were to stick with the status quo or vote for the senate bill, he would vote for the senate bill. however, he says the real problem is not being addressed and that's the cost structure. larry, back to you. >> mr. buffett really did pull back from some of his stock market optimism last year. we'll see how it turns out. there's a lot more economic

news to talk about. new ism numbers. they slipped a bit in january but still up in the recovery zone, 56 on the index at seven straight months. federal reserve vice chair donald cone announced his retirement and consumer spending fairly good in the income report. and the greek debt crisis continues to continue. here to make sense of it all we have from the university of california irvine business proif he czar, peter navarro. and andy bush of bmo capital markets. gentlemen, peter, just a quickie on warren buffett. he kind of pulled back a little bit on the stock market. now i know you have pulled back a little bit on the stock market. now stocks were up today about 60 or 70 points. what's your fake? are you in line with mr. buffett? >> well, larry, it's a shock, when buffett goes bearish. you go back and look over the ten years and he doesn't say a

lot of things like that so that's kind of scary to me. myself, i see the market in a sideways pattern. the trend is either up, down or sideways. when it's sideways that means that market participants are unsure whether we're going to have a recovery and i think the data reflects that. the big question is whether or not the consumer can step in and start buying the stuff off the shelves that businesses are putting on and inventory. and then with the dollar going up, we have to worry about exports going down because that's been fueling us. and, the big thing and we know this, this whole uncertainty that the obama administration is casting. it's just over the economy, tax hikes, this obama care. it's crazy that washington doesn't understand that what this economy needs is basically investment. >> well you got your tax hikes on banks. you got your tax hikes on foreign corporate earnings. you got your payroll fax hike that will be applied to investment, on top of the expiration of the bush tax

hikes. none of this can be good and your point is well made. andy bush, i'll say this. if you look rat personal income and spending report today, consumer spending was pretty good up 3/10 of 1%. about 3.3% annual rate. but here's the thing. durable goods spending up 7/10 and nondurables up 8/10. that's pretty good. i want to ask you about that. in the light of some very worrisome job figures, is it snow or a mini economic down snurn. >> no, no. i don't think it's a downturn. we had two big snowstorms. one hit at the beginning of the the survey week and one hit at the end so i think you should go to 19d 94 are where you can see an example of this where only one storm hit during a survey week and really impacted. i think the market will look beyond the numbers on friday. the payroll can probably hit the

unemployment rate i expect to go down. so i believe we're in the beginning stages of really a very strong economic recovery. we're already seeing it for the fourth quarter and it's continuing into the first quarter. job creation should begin sometime in march with numbers released in april. i think we'll see improvement throughout the summer. >> you have a sleepily sloping treasury yield curve from the fed all the way up to tens and 30s's. the interesting thing is, i'll let you weigh in on this before we get to greece. the dollar is strong. king dollar may be back on its thrown if only temporarily. that will squash inflation concerns and, meanwhile, bernanke is prch having it his own way? is he not? keeping money fairly loose but he has a strong currency? >> right. i think the great thing about that is if the dollar continues

to strengthen which i believe it will it should help drive foreign direct investment into the united states as long as bernanke has money supply equal money demand. as long as that scenario continues to play out -- and you can look at -- >> how do you measure that? i would appreciate your supply-side conversion. i'm a convert myself. but that's religion, not -- i've been a supply-sider for 30 or 40 years. but you can measure that two ways. you can look at exchange rate which similar proving as you noted. or you can look at the gold price and it's well off the peaks and it's been fairly steady. is that what you're talking about? >> yes. >> i have to define these fancy terms for our evening viewers. >> it's partly the rate of growth. it's partly the inflation rate. it's a combination of several of those factors but that's really the key. i think as long as the fed continues to march this path where they're telling people

they'll raise interest rates and have raised the discount rate and will use the leverage to control the free reserves in the system, i think they'll be okay. that could be a very big positive, as peter pointed out, exports might get it. >> there's a lot of "if's" in this. >> real quick. the dollar is not strong. euro is weak because europe is weak and that means our economy will sell fewer exports and that's very bearish. this is not a strong king dollar thing. >> let me go to the strikes. besides the fact we have yet, no assurances -- and i'm not sure i want assurances of a bail jut for greece -- i'm opposed to that. i'm opposed to loan guarantees. angela merkel in germany is in trouble. her major coalition partner is fushous and any talk of bailouts and they are striking all over europe. that's sinking the euro. what does it mean to you.

>> let me give you the chess board. looking at greece's optimal strategy it's the threaten to come out of the euro and get export-led growth and default on their loans. so greece is actually pretty houfl in terms of bargaining. -- powerful in terms of bar ginning. merkel is between a rock and a hard place. the public opinion is strongly against bailing out greece, but the german banks hold a lot of debt and they have political power too. >> it's too big to fail. here we go again? >> it could be. but i think, larry, the end gain really is going to be for grease to bail out of the euro because it will be too painful -- >> really, bail out of the euro? >> wow. i don't think -- there's no way. >> did you you see marty fellstein's article when he let greece go out on a voluntary basis and then let them devalue? andy, if you're living over there in greece you're not going

to put up with the germans telling you got to eat dirt for two years to please them. >> andy, let me raise this point. when i look at the strikes throughout europe and i look at the failure of greece to take the necessary remedial action, you are watching the demise and bankruptcy of the european welfare-entitlement state, andy. that's the underlying theme. the benefits, the redistribution and the pay them not to work. you know the story as well as i do. apply your supply-side analysis. this can't be good for the euro. and it can't be good for europe in general. >> i agree. it can't be good for the euro and that's why are we expect it to continue to depreciate. those are the two basic ways of getting out of a debt problem. i don't think greece will default on their debt because not only would they get kicked

out of the euro zone and they couldn't come back to the capital markets any time soon and they're rolling over about 65 billion worth of euros every year. >> why is that bad? i want the vigilantes to discipline these welfare states. >> let me say this. there's some decent things coming out of this. from a supply-side standpoint we're seeing spain, for instance, address some spending issues with entitlements by saying we need to raise the entight -- retirement age from 65 to 67, was exactly what you need to do as far as reducing costs. it's something that should happen in this country as well. >> they're learning. peter navarro, i'm out of time. life, liberty and the pursuit of happiness. >> let's talk 30 seconds on don 23458d cohen. obama packing the supreme court. it's the fed. he can put five out of seven

governors on that and you're not going to have to be an economist, larry. just learn to be a printer or engraver. it's easy money. >> andy bush has the right idea of balancing the supply side of the money. but andy bush isn't going on the fed and nooirt are you, peter or me. thank you both. coming up, senator jim bunning continues his one-man filibuster against extending unemployment benefits without paying for them. i think he has a good point and i think extending benefits may extend unemployment. we'll tall to allen reynolds from the cato institute. stay with us. we're the kudlow report '. you want to see the future? look at breakdown of europe. is that really what ewe want to do? i think not.

senator jim bunning is holding firm against extending unemployment benefits without first figuring out how to pay for them. his unpopular politics are, i think, good policy but that may only behalf of the problem. let's talk to alan reynolds.

great to see you. bunning is, undoubtedly, right. they should be able to find what a $10 billion offset to finance this. but you're raising more important points. i want people to hear this. you're saying stimulus is raise, unemployment and i think you're saying longer we have for unemployment, the compensation benefits with worse the unemployment rate. do i have that right? >> absolutely. i quote the federal reserve, the latest minutes, they say they probably added tryst a percentage point. they punched it up. larry summers himself said unemployment is 1.5 percentage points higher than we can explain by the usual gdp figures. and alan kruger in the treasury department did research on the subject and the oecd says the evidence is clear. if you subsidize something,

we're subsidizing long, extended periods of unemployment and we're getting what we pay for. >> alan, let me get through this. we used to -- we used to have unemployment benefits for six months. now it's grown to, what, 18 months or longer? >> it was 18 months until november. and what we're dealing with here is an extra 13 weeks which takes it out to almost two years. so we would be rolling back and only in a couple dozen states, because this only applies to states with high unemployment. in a couple dozen states you'd have to go back to 07b8 seven to nine weeks of unemployment benefits. my data maybe slightly out of date but canada had a maximum of nine months last time i looked from the 2007 report. sweden was 14 months. britain was six. japan was something like ten. this is unusually long period. and it basically gets people to not leave michigan or not leave

california and go to utah. utah pays 46 weeks. they have an unemployment rate of 6.7. >> so people stop or slow down hustling to get work? i think that's what you're say something. >> yes. >> it's very politically inconnect. absolutely. >> which i think you like, actually. and i probably do, too, on the point. but, look, you say the fed has acknowledged this in print. you say the oecd, the organization for economic development has said the same thing. so why do republicans and democrats in washington keep extending this, except for maybe our friend, joim bun something. >> i think it has to do with natural sympathy. you want to help people in trouble and one can make an argument that if they have a little more time to look they might get a better job. a year, that makes a little bit of sense. 14 months, maybe. we're talking two years and there's just an awful lot of research that says the intensity of job search really picks up in the last four weeks or so before the benefits run out.

the benefits are, in california, 4.75 an hour which is about $25,000 a year. that's my salary. that's serious money. in new jersey, it's closer to $30,000 a year. if somebody else in the family is working, you are just not in a big hurry to get off the gravy train and you're likely to lose medicaid or other benefits, some health benefits and some housing benefits, perhaps, food stamps. >> so the last point -- >> so you don't do it. >> real quick, the 90% working are financing the 10% unemployed, out to two years. is that what's happening here? >> yeah. and it's really getting to the balance, it's tilting badly. the ratio of transfer payments, including social security and medicaid, is now 40% of -- as large as all private wages and salaries combined. the amount of individual income tax was barely even with the amount of transfer payments,

federal and state, that were paid out last year, about $2.1 trillion. we're reaching a tipping point where those paying in and those taking out, it makes a lot of people want to step over the edge and join the other camp. >> yup, yup. peter to pay paul run amuck. it doesn't work. alan reynolds, great to see you. coming up on the kudlow report '. larry summers warns of a bad jobs' numbers and fudges on the volcker plan to limit bank trading and tries to tell us if the president is really, get this -- really very pro business. you don't want to miss this. we'll get a quick report and "the kudlow report" will be right back. if you pay people not to work, guess what? they don't work!

earlier today, "fast money" contributor and president of metropolitan company, sat down with larry summers. she asked for clarification on the so-called "volcker rule" and here's what he said. >> the volcker rule spoke only to institutions that were banks.

it did not speak to institutions, to other types of financial institutions, pure investment banks, for example. trading companies and the like. and so any financial institution that is not a bank is free to engage in these various kinds of trading activities. >> so, we have karen with us. this is a very rare and wondrous treat. hello, karen. >> hello, larry. >> let's zip through this. let me ask you, first of all. larry sort of dancing around the "volcker rule." i'm not sure i got it. what's he say something. >> i was tryinging to get at the this rule is specifically aimed at goldman sachs. what does the rule say and you think about, they want to address proprietary trading and who on the street is better proprietary trading than goldman sachs? in addition they want to address a tax on the way that you fund your business. if you have a depositor base,

you don't pay additional taxes. if you have a debt funding base, like a goldman sachs, for example, then you will pay taxes. what i was trying to get at was -- is this directed at goldman sachs or a goldman sachs-like institution? >> is it? >> i think it is. you wouldn't say that specifically, but i don't know, draw your own conclusion. larry what do you think? >> i think the answer is "yes." we can argue whether goldman deserves it. is he sticking with the bank tax hike? >> i think so. you have to wonder how difficult is it going to be to get the volcker rule passed. one of the things that we talked about in the interview that was so interesting to me is the idea that the real time for reform is during a crisis. that's when you have leverage. and maybe that's where the eu is right now. it's in the midst of a crisis and maybe they have the most leverage to reform there. and i'm wondering, have we missed the window here?

will it get harder and harder as the depth of last year seem to fade? how will they get the political capital to pass this? >> all my sources say the volcker thing is dead and a lot of my sources say the bank tax hike is also dead. but we'll see. karen, did you ask him about the financial transaction tax. geithner opposes it. anything on that? >> we didn't get to that, actually. we talked about greece. we talked about jobs. we talked about geithner. we talked about -- i asked him specifically, how difficult was it to watch geithner just getting grilled in front of the house for those aig bailouts and he was very defensive and very oh i don't know were supportive of tim geithner. he said, look, this is someone how has more experience, who has seen more crises than anyone and i think including himself. so he's really protective of his guy. >> and i understand that larry

summers told you president obama is really pro business, that may of us have the story wrong, despite the fact that there's not a business person in his cabinet. >> we did bring up that specific point and, larry countered with, we spend a lot of time with business people, which, i don't think is quite the same thing but it's not hard to come to the conclusion that they're not delighted with business right now, particularly wall street. >> and fanly, top of the drunk report, the drudge page is from your interview that summers is preparing us for a horrendous jobs' report on friday. what did he say? what did you ask him? >> i asked him about -- we were getting into creating jobs and he really wanted to lower expectations about this friday's job report and talking about, you know, with the blizzard we see a number that could be 100,000 or 200,000 less on the jobs' report. really, setting bar way lower

than i think where it had been and trying to say, but it really can fluctuate so don't read too much into it. from that, i took, we're going to see not a great number. >> deep yogurt, and some see a huge loss. karen, great work. thank you for your time. >> great to see you. next up, interview with madoff whistle blower. and will the supremes give the enron crook his get out of jail free card? our greatest attorney, our greatest friend, new york-based defense attorney, tom krochlt urrant will join us when "the kudlow report" comes back. (announcer) if you want directions to the stadium, push here.

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an update on the madoff ponzi scandal. the madoff whistle brother, harry markopolis about his effort to bring down the ponzi master. mary thompson sat down with him to hear all the gritty, glory details. hello. >> it was an interesting interview. it's a well-known fact that the s.e.c. repeatedly ignored

markopolis's warnings and his $65 billion ponzi scheme. what we didn't know and what markopolis writes about in his book "no one would listen" he tried to bring this to the attention of the former governor, ellioiot spitzer. >> you actually had a plan to go down and kill madoff yourself? >> i did. and rightfully, so. speaking to the fbi. they told me for that kind of money a lot of bad things happen to people. >> during your investigation, you actually went up to someone or an aide of someone who you thought had the fight in them, that being the former governor of new york, the former attorney general of new york, eliot spitz spitz spitzer. you presented this to an aide

and took out your name and said, please give this to him. in retrospect, should you have gone up to him in person? >> i had 2009 boys about to be born a few months later and i was so worried for my safety, i have regrets. i wished i had confronted mr. spitzer. i have 4,000 membered and i'm highly respected in this immunity. these are my documents and i have proof that madoff is a fraud. meet with me. this is the biggest case in history. it will make your career. if i had said that this case could have ended differently. >> he said he never received any package, mr. spitzer did. for more on my interview with mr. mark poe list, go to our website. >> a fascinating story. we're going to continue in the crook department here on the kudlow report. remember jeff skilling? the ceo of enron and he's gone to the supreme court to get

himself out of jail. joining us now is our friend, tom curran, and, tom, what is it? he's a crook? he's a phony? the accounting was fixed? and what? he's trying to get out of jiel and going to the supreme court? >> you can hardly blame a guy for trying to get out of jail. he got sentenced to 24 years. the people who cooked the books, arre arthur anderson. everyone has been speculating this this appeal is on the intangible theory under the mail and wire fraud, the federal mail and wire fraud's statutes. but the justices today spent most of their time talking about the pretrial publicity fairness of the jury pool question. which is a big uphill climb for any defendant to try to win. >> tom, let me go back to -- walk me through this honest

services. because skilling was not honest. therefore, how could he put together -- he cooked the books. they used all these off-balance sheet voeinvestment partnershipo trade with wall street vochment. i don't know why a lot of these wall street guys didn't go to jail. they misreported it and they brought down the whole accounting firm and they upstreamed phony revenues to the ten ron holding company. so they could go out and make acquisitions and the guy lied to the public. now, on his services these are dishonest services. i guess that's my point. >> well, the problem was that the argument by the federal prosecutors was that mr. skilling artificially propped up the price of enron in order that he could sell his stock. but it's equally true that the argument goes that he propped up the stock price in order to try to buy time to protect the investors in enron, so they wouldn't be hurt by the collapse.

he was trying to hold it together. and he did get acquitted of certain charges, larry. so it's not like it was a absolute conviction. the guy was guilty of everything that the prosecutors threw his way. >> what's going to happen here, tommy? you're not going to tell me he's going to get off and get out of jail? you're not going to tell me that? former prosecutor that you were? >> former prosecutor now and now i do different things but -- >> i know. i'm appealing to your universal philosophical knowledge of these things. >> reading the tea leaves, i believe that the supreme court will strike down or is going to severely limit the honest service theory. there's a lot of unpop larry there. there's been since the last time it struck it down in 1987 in the mcnally versus the united states case. >> does he get out of jail? >> no he doesn't. >> what happens? honor services down, what do they hope for? >> that's only part of the conviction and some of the

counts for which he was convicted related to honest services he may be resentenced. he's in jail for 24 years. he's going to be in jail for a long time. i believe regardless of what the supreme court does. i think that in this country, people should understand what is a crime and what is not? where their conduct could run afoul of it and under this law they'll really don't. it's an unfair law. >> tom curran thank you very much for the update. a lot of crook stuff tonight. >> not me. >> markopolis and madoff, not tom curran and certainly not. coming up, my last thought. it will not be about crooks.

can we please stop the tax and spend entitlement state explosion before we go totally down the european road? europe is going bankrupt and they're on strike. do we really want to follow that model? i don't think so. we'll be back tomorrow night on "the kudlow report." tomorrow morning i'll be with tricia and melissa an "the call." see you then.

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a cnbc original production. [ music ] >> marijuana is the most profitable illegal narcotic. >> this is a huge business. uh, in california alone, it is the number one crop. >> and there's at least 13 gardens within a mile radius of our home. >> thirteen gardens right around your house? >> mmm-hmm. >> yes. >> wow! >> thousands of growers, millions of users, and a market in the billions. >> how much money was coming in to your marijuana smuggling operations every year? >> about 50 million. >> it's a multi-billion dollar business rife with guns, gangs, and plenty of money. i'm trish regan.