tonight on the "kudlow report," drill, drill, drill, an obama cry of mind for free market's way to produce more oil. today, president obama announced his plan for more off shore drilling. however, oil prices went up to nearly $84 a barrel, and top oil ceo larry dickerson of diamond off shore drilling calls it half a drill because so much was left off the table in florida the pacific coast and alaska. plus, richard burr if president obama is out boxing republicans in order to generate support for a tripartisan cap and trade bill that could spell economic disaster. >> and finally, are we going to gain or lose jobs in friday's

report for march. the debate over the economy continues. fasten your seat belts, the "kudlow report" begins right now. good evening, everyone. i'm larry kudlow. welcome back to the "kudlow report" where we believe free market capitalist is the best way to energy. drill, drill, drill. for free market regulation to produce more oil and gas to fuel the economy, create jobs and stabilize prices. today, president obama announced his new plan for more off shore drilling and our chief correspondent is going to give us the full report, a very interesting turn of events, john. >> it was very interesting, larry. he's moving in your direction. not all the way there, but part of the way there. and there's a good reason for that. he knows to achieve his goal of a comprehensive energy goal including a cap on carbon

emissions, he's got to get significant republican support. how do you do that? split the difference on oil drilling and challenge your own base. >> ultimately, we need to move beyond the tired debates of the left and the right, between business leaders and environmentalists, between those who would claim drilling is a cure all and those who would claim it has no place. because this issue is just too important to allow our progress to languish while we fight the same battles over and ever again. >> well, you saw from some of the rhetoric on capitol hill afterwards he may have achieved part of his goal. nancy pelosi said the president's initiative has to be achieved in an environmentally and fiskally responsible manner, but mitch mcconnell the republican leader is usually very critical of the administration, called it a step in the right direction, just a step that is a little too small. that might be a start. i talked to a senior administration official who acknowledged the fight is very uphill to get a comprehensive

bill as they want, but their strategy may be turning to a lame duck session after the election when they still have the democratic numbers they have now instead of the diminished ones they expect after the election, but they may drain some of the political fear out of the calculation. >> on the plan, we talked about it, but i want to catch up with you. the idea of a lame duck. do you reckon it won't happen before the election, the idea of a comprehensive carbon cap and trade bill? >> the soundings i get from republicans and democrats on this issue is it's simply too heavy a lift before the election. there's too many democrats in competitive states who don't want to go there, who think this hasn't been communicated effectively to the public. not sure they're ready for another difficult fight after what they went through on health care. the administration's response is maybe not so not now, buyou could get things done in a lame duck session. they may have more spring in

their step after the elections are over. it's going to be hard to do, and republicans are going to have little incentive to provide the broad bipartisan cover they want, why? because in the next session there are going to be more republicans in congress. >> thank you very much. now, we have north carolina republican senator richard burr, a member of the senate energy committee. mr. burr, off shore north carolina, do you expect any drilling? >> well, larry, this is a nod in the right direction. the question is, is this really a wink and a nod from the president? the truth is that we can put together an energy plan but not one that deals with carbon or climate effects. i don't think they can get it through congress and certainly i'm not going to be there to help. >> let me just ask you on some of the specifics. as i understand it, in order to put these leases up for sale, you still have to go through a congressional process. in other words, president bush

put a more torium on the end to drilling. he put an end to that. congress let it run out. the moratorium ran out in 2008. now, what happens now. even mr. obama wants it. will he get even what he wants without congressional authorization? >> he's not going to get it without some type of coshare, revenue share with the states. and i think that the secretary of the interior went out and quickly said there's not going to be a revenue share. who knows exactly how they're going to move forward, whether it's going to be during the regular session or in a lame duck session. but i know this, that american business needs predictable energy pricing for the future. the president was smart. he dropped cap and trade. he would look at how we can match nuclear and natural gas and domestic production. we can become less reliant on foreign oil, but the president setting this up as an either/or,

and i'm not sure they're going to move the ball town the field at all. >> let me ask you about dropping cap and trade. has president obama in some sense outfoxed the republican caucus by putting this off shore drilling in? he's also got a small nuclear piece in there. and of course, he's got his green energy. your colleague senator lindsey graham of south carolina is working with john kerry of massachusetts, joe lieberman of kentucky, for it's sometimes called the tripartisan cap and trade bill that would fence off f i understand it, but it would set carbon caps. so it's not one size fits all, but it suggests a comprehensive carbon control plan. did president obama today outfox the republican caucus? >> i dont think he did. to suggest it might even say he tried to outfox his own democrats in the united states senate and house that come from states that aren't going to support a carbon based piece of

ledge slashz. at the end of the day, it's important we along at the entire piece of legislation. republicans and democrats will voice opposition to anything with carbon that might come out of the white house. i commend lindsey graham for trying to push the envelope, but i can't support carbon because it penalizes the state. the federal government is doing natural things today, and the last thing i want them to do is pick winners and losers based upon which state you come from. gr i totally agree with that. that's my next question. is there enough caucus support for a demarcation of energy. it's an unbelievable job creator, and i'm talking about all the above, nuclear, clean coal, talking about natural gas, oil, and even about the so-called renewable green fuels.

only i want the marcus place to do it, not the government. why is it that we are in this position and george bush was guilty of this, too. of wanting government control, and shackles and directing resources and money and loans and guarantees and all this stuff? why can't we go free market? >> well, typically, when government gets involved, we make investments in the wrong technologies. we waste a lot of money. what we want to do is unleash the entrepreneurship of america. we want to go and say give us a game-changer for energy. every american wants to be less reliant on the middle east for oil. the only way we're going to get there is if we do all of the above. when the president talks about opening up new territory but he takes the california coast off the table, takes the bays in southern alaska off the table, these are the most productive immediately. and when you say that we're going to open it up for exploration, it doesn't mean it's going to be permitted.

we have to drill on shore and off shore. we have to drill everywhere if we want to be less reliant on the middle east. >> you know, you have people on wall street that are skeptical that the sales of leasess will happen. the government has to vet this stuff, this environmental stuff, and we're worrying about endangering environmental species and glow worms and stuff like that. is anything of this going to happen? >> we have seen a nod in the right direction, but is there a wink to follow, meaning i never intended this to happen. the truth is we're beholding to the government agencies that issue permits. it doesn't matter if it's exploration offshore or the build off we need. if we would wave a magic wand today, we would have a bill that married nuclear and natural gas. let's incorporate the thoughts of boone pickens. we have a 200 year supply in a different way, but let's not leave behind the basket of

domestic production that is so important, and that includes renewables and new technology. >> just to finalize this, will the senate and the house vote for this off shore drilling even limited as it is? >> i think if it were a stand-alone bill, we would vote for it to move it ahead. if it's tied to some type of cap and trade legislation, it's a nonstarter in the united states senate on both sides of the aisle. >> it's possible nothing may come of today's speech. you may not get any new leases. >> kwl think you and i both know the senate is next going to go to a financial regulation. it's not going to go to energy. and the truth is this is a filler, a teaser by the president. if he really means what he says, then come to congress and guide us down to the white house. we'll sit down and map out a way. but don't make it conditional upon whether cap and trade is part of it. >> senator richard burr, appreciate the insight.

here are some of my thoughts on the money politics top story of the day, drill, drill, drill. sometimes i'm glad president obama is opening the door to off shore drilling. but i think in the spirit of free market deregulation much, much more should be done in the atlantic, the gulf of mexico, the pacific california, and of course, alaska. oil prices are high. new tex knowledges are coming on stream every day. drillers and producers have tremendous incentives to generate much more oil and gas if only we let them. now, i don't want any oil price manipulation. goes without saying, though, that a growing economy is going to need more fuel. that's why i want to dereulate the entire energy industry as i have said so many times in recent years. remove government obstacles for oil, for gas, for clean coal, for nuclear, and remove them for the so-called renewable green sources, but i oppose government

subsidies of any kind. let the marketplace decide what makes profitable economic sense. turning back to the off shore oil drilling issue, by some estimates, the u.s. has 86 billion dollars of oil reserves off shore. and that could fuel 65 million cars for 47 years. that's why the stakes are so high. that would give us plenty of time to transition into nuclear power and natural gas development that can be used for the home and the highway. and of course, millions and millions of jobs would be created. this power can fuel tremendous economic prosperity, but the tripartisan senate approach for the new cap and trade bill is a far cry from free market capitalism, and in my view, could spell economic disaster if it goes into place. a new study by the heritage foundation estimates that over the next two decades, the new

cap and trade bill from senators lindsay graham, john kerry, and joe lieberman could reduce gdp by as much as $10 trillion. it could force $4.6 trillion in new energy taxes on americans. it could kill 2.5 million jobs and raise the costs for all goods and serves by $300,000 a year. that's the wrong medicine. let the market work, i say. use all our resources and our technology and our wealth. now look, if you really believe in the manmade global warming carbon problem, which i do not, but if you do believe that, there's a much more efficient way than government controls and efish aebss, put a tax on carbon and legislate that all of the revenues are recycled in the form of lower marginal tax rates for all individuals, families and businesses.

and finance a true single rate flat tax reform. that's what you do if you buy into the manmade carbon problem. most of all, my plea is liberate the great american energy sector from the shackless of government control. energy freedom and economic freedom should go hand in hand. it is part of our history. and it will help us resurrect the great economy and provide the fuel to power american prosperity for as long and far as the eye can see. all right, coming up this evening on the "kudlow report," larry dickerson on off shore drilling. he calls the plan half a drill because so much was left off the table in florida and california and alaska. a one-on-one interview with him when the "kudlow report" comes right back. drill, drill, drill, all across the board. half a drill, i'm going to use it. a great line. >> you know, i adapted that for

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all right, much more on drill, drill, drill, tonight's big story. dickerson of off shore drilling calls president obama's drilling plan half a drill because so much was left off the table in florida, california, and alaska. i spoke to mr. dickerson about it all just a short time ago. please take a listen. >> larry, thank you for coming on. i want to get your reaction to president obama's opening of off shore drilling restrictions. your stock did great today, up 4%. what do you think, sir? >> well, it's a tremendous event to see any president come out as strong as he did verbally to

support our industry. so i think that's terrific. i don't want to take anything away from that. but when you actually look at the facts of what's being proposed, it is certainly not drill, drill, drill. it's maybe half a drill. >> tell me about half a drill because a lot of areas were left off the table. the north lantic, the pacific, parts of alaska. you're in the gulf. tell me what is only half a drill. >> well, i think the virginia piece is solid. that was already on the table. and that was moving forward and it's a big deal that the administration is going to support that and move forward on that. that's not anything new. still going. i thing that the lower eastern coast is not open for drilling yet. but they're going to start moving in that direction. that's a good ways away. and then i think we actually lost a little ground in florida on the proposal. we had been talking about the

issue under discussion is how far off the coast you would drill, 75 to 100, and this came out at 125. i don't have enough knowledge on alaska. they were trading some stuff back and forth, but they did take leases off the table in the bristol area up in alaska. >> i think there's some kind of endangered species in bristol bay. let me ask you, when you look at this picture given what you know from today's speech from president obama and so forth, will you expand your operations in the gulf or elsewhere? >> no. i mean, we -- it's a long ways away from anything that was announced for more activity here. i was looking today, we employ about 2,800 u.s. citizens in our worldwide fleet, and the majority of the fleet operates overseas. i look back eight years when we were much more balanced.

we had probably two thirds of our fleet in the gulf of mexico. we employed almost 4,000 people. there's 1,200 jobs that are gone from our company, and we have taken the same rigs to brazil, egypt, around the world, and we're employing foreign nationals now as we drill forward. i would think the jobs issue is the most important thing related to this issue. and although everything takes a long time anyway because of the amount of money being exposed, but when you cut through it all, it's going to take a good amount of time to turn this into any kind of jobs in the u.s. >> what's your out look for the oil price. we're close to $84 a barrel. some economists are getting worried this is a breaking point for the economy. might do us some damage. what are you thinking for oil prices, larry? >> it's really hard to say. i mean, certainly when we were up there at $140 a barrel, we didn't think that was

sustainable. and you pray it's not sustainable when it's down around $30. certainly, the industry can make money and everything works north of $70. it will have a negative impact on the economy as it begins inching up from these points. but i think that the price of oil even with a poor economy out there is reflective of how expensive it is to bring marginal oil on and the fact that despite all the activity you have going on around the world, you have to replace the existing fields that play out. number of countries that have big fields, mexico and indonesia are two where their production is down substantially. >> we need more oil. that's what you're saying, we need more oil to get the price down. it makes sense to me. >> more than half a drill. we need maybe four drills. >> another quickie. this cap and trade bill

serkulated. lindsey graham, john kerry, joe lieberman. they are going to put some carbon caps on your industry. how that going to affect you? >> i don't really have a good read yet on how that would affect everything. obviously, to the degree that you raise the prices, does it hurt the economy, but it dampens demand. demand for oil could go down around the world if they do that, which i presume would lower the price except for the impact of taxes that raise it. >> the global demand in places like china that doesn't play with these caps might keep rises but the u.s. production might not so you would have an imbalance that could contribute to higher prices, couldn't you? >> absolutely. i mean, we have seen china and india and other countries that are industrializing, brazil as well, really continue to step up demands, and they take active steps to increase their supply.

the discovery they have been making in brazil is tremendous. it's long-term prospect. china is doing some exploration but they're striking deals, investing in brazil, doing things to secure their supplies. >> just one last one. in the obama budget, he's got a tax about $36 billion on oil and gas companies. do you pay any part of that tax increase? >> we're in the oil service business, so i think that would be upon our customers, and our impact would be to the degree they have less money to invest in active drilling that we would have rigs go idol and we would lose money. >> half a drill, as you put it, a great phrase. all prices have gone to $100 a barrel? >> i would probably bet not, but they wouldn't go to $100 a barrel in the near term. you add a couple years, i can't tell you what they might do.

>> larry dickerson, ceo of diamond offshore. thank you for your time. >> thank you. all right, there you go, half a drill. i love that. he said we need four drills. >> coming up, will the president's plan put him in the middle ground or in no man's land because the environmentalists thing he's gone too far but some thing he hasn't gone far enough. and we michael and john. they'll be here to debate. half a drill, four drills, drill, drill, drill. i'm kudlow. stay with us.

today, we're announcing the expansion of off shore oil and gas exploration. but in ways that balance the need to harness domestic energy resources and the need to protect america's natural resources. we'll employ technologies that will protect area that are vital to tourism, the environment, and our national security. >> all right, of course, that was president obama earlier today claiming that his new off shore drilling plan can be clean, green, and environmentally friendly. is it half a drill? should it be four drills? maybe it should be no drills. the question is it we keep the oil industry and mr. obama's greany supporters happy. joining me now is a chief economist at the american petroleum institute and michael bloom. michael, let me start with you

because you don't like any of this. >> well, we like a lot of what the president is doing, and we like his investments to increase fuel efficiency. we think that's a better way to stimulate the economy and meet the energy demands. today's announcement, we thought was very disappointing and it takes us in the wrong correction. >> are you opposed to any oil drilling? would you like to keep the ban on off shore oil drilling and let me put on the table onshore oil drill sng. >> yeah, you know, let me put it to you this way. i grew up in new jersey on the beaches in new jersey. in the 1980s, the beaches were closed for months at a time because hospital waste was being dumped off shore. there was also a chemical plant dumping its waste into the ocean. i saw for myself the impact of ocean pollution on my father's business andong t on the local economy. the question i have that we had at the sierra club will exon,

will shell, will bp be subsuicizing the local economies when there's a spill, when they have a cleanup. it didn't happen in alaska or california. >> all right, john, you heard what michael has said. can you respond? >> if you look at the track record of the industry, it's tremendous. i don't know what oil has to do with medical waste, but if you look at the operations, particularly our operations in the gulf in the wake of hurricanes katrina and rita, they were remarkable. this is good news for consumers and workers. it will generate jobs, it will generate revenue for the government and improve the trade deficit. it's a win-win situation. let's go forward as that looking as that as an opportunity. >> we debated that when oil was getting up to $100, $150 a barrel. i had a guy from santa barbara, california. this is the fruits and nuts.

they passes a pro-off shore drilling resolution because they found, john, that the oil seepage from off shore which hit the beaches would be reduced if you actually went out there and drilled for oil environmentally. now, it seems to me that's what michael is raising and i would like to get both of you to weigh on this. the oil seepage problem can be cured by drilling off shore. what is your take? >> in the santa barbara area, that is absolutely true. drilling reduces the amount of oil on the baechs and it's important to recognize because the santa barbara area where you have off shore areas in the sun doesn't seem to be suffering in terms of tourism. it's -- we should be careful to look at the reality of the situation. >> michael, the jersey shore reminds me of sant raw basanta barbara. that was a joke. you can do it environmentally,

you can do it cleanly, and you'll stop the oil seepage. >> you know, that may be true in a place like santa barbara, but i have to say this feels like alice in wonderland. the fact that we can protect our beaches by drilling more isn't borne out by reality. it's true that it's safe up to the point where it's not safe. here in san francisco, we had a tiny smil, a tiny spill when a barge ran into the san francisco bay bridge. it shut down the crabbing industry for the entire year. if we're concerned about the economic impacts, we should be looking at the jobs that will be lost when there's further contamination. we just don't think this is the right way to go. >> how far can this go? it came up in my discussion with senator richard burr. it may be that nothing is going to happen because congress has to pass an enabling legislation to allow the oil lease sales, do they not? that enabling legislation may be tied to the so-called

tripartisan cap and trade bill from lindsey graham, john kerry, and others. this may never even come to pass, john. >> first of all, the climate legislation is a separate issue. we need to look at what we need in terms of oil going forward because all the forecasts say even with energy efficiency improvement, even with biofuels, we're going to need more oil in the next 20 years than we use today. let's look at it in that perspective. going forward, for some parts of the gulf of mexico, you will need congressional action. for others parts, you'll need a series of steps that have to be taken that can take one to two years. for example, setting up lease sales and ultimately eis impacts for production. so it will take some time, but that's all the moyer reason to start right now to generate the jobs, generate the revenue, and improve the trade deficit. >> with respect, i appreciate your point of view, but i have to ask you, if you stop drilling oil, i think the price sky rockets back to the $100s.

i think a lot of economists believe that in a growing economy, and china is drilling and brazil is drilling. china and cuba together are drilling off the florida straights. don't you worry that your hard line against oil drilling will yield an economic recession again after the awful one we have been through because we're going to need oil as far as the eye can see as president obama said today. oil is going to be necessary while we transition into so-called cleaner fuels. do you have an inconsistency in your position on that? are you ignoring the need for oil in the next several decades? >> no, of course not. we're going to need oil. the point is that if we want to increase our nation security, if we want to cut pollution and produce more jobs, then we need to be getting reducing our dependence on oil as quickly as possible. there's a couple ways to do that. the first, i was glad to hear you earlier in the show talked about cutting subsidies. we can't subsidize a industry we're trying to wean ourselves

off of. they should be eliminated. the money should we redirected back to consumers. >> between the corporate profits tax and the royalties they pay, they're gigantic contributors to the treasury. >> they do contribute a lot to the treasury, that's true, and they also take a lot from the federal treasury. my point is that we should -- american taxpayer s shouldn't b subsuicizing to the tunes of millions of dollars of year the richest industry in the world. and we need to reduce our need for oil. one second, we can save. >> you're talking about government subsidies. what is good for the goose should be good for the gander. there's roughly $2 billion of subsidies according to some accounts to the oil business. what they pay back in corporate

tax receipts and royalties is like a multiple of 20 times of that. are you asking to cut off any help for the oil business, which probably makes sense, and instead give it to the targeted green areas? is that what you want? it doesn't sound consistent to me. >> what i was saying is that investments in green technologies private and public are much better for the environment and for the economy. dollar for dollar, an investment in renewable technologies produces three times more jobs. to the extent there are government money going to subsidies, it would be better to direct it to clean energy programs. by raising fuel standards, we can dramatically eliminate the need for oil drilling. we can reduce our oil democracy, our consumption, rather, by more than a third. by $7 million day by using the

technologies that are available across the fleet. if we used all those technologies today, we could eliminate the need for more oil and we wouldn't have to sacrifice our beaches. >> john, as far as i know, the alternative fuels here are roughly, i don't know, 2% of the total energy production. that's all they are. i want to ask you directly john about the issue of the oil company royalties and subsidies. i have a document that says the oil companies between corporate taxes and other royalties actually pay uncle sam $140 billion a year. there's a $2 billion subsidy around, but you're off setting that with $140 billion of revenues. you tell me, you're the expert from the american petroleum institute, how do the numbers work? >> absolutely true. the subsidy argument is not true. if you look at the facts, it's closer to around $2 billion. it's also important to know that the oil industry is investing in

green technologies already. we're investing in technologies. that doesn't help the consumer who has a car that is going to last a long time. we have 250 million cars and trucks in the country that run on oil and they're going to last for a long time. we need to keep fuel flowing to them, and to do that, we need to produce more onshore, offshore. we need to improve energy efficiency. >> michael, i just think -- i understand your point of view and i myself want to get to the cleanest, most renewable sources. one of the reasons i'm in favor of nukeler energy, but you take away it oil for the next several decades, we're going to be in a heap of trouble. you're going to have prices at the pump at $4, $5, $6 a gallon. >> we're not talking about taking away oil for the next several decades. the oil that may come online won't be coming online for a decade or more.

in that decade, we can do a great deal toward reducing the need for any future sources, any future soirss of oil. the point that we're trying to make is we have been having this debate about america's oil dependence for almost four decades. how many times can we keep suggesting the same solution over and over is over again before we realize that it's not going to work? we know that the american economy needs to get off of dirty inaenergy in this certain. we should be investing in the technologies of tomorrow and not subsidizing the industries that are the most profitable today. >> john, i'll give you the last word. >> it's clear we need to move forward. and unfortunately, the sierra club is formulating one sized fits all policy. we need renewables, we need energy efficiency. we need a balanced policy and that's what we have been arguing for for a long time. today's announcement was a good first step in that direction. >> gentlemen, thank you very

much. the debate goes on. coming up here on the "kudlow report," another debate. are jobs going up or down in friday's crucial employment report? today private job survey was an unpleasant surprise because the jobs were supposed to go up. what is going to happen? we have joe and peter coming up to tell us which way jobs are going. i've been growing algae for 35 years.

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the unemployment rate is still terribly high and it's going to stay unacceptably high for long time. it's going to take a long time to bring it down because of the damage from the recession. >> it's gloomy. you can see more of the interview tomorrow morning on "the today show." so are jobs going up or down in friday's important employment report. today, adp private job survey, well, that survey surprised everybody with a drop. it was suppose today go up. what's going on here? what's going to happen? we have the chief of u.s. commer

commerce, and a business professor at the u.s. international trade commission. joe is our resident optimist. what happened today. these private pay rolls were supposed to go up, they went down. not good. >> no, look y have been bullish on the labor market for a while. i have been completely wrong, and i'm going to maybe disprove the broken clock motion at this point, but i believe eventually we're going to get improvement. adp is missing the weather workers, missing census. i think we'll get the sign right friday. >> what is your number? >> 350. >> that's a big number. peter, one thought i have here besides the deep in the weeds analytics, peeter, this great story about the obamacare tax on all of the big corporations, caterpillar, verizon, a million of them. faced with a tax increase on

prescription drugs for retirees and other tax threats coming out of obamacare, peter y have to ask myself why any of these establishes companies or for that matter, the smaller companies, will create jobs at all. what's in it for them? >> not a whole lot. we're seeing manufacturing expand where it can without using much labor at all. basically, all automation. it does ncht make sense to crate jobs in barack obama's america with the china problem, the health care problem. the carbon tax, you have to be out of your mind if you're looking at the united states as a place to manufacture. that's a job killer. >> see, that's it, joe, i don't want to politicize. in terms of government policy, you have these threats coming out of washington. and frankly, this cap and trade threat that i had written off a few months ago may be a threat after today's speech from obama and so forth and so on.

the other thing is productatively is very strong. other the last year, it's grown 6% or 7%. we could have a jobless recovery on the basis of more efficient productivity in the private sector which is a good thing in the long run, but it won't create jobs in the short run. >> you're right. it's about 6%. we're assuming the growth rate will slow. peter makes a good point, too. there's no question the structural possibilities holding back hiring. even if we have 200,000 a month the rest of the year, a little over 2 million jobs, roughly 2 million jobs, that still would be effectively a jobless recovery. what is sustainable and doable is low. we'll get hiring. it will be at the big company level where cash flow is deep. i still think we'll be surprised at how we do this year. >> peter, on the way out, you guys are coming back, i want to talk about the fed ending the

bomb purchases and ending the funding supply. what is your jobs number for friday? >> 150,000. will the private sector create any jbs or is it temporary census jobs and stimulus jobs. the stimulus job s only last a year. it's not bright for the private sector. >> you're going come back. we're going to talk about the fed. the fed ends its purposes of mortgage backed bounds. and be sure to catch the fuel time geithner interview on tomorrow's "today" show. is the fed cutting off the money supply inwhat is that going to mean for your investment. (announcer) we're in the energy business.

but we're also in the showing-kids- new-worlds business. and the startup-capital- for-barbers business. and the this-won't- hurt-a-bit business. because we don't just work here. we live here. these are our families. and our neighbors. and by changing lives we're in more than the energy business we're in the human energy business. chevron.

we are talking about the fate of the economy. $84 a barrel of oil. drill, drill, drill discussion, that can't be good. let's talk fed for a little bit. $1.25 trillion in mortgage backed bonds they purchased along with $500 billion in treasuries, fannies and freddies. close to $2 trillion of new money. all ends today.

no more new money. peter, what's that mean, no more new money? what's that mean? >> we are going to see a little steeper yield curve. not alarmingly so. the corporate rapt bond mark set coming back. yesterday citigroup, obligation for $525 million. the fact is that people have money to loan other people and they are willing to re-enter the market the fed is vacating. i'm optimistic. as long as it keeps the federal funds rate low, through the summer, we will have adequate credit and will move forward from here. >> okay. peter likes and it i would say that the fact stock create the new money, probably a good thing. one reason the dollar is on the firm side is that -- a good thing. lot of people out there worried that the world is going to come to an end because the fed is not pumping money in. what's your quick take. >> they thought the world would end and never thought the fed's programs would be successful. i agree with peter and agree with what you think. the world is fine.

it is becoming better by the day. >> what are they going to start taking cash out by selling these bonds? >> i think reverse rate. sometime may or june. i think we will start hiking in the third quarter gingerly. i think look important more aggressive tightening next year in the labor market. >> i think you are right. bernanke is a little more hawkish than i might have thought three, six months ago. again, besides the lousy euro in greece, i think strong dollar story is partly a function of this. let me switch gears, final seconds here. $84 a barrel oil. threat of $3 at the gas pump. what's that mean for the economy? $84 a high number. not high compared to $150 pop for all the years before, $48 is a big number. what's your take? how s does that impact the economy? >> principle reason the u.s. economy can only grow at 3.5% going forward and going to have a jobless recovery. we have to pay less for imported oil. we need to drill more here.

we need to develop oil energy here -- alternative energy here. we need to have a whole selection of solution so we can go from importing, 10, 11.5 million barrels to 5. >> is there a tax hike effect to economy? consumers and businesses from this big oil prices? tax hikes. >> certainly will not help. every one penny on gasoline is worth basically a billion dollars on taxes. gas goes up $1. same basis. like $100 billion tax hike. yes. however, i would say, larry, growth we are going get this year will be on the business side. exports have been booming. don't look for the consumer to lead the way. therefore, growth still will be decent and targeting 4% for the year. >> that's a strong forecast. peter, i will leave it to you. you have your health care taxes coming down the road, again, that is what we saw from caterpillar and deere.

this is not the way it is supposed to be in order to promote fast growth. should be cutting taxes and not raising them. >> absolutely. most of the obama policies responsible to -- my forecast is for 3 to 3.5% this year. 3% to 3.5% next year. >> i think everybody would take that. >> jobless. >> thank you very much. coming up, my last word. please stay with us.

once again, i say drill,

drill, drill. diamond off shore drilling. we need four drills. drill, drill, drill, drill. not a half a drill. drill for nuclear, oil, gas, and drill for everything and keep the government out of the way. stop obstructing and controlling. drill, drill, drill, drill.