qualcomm, i expect that stock to go to 65. i like to always say there is a bull market somewhere. i promise to try to find it just for you right here on "mad money." i'm jim cramer. see you tomorrow. hey larry, what is going on in tonight's show? >> all right, jimmy, america does not need a buffett tax on millionaires. we have a enough taxes as it is. good evening, i'm larry kudlow. this is "the kudlow report." sizzle story number one. that's right, folks. the so-called 30% buffett tax on millionaires which the obama democrats are aiming right at mitt romney's capital gains, it's nothing more than doubling the 15% cap gains tax. and by the way, cap gains itself is a double tax on corporate profits. and if you raise the combined tax to 55%, that would pose enormous damage to the economy. sizzle story number two, good economic news around the globe helped our stocks climb 84 points. and i wonder, are we heading for a stock market melt-up? that's right, a melt-up. and topic number three tonight, the day after mitt romney's

bone-crushing victory over newt gingrich, now the front-runner has a controversy over poor people, and we'll tackle it. by the way, we're going have a quick report on the facebook ipo. one thousand millionaires could be created overnight. wow. let's get right to our top sizzle story of the day and the continued class warfare coming from obama democrats. senate democrats moved ahead with their so-called buffett tax on millionaires. take a listen to the bill's co-sponsor, rhode island senator sheldon whitehouse earlier today. >> we should celebrate the success of people who are earning a million dollars and more a year, but we really don't, particularly in this time of tight budgets and hard choices need to subsidize that. to call our tax system fair, i believe the highest income americans should pay a higher rate, not a lower one than middle income taxpayers. >> all right. let's talk. here now is former labor secretary robert reich. he is the author of "aftershock"

and we republican kay bailey hutchison. senator hutchison, thank you. do we need a 30% millionaire's tax? >> larry, you're talking about the income that the 15% rate, which is there to promote investment and capital expenditures. now you're talking about putting another big blanket on our economy. i just think we need to stop talking about tax increases on the people who would create jobs and instead start cutting spending. we are now looking at the cbo, which came out with their estimate of this year's deficit, and it's another over a trillion dollar deficit, the fourth straight one in the obama administration. >> robert reich, capital gains tax 15% is a double tax on corporate profits. the real rate for investors who pay that is actually 45%. that's one of the worst in the

world. why on earth would we want to go down this road, mr. reich? >> you know, larry, have i been listen to the same claptrap for years and years and years. in the late 1980s, you remember the capital gains tax was about 35% rate. we did not suffer. those are the years you think are very, very good years. in the 1950s under dwight d. eisenhower who nobody considered a socialist, we had a marginal income tax on the top earners, the equivalent of people earning a million today that was, if you include all of the deductions, all the tax credits, was about 52%, and the economy did fine. in fact, the economy grew in the 1950s faster than it grew today. >> the economy in the 1950s. >> why are you so concerned about raising tax when we have -- >> three recessions in the 1950s. >> we have a gigantic budget deficit. let's try to deal with that. >> all right, robert. i'm just going to repeat this. the economy in the 50s had three recessions. but what is different from the

'50s and the '80s and the '90s is senator hutchison, i'll go to you on this. all these foreign governments have been slashing their corporate rates and capital gains rates. while they are cutting taxes for investment, we want to raise tax rates for investment. that's the stupid part i don't get. >> of course we already have the highest corporate tax rate in the world except possibly japan, which is a damper on our economy. no one can say our economy is thrive right now. and mr. reich served in the clinton administration, which lowered the capital gains rate to 20%, and then in the bush administration, it came down to 15%. and revenue increased to the federal government. that's what happens when you open up the ability for business to grow, get capital, hire people and get the economy going. >> and robert reich, on top of that, i just want to read you some irs data. millionaires, millionaires, one million or more have an

effective average tax rate of 25 to 26%. middle class folks between $50,000 and $100,000 a year have an effective average tax rate of 7 to 8%. so it is an urban myth that millionaires pay less than middle class people. >> well, first of all, larry, if millionaires are already paying 26%, nobody should worry about a 30% minimum. i mean, why are you making such a big stink about a 30% minimum if they're already paying 26%? but more importantly, i want to go back. and with due respect to the senator, let me just say corporations these days don't need tax cuts. they're sitting on almost $2 trillion of cash they don't even know what to do with. the reason they're not investing in new jobs is because there are not customers out there for the additional goods and services. and the reason there aren't customers throughout is because the middle class is stranded. people don't have adequate wages. their taxes are too high. they just are -- they basically haven't seen any increase in their wages in 30 years,

adjusted for inflation. that's the real problem in america. >> you know, larry, that's not what i hear from the businesses out there. they're not hiring because all they hear from this administration is new taxes and new regulations, and they're seeing the obama health care costs kick in another year. and they are frozen because they do not want to take on more overhead not knowing what the future. what we need in this country is to open up jobs. how on earth could anybody miss that? and to do that, you have to free up capital and you have to entice people to put their money out there. and one of the things that has done that and has been proven time and time again is a lower cap gains and dividends rate. >> you know, bob reich, i finally figured out your game. i'm listening to you this evening. what you're saying is let's have more stimulus packages, which obviously hasn't worked. let's have bigger deficits and

debt. and then let's tax those most likely to invest in order to finance it. is that basically your model? >> no, it is not. let me lay it out very, very simply for you, larry. number one, we do need to reduce the budget deficit over the long-term. the people at the top in this country are now taking home -- in -- in fact in 2007, 23.5% of total national income. they've never had a marginal income tax so low since the 19 -- late 1920s. why don't we just raise the marginal income tax to something that is at least appropriate given the size of what they're taking home? but secondly do not, do not, do not cut the budget deficit until there is a trigger. and i'm going to give you the trigger. and that is we get unemployment down to 5%. we cannot afford to cut the budget deficit right now in terms of additional cuts in spending. why? because we need the demand. because consumers are holding

back. and that is a basic, basic principle of economics. >> i'm going to give senator hutchison the last word. senator hutchison, let me ask you this. did $5 trillion of new debt over the last three years plus help grow the economy has robert reich suggests? >> that's just stunning to hear someone say that. everywhere you go in the world or talk to, ambassadors from foreign countries, they say america must get its economic house in order for the global economy to settle down. >> all right. >> and for us to be leading the way toward going to 100% of gross domestic product to debt ratio, which is where america is right now is not the example that the world is looking for. >> i got to leave it there. >> austerity economics is killing europe. >> we'll do europe another time. robert reich, thank you very much. senator kay bailey hutchison, as always, thank you very much. >> thank you. okay. president obama pushes yet

another mortgage bailout plan, one that includes a stiff tax on banks. so let's talk. we have a debate. former hud secretary henry cisneros. well welcome him back. and cnbc contributor jimmy pethokoukis from the american institute. it's great to see you, but i don't understand why we're going to waste taxpayers money when the free market is lowering prices and increasing sales and getting rid of inventories. why must the government interfere again with taxpayer money? >> well, i think, larry, the problem is that the process is playing out very slowly and the entire economy has suffered and is continuing to suffer that is to say we know now that we're not having the kind of robust recovery that we ought to be having, the jobs creations. and a big part of that is the lag of the housing sector. the housing sector is lagging because the foreclosure overhang exists, because we have been overly restrictive with respect to credit. and because there is a whole number of people who can likely go into foreclosure without some help.

this step by the president addresses the third piece, which is keeping more people from going to foreclosure, which would be just one further drag on the economy. so i think it's a very reasonable step. it doesn't involve people who have been irresponsible. it involves people who are basically current on their mortgages. it's just that their mortgages are more than their houses are worth today, and they can't take advantage of the refinancing opportunities at all-time low interest rates which would give them a chance. >> jimmy p., you called this thing way back when in your reporting. i'm going to have you now, is this going to work? this new version, is it going to work? >> larry, am i in the twilight zone? is this a horrific nightmare that you've brought me in to that we're going to use the gses again to try to stimulate housing, stimulate economy. this is what try to do for the past 25 years which the housing secretary nose very well about that created an absolute disaster. and we're going to go right back

down the exact same path? and trust me. no one is making any claim that this is going to keep people out of foreclosure. the secretary is wrong about that. all this is about is juicing the economy by giving people a few more dollars to spend. >> but is it going to juice the economy by jacking up bank taxes? and is that going to dejuice the economy, jimmy, just as a follow-through? >> listen, one, they want to pay through it through bank fax. and what they're not talking about is everybody owns mortgage-backed securities which are banks and all kinds of institutions, funds, they're going to lose money on the deal. next time they try to go to market, they're going to demand higher interest rates. they're trying to hurt housing tomorrow by trying to help it today. >> it's not small point. investors who own mortgage-backed securities are going to get killed in this. so they are going to lose money. they're going to lose wealth, and they're going to lose income because of the lower interest rates. so this is a typical government thing. the government wants the help somebody, but they're going to hurt somebody on the other side so badly that it's going to wash

out and we'll probably be poorer because of it. >> larry, i don't think it's a washout. as i said, the drag on the larger economy of the housing sector is big. and it is not about putting $3,000 in people's pockets, although i think that is a good thing. but it is about keeping people from going to the edge and adding to the foreclosure stock. you're keeping the overhang. >> with all due respect, secretary, that's not what it's about. it's about the $3,000. no one is making any claim that this is going to reduce foreclosures. that's a whole another issue. >> in the real world, if people are having trouble with the size of their mortgage and this keeps them from having to get over the edge on foreclosure -- >> then that's probably too much house. >> and if you look around the country today, one-third of housing sales are from houses in foreclosure. we don't need to be adding to the stock of houses in foreclosure right now. it's keeping the production down. >> the cause of and apparently the solution to our economic

problems. >> let me ask you something, jim p., there is one thing in the fine print of this i do like. apparently they're going to have auctions, bulk sale auctions of foreclosed houses to be sold to investors who are then going to rent them out. that might help clear up the inventory story. >> right. >> why the heck didn't we do that earlier? get fannie and freddie to auction off the foreclosed property? >> that's an important and good step. it will bring investors to the mix. there had been some inhibitions from bringing in investors and letting investors sort of benefit from the crisis. but i think we recognize now the private sector can do a good job of bulking up those products. >> are those the same investors we want to double taxes on? >> good point. we're going to charge them a higher tax rate. >> right. >> we're not going to settle this tonight. i don't know. i'm a little skeptical. >> this is about strengthening the overall economy. and investors and banks would do well with the economy is strong. >> we'll see if it work nice better this time. >> henry cisneros, thanks.

it's great. jimmy pethokoukis, thanks. signs that manufacturing is strengthening. car sales almost booming. is there a market melt-up? we're going to ask our top-notch panel of market strategists. and please don't forget, housing bailout ace side, free market capitalism is the best path to prosperity. prices adjust. so do sales. let the market work. i'm "kudlow." wheeeeeeeeeeee!! whee whee wheeeeeeeeeeee-he-he-heeeeee!

whee whee wheeeeeeeeeeee! pure adrenaline. whee whee wheeeeeeeeeeee! everything you love about geico, now mobile. download the new geico app today. whee wheeeeeeeeeeee-he-he-heeeeee! how they'll live tomorrow. for more than 116 years, ameriprise financial has worked for their clients' futures. helping millions of americans retire on their terms. when they want. where they want. doing what they want. ameriprise. the strength of a leader in retirement planning. the heart of 10,000 advisors working with you one-to-one. together for your future. ♪

so stocks kick off the first trading day of february in rally mode. look. booming car sales, a solid ism number. positive global economic data set the tone today. 84-point stock climb. i want to ask, are we setting the stage for a market melt-up? let's now turn to our distinguished panel of market mavens. joining me is thomas lee. he is the chief u.s. equities strategist at jpmorgan. and jim iuorio. bryan kehly, bk, you got pretty good isms here. you got pretty good purchasing managers in england, in germany, in india, in china. it looks like the global economy is okay. so i ask you first.

are we on the verge of a real stock market melt-up? >> absolutely. >> whoa. >> you're absolutely right. i think people have said economies around the world are too weak. they've been too worried about europe. i include myself in that category. but absolutely. and most importantly, last week ben bernanke told you if you hold cash, you will lose 2% this year due to inflation. so you don't want to hold cash. you want to be in stocks. you want to be in commodities. you want to be in anything that is a hard asset, anything but cash. >> wow. okay. so tom lee, let me go to you. greece is going to get fixed on top of all this good economic data. the ecbs, they'll put more tranches of emergency loans if we need it. and even here at home in the junk bond market, the spread between treasuries and junk is they're rogue. this looks like a very bullish scenario. i'm thinking about melt-up. what you thinking thinking

about? >> i think the probability of a melt-up has increased. we've had a 24% move in four months. we published a move last week showing typically a three-month pause first, and then the market makes a pretty strong advance six, 12 months out. i almost feel that we've got to work on some of the bullishness. it's not bearish, but i think it's going to be a time for people to do a rotation. i think the rotation is you've got to buy financials, energy during this pause. >> tom, let me just ask you. if you have this little consolidation or mini correction or whatever you're calling it, it sounds like a big buying opportunity. in other words, if bk is bullish for a melt-up, and i see stocks correct 2 or 3%, then would the investor want to come in and buy the heck out of this thing? >> yeah, i think you got to buy the dips this year. started the year at a 60-year high. it means stocks are less correlated to economic earnings actually. this has been a pretty earnings week seasons season, but it's been one of the best stock

performances in four years on earnings. it tells you stocks really got too cheap at the start of the year. >> jim iuorio, it's up to you. throw a wet blanket over the whole thing. tell me inflation is about to roar, the fed is too loose. and by the way, what about mitt romney versus barack obama. >> none of the three of you mentioned a pretty weak jobs number today. so is the economy going gangbusters? no. we do have positive growth. to put a finer point on one thing brian said about getting sick of making negative 2% on your money, the california public pension fund, one of the biggest in the country made one and change percentage on their money in 2011. built into the models is a 11 1/2 assumption. there are people who are going to lose their jobs unless they start investing in more risky things. and that's the fuel for the stock market. and there is plenty of people on an individual level who are sick of making those paltry returns in u.s. treasuries as well. i do think the stock market is going higher, but i think the economy is only mildly moving in

the right direction. it's more a function of tons of money waiting to go in. >> bryan kehly, too much bond buying. i think that's what jim iuorio is saying. so when do the bond investors who are stuck with these terribly low interest rates go back in the stocks on the basis of a global economy that is okay? it's not fabulous, but it's okay. >> no, it's not fabulous. one, jim is exactly right. the economy does not matter here. what it's about is the federal reserve and every central bank frankly is forcing you out on the risk factor. i think the bond investors going right now. as i look at it, the federal reserve has capped ten-year rates at 2% for the next two years at the very least. and so for me, that's extremely bullish for risk assets. you know, i am long bonds. and i think the lower bond yields go, the more bullish it is for the u.s. stock market. >> everyone is jumping buying long on the treasury curve because the fed came out and said rates are going to be at zero for the next three years. economists get things wrong.

for the market to jump completely to say okay, they must be right, three years, it's illogical. so to me, the more people that are pouring into bonds right now, that's going to make it more abrupt and dramatic when it turns. i think it's going to turn quick. >> tom lee, at $110 a share for 2012, but at $110 a share, today's s&p at 1324 is 12 times forward earnings. is that an inexpensive metric or not? >> i mean, i just say that if you're paying 12 times for stocks right now and you're paying, you know, 50 multiple for a treasury, i mean stocks are a great value. earnings are growing. companies have pricing power. they're a great inflation hedge. s&p profits are hugely leveraged to a housing recovery. every time you increase starts by $250,000, that's another $4 of s&p profits. if you're going to think about housing recovery, low inflation or inflation, a european recovery, all of these are really going to benefit

companies which means you really want to own stocks. >> all right. we're going to leave there it. thomas lee, thank you very much, bryan kehly, tim our owe. coming up, the facebook poip has been filed. we're going to get all the late-breaking details when we touch base with the cnbc newsroom right after this. (

facebook has filed its ipo paperwork with the s.e.c., and it could make one thousand facebookers overnight

millionaires. cnbc's bertha coombs joins us with more on that and all the late-breaking headlines coming into the knew. good evening. >> good evening. one facebook ceo and billionaire. facebook has filed papers with the s.e.c. for a second quarter ipo. jon fortt has more. john? >> reporter: yes, the blockbuster filing from facebook is out. here are some of the really interesting numbers that you can find in here. revenue, $3.7 billion. net income $1 billion even for a 2011. but here are some other things that we didn't know before about facebook, like where are the users? geographically. well, just 21% of them are in the u.s. and canada. also, facebook has operations, including data centers, in 20 countries. now over to bertha. >> thank you very much, jon. defense secretary leon panetta announced late today that the u.s. will change its combat role in afghanistan. it's going to shift to a train

and assist strategy by the middle of next year. in and in port said, egypt, 70 people killed, a thousand injured when a soccer match between two fierce rivals turned violent. this hour police are still unable to quell the stampede. american airlines trying to work its way out of bankruptcy is looking to cut 13,000 jobs as well as terminate its workers' pension plan. labor costs account for about 30% of the airline's overall costs. and the internet ate it. lawyers for news corp. say an e-mail telling james murdoch that hacking might be ripe at news of the world was deleted as the company was migrating e-mail systems. the police investigation into the news of the world began one week later. and nielsen expects two-thirds of smartphone and tablet ownlers be texting or posting as they watch sunday's super bowl game. companies from coke to chevy will be trying to reach fans on every screen they can, not just the traditional tv ads.

and of course you can watch the super bowl this sunday on our sister network, nbc, larry, when any new england patriots will take revenge on those giants. >> that's it. dream on! many thanks to cnbc's dreamy bertha coombs. next up on "the kudlow report," the day 2 story on mitt romney's huge win in florida. will his message switch to spending cuts? how about adopting paul ryan's bold tax reform. and today's flap. does mitt care about poor people? we'll be right back with it all. heartbeat, and that it put me at 5-times greater risk of a stroke. i was worried. i worried about my wife, and my family. bill has the most common type of atrial fibrillation, or afib. it's not caused by a heart valve problem.

he was taking warfarin, but i've put him on pradaxa instead. in a clinical trial, pradaxa 150 mgs reduced stroke risk 35% more than warfarin without the need for regular blood tests. i sure was glad to hear that. pradaxa can cause serious, sometimes fatal, bleeding. don't take pradaxa if you have abnormal bleeding, and seek immediate medical care for unexpected signs of bleeding, like unusual bruising. pradaxa may increase your bleeding risk if you're 75 or older, have a bleeding condition like stomach ulcers, or take aspirin, nsaids, or bloodthinners, or if you have kidney problems, especially if you take certain medicines. tell your doctor about all medicines you take, any planned medical or dental procedures, and don't stop taking pradaxa without your doctor's approval, as stopping may increase your stroke risk. other side effects include indigestion, stomach pain, upset, or burning. pradaxa is progress. if you have afib not caused by a heart valve problem, ask your doctor if you can reduce your risk of stroke with pradaxa.

welcome back to the cud-kk report." the bigger news in last night's victory speech. romney going to go tough on spending cuts to attract tea party and other conservative support? listen to what he told the crowd last evening. >> president obama wants to grow government and continue to amass trillion deficits. i will not just slow the growth of government, he will cut the spending of government. i will not just freeze government share of the total economy, i will reduce it.

and without raising taxes, i will finally get america to a balanced budget. >> all right. big emphasis on spending and shrinking government. we're going to get to our distinguished panel. we have steve forbes, tad devine and mark waiting in the wings. kevin madden, an adviser to mitt romney, as always, 65% of the republicans voting according to the exit poll, 65% tea party. mitt won that, but it was close, 41-37. on the so-called very conservative, which is a third, gingrich won that, 41-30. the thought i had was that mitt mentioned tough spending cuts and deficits and debt more emphatically last night in order to reach out and try to unify his big ten and bring conservatives in. is that a fair assumption? >> he was emphatic last night, larry. but he has been very emphatic about this the entire course of his campaign. that's run of the things that is really -- those are the issues

that are really animating a lot of the core conservative voters. they look at the way washington reacted to a slowdown and rejected it. they rejected it in 2010. they saw a congress and a president that decided to open this spigot on federal spending. and that goes exactly against what they think the government needed to be doing. the government needed to put more of its faith back in the american public in order to create jobs rather than putting its faith in government spending. so i think as we go through this campaign, that's going to be a really important issue for conservatives. but it's also going to be a very important issue for independents. when we saw 2010 independent voters align with republicans. >> right. >> it was because they rejected the same spending and the same deficit policies that we saw coming out of the obama administration and the democrats. >> but i hadn't heard mitt talk in these terms in quite a while. he put out a pretty good white paper last fall, he wants to get government spend do you think to 20% of gdp. $500 billion of cuts i believe by 2015. >> right. >> and he has a good medicare

reform plan that is now a lot like paul ryan. in fact, let me ask you about the paul ryan connection. i know those two talk, ryan leading in the congress. might essentially throw in with paul ryan's budget, which will be very tough on spending, probably $6 to trillion below the current services line. that a possibility, how to unite the whole republican party? >> look, the principles that congressman ryan espouse are very strong principles as related to fiscal conservatism. and i think governor romney as he has continued to go out and reach as many voters throughout this campaign, i mean he has talked about the very same principles. now i think that the tales may be different. but governor romney does believe if we have these type of reforms on the entitlement side, and that if we make taxes fairer, flatter, and broaden the base, that we're going to have the economic development, the economic growth that we need that is going to help create jobs in this country.

>> just on that point, that tax point, last one for you, kevin. we appreciate your time as always. norquist has said that governor romney should essentially take paul ryan's tax reform plan, which is two brackets. 10% and 25%, get rid of the deductions and the flotsam and jetsam and take the corporate tax down to 25%. might governor romney actually look at the paul ryan plan as a model for his phase 2 tax reform that he told me he was working on? >> yeah, there you said it. you do this to me every time. you did to it the governor. you're trying to get us to break news on the show. look, the governor did say this in his interview with you last week that he is going to take a look at proposals like the ryan plan. a lot of the principles that you found in the simpson-bowles recommendations, and all of them are consistent with the idea of making sure that the tax code is flatter, fairer, broaden the base in order to get economic development. so i think as part of this campaign, as we progress through it, you're going see a lot more proposals from the governor

related to -- on that particular topic. >> all right, thank you. kevin madden, we appreciate it as always. now florida side, gop primary is not over yet. it may be basically over, but the hand has to play out. and newt gingrich had a nonresponse to romney's win. by the way, this is really weird. newt gingrich didn't bother to congratulate governor romney. so it's going to be a heated and competitive race. now romney says it could be a good thing that it's a heated and competitive race. take a listen. >> primary contests are not easy. and they're not supposed to be. as this primary unfolds, our opponents in the other party have been watching. and they like to comfort themselves with the thought that a competitive campaign will leave us divided and weak. but i have got news for them. a competitive primary does not divide us, it prepares us. and we will win. >> all right. and oh, by the way, this is

interesting. new gallup numbers predict a huge loss for president obama in the general election. check this out. the republican nominee could get 323 electoral votes to obama's 215 votes based on obama's approval ratings around the country. whoa. let's go to our distinguished political panel. we have steve forbes, chairman and editor-in-chief of forbes media and former republican presidential candidate himself. democratic strategist tad devine and mark mckinnon, republican strategist and former bush 43 policy adviser. mike mckinnon, welcome the show. i want to begin with you. there is this flap today that i didn't put up on the screen. mitt romney said i'm not concerned about the poor. we have a safety net. if it needs repair, i'll fix it. i'm not concerned about the rich. they're doing just fine. i'm concerned about the heart of america, which is the 95% who are struggling in the middle class. newt gingrich is jumping on this. the media is jumping on this. they're all saying mitt romney doesn't care about poor people.

what do you think about that? is it utter nonsense or what? >> well, i think his instincts were try to try to get a message designed to get a message to the middle class which president obama is successful getting a lot of traction with. so the instinct was right, the execution was bad. that's where i think this long drawn-out primary is in many ways problematic. because we're seeing -- we're seeing independents turning against mitt romney. we're seeing incredibly negative campaign, which i think is exacerbated by the heavy influx of super pac money. it's not so much that the tone is different or more negative than it has been in the past, but the volume is so much greater because of so much more spending. and result, the thing that really concerns me look at republicans is that the turnout is down in the early primary states by 10 to 15%. and if that's the case in the general election in a close election, that could be problematic. >> but tad devine you saw that gallup poll. we can put it back on the full screen. based on obama's poor approval

ratings, this could be a republican landslide. >> i disagree with that. i agree with the points mark just made. i think the republican process is going to go on for a long time and that's very bad for them. governor romney said last night no, it prepares us. if you look the process in 1968 when we had riots in the street in chicago. in 1972 when the democratic nominee gave his acceptance speech at 2:30 in the morning. in 1976 when reagan and ford went all the way to the end, in 1980 with kennedy/carter, when you have a tough process that goes all the way to the convention, inevitably it hurts the nominee of that party. and i think the president is going to be in strong shape by the time he comes to the general election because the republicans are hurting themselves and hurting themselves badly. >> steve forbes are, the republicans hurting themselves too badly? and let me just add on to that question. the issue of governor romney moving a bit to the right on economic policy with sharp spending cuts and a real bold tax reform plan. that what he needs to bring everybody together?

>> he does. and for 1976, by the way, gerald ford came out of that convention 30 points behind, the party united. he came within a hair of winning that election. so these things can be overcome. and in terms of preparation for governor romney, he's got to really put flesh on the bone on tax cuts, not just talk about it. he has had five years to model this thing. if an investment came along, he wouldn't take five years to come up with a proposal. he's got to get that on the table as soon as possible. he's got to come up with a reaganesque image that he wants growth, not just austerity, not just root canal, but something for this country to get excited about. and that means on health care, getting over this individual mandate, getting exciting tax proposals, substantive, and go all the way on monetary policy. steal ron paul's idea. it's a pretty good one, making a stable dollar again. be bold. don't be tom dewey.

>> how about tom dewey versus ronald reagan? which side will mitt romney choose? that's a wonderful contrast. >> it is. the key point for mitt romney, he does have to be bold. and the thing that concerns me, i think it would be great if he adopt morse of the ryan plan and shows a bold strategic vision and great ideas. the problem is two nights ago in florida, he started criticizing obama for cutting medicare. republicans shouldn't be criticizing democrats for cutting. we should be the ones making the cuts. and we can't simply go to audiences like older voters and tell them they can have their cake, eat it too and have more dessert if we're in the presidency. >> so you want him to be tougher on spending that was the question i had for madden that would be a good signal? >> absolutely. he's got to be tough. if we can get the chair, that we're willing to make the tough, bold decisions and adopt much of the simpson-bowles kind of ideas which the president was unwilling to do on his own commissions. we got to show that we're willing to make the bold and tough choices. >> tad, mark and steve are make

some important points. and i know you're from obama, and that's great. i appreciate that when you look at the cbo report, 9% unemployment, 2% growth this year, another trillion dollars on the deficit, and he won't touch, the president won't touch simpson-bowles, which almost everybody, including mitt romney and paul ryan believe should be the basis, not exactly detailed, but the basis of the deal. why doesn't obama go toward that deal? it seems like what's it the country wants. >> well, i think the president, you know, when he came into office, was looking at a situation where the country was losing 750,000 jobs a month. it was a hall that he had to lead the nation out of it. he recognized that the only way to try to do that was to try to stimulate the economy, try to create job growth. now we've had 22 months of private sector job growths. over three million private sector jobs. i think that's what the president's job has been, to try to dig this country out of the

enormous hole it's been. in that's been his focus, that's been his charge. i think when voters look at it in the rear view mirror, they're going to see someone who inherited a very difficult situation and did a very good job. >> do you think tad devine is right, that the economy and the economic card is going to be a big plus for reelection for president obama? i'll give you the last word. >> it's going to be better than it is today, even though this is still the worst recovery. we'll do better this year. but we should be doing far, far better. but larry, this underscores why romney, he gets the nomination, has to have the bold reaganesque proposals. he cannot count on the sluggish economy to put him in, the way tom dewey can't count on the country's dissatisfaction with truman to get him the nomination. he is beginning to inch that way, but by golly, he's got to do it and not take the florida victory and think that's it. >> gentlemen, thank you very much steve forbes, tad devine and mark mckinnon, i appreciate it very much. buried in the exit polling

shows as many as four in ten republican voters still want someone else at the top of the gop ticket. so what does business think? does business want another candidate or is president romney going to be bullish for business? we have a businessman who will tell you, coming right up. i love that my daughter's part fish.

but when she got asthma, all i could do was worry ! specialists, lots of doctors, lots of advice... and my hands were full. i couldn't sort through it all. with unitedhealthcare, it's different. we have access to great specialists, and our pediatrician gets all the information. everyone works as a team. and i only need to talk to one person about her care. we're more than 78,000 people looking out for 70 million americans. that's health in numbers. unitedhealthcare.

governor romney had a big night last night in the florida primary. the question is will a president romney be bullish for business? here is our great friend bob lutts, forrer general motors vice chair. mr. lutts is also a gm consultant. welcome back, bob. in the exit polling, 58% said they're satisfied with the candidates. but 38% said they want someone else. now i want to ask you from the standpoint of your distinguished business career, are you okay with romney? is he okay with business? >> well, look. i think we're going to have to take the one we've got. i think i'm probably part of the 38% who would like to bring ronald reagan back or make mitt romney more reaganesque. i don't think that's going to happen. and i think we have to compare him to what we've got today, which is essentially an administration that is hostile to business, doesn't understand the role of business.

i think at least with mitt romney, we will get the needs of business out on the table and taken care of. >> i mean certainly, bob, romney's personal biography is business through and through, business and finance and a very successful career. but i guess what i'm going to ask you is, are his policies sufficient? it sounds like you would like to hear more from him in a number of areas. >> well, i tell you what i would -- i will always have animosity towards him because of what he did in '08 when the automobile industry was in trouble after the subprime mortgage meltdown. he said it was wrong for the government to bailout general motors and chrysler. let them go bankrupt. that would have -- that was so imprudent and not thought through. it would have wreaked economic devastation on the country. so personally, you know, i'll never forget that. i think he would have made a catastrophic mistake. but i think on balance, look we have to compare to it what we have today. is it ideal? no. is it going to be better than an

obama administration? by all means. >> all right. i'm going to leave it there. sorry for the truncated, but we appreciate it. bob lutz, former vice chair of general motors. up next, breaking news. the house passed a bill to freeze government pay. but is congress going to do anything about this pessimistic crystal ball to cbo. 9% unemployment. 2% growth. another $2 trillion on the deficit and huge massive tax hikes a year from now. when are they going to get wise? we'll hear from two house members in just a moment. it's kind of a big deal. to find nutritious and gluten-free cereals my whole family actually loves? well, the word "wow" comes to mind. and then a friend told me chex has five flavors that are gluten-free. even a cinnamon one the kids love. a nutritious cereal that makes everybody happy? like i said, wow. [ male announcer ] chex cereal. five flavors. good and gluten free.

the two trains and a bus to the 5:00 arider.holar. the "i'll sleep when it's done" academic. for 80 years, we've been inspired by you. and we've been honored to walk with you to help you get where you want to be. ♪ because your moment is now. let nothing stand in your way. learn more at keller.edu.

this is cnbc breaking news now. >> breaking news from washington right now. the house has just passed a bill freezing federal pay for another year. this as we continue to pour over the numbers in the congressional budget office. 9% unemployment, 2% growth, another trillion dollars deficit that makes it $5 trillion in the obama years. and by the way, massive tax hikes staring us in the face a year from now. so what is going to happen here? stop the madness. joining us now, house members bill pascrrell and tom price. i say stop the madness. i want to know what republicans are going to do about this madness. because as how you've know, the public hates congress. you all could be turned out of office if you don't have good

policies. what is your message? >> you're absolutely right. the trillion of deficit spending four years in a row, as you mentioned, over $5 trillion under the term of this president who said at his first term he was going to cut the deficit in half. so we recognize that the president can't run on his record, so he has to run on a divisive tactic. the truth is that we've got a plan. we've got a jobs plan. we have nearly 30 pieces of legislation sitting over in the senate that would create jobs. we believe in spending reduction here in washington, tax reduction for the american people as well as american businesses, small and large. so that we can get this economy rolling again. because what is happening right now is clearly not working. >> but bill, i don't think taxing millionaires and taxing the rich and all this left wing populism, i don't see that as an answer. that's not going to grow the economy. >> well, it's part of the answer. i don't think it's the full answer. i think it's half the answer. but i think it's on the way. people should pay their fair share. we've introduced many legislative bills to deal with

the jobs problem. you know what has happened to the bills. both in the majority and now we're out of the house majority in the house of representatives. i believe what the president has said is right on target, that we should provide tax credits for the companies that produce jobs here rather than ship them offshore. that's one of the differences between how we approach things and how my good friend tom approaches things. >> there you go, larry, picking winners and losers, deciding who gets the credits and who doesn't get the credits instead of letting the free market work. you know well this market is just waiting to thrive. but washington's got to get out of the way. decrease the regulatory oppression that is coming out of washington. decrease taxes on businesses small and large. and free up the wonderful entrepreneurial spirit of this great nation. that's how you get this economy rolling again. it's not having trillion after trillion after trillion deficit that this administration has put in place. >> larry, the president offered a very stark contrast between the democrats and the

republicans. when he said for every dollar of revenue, i'm willing to support $4 cut in expenditures. and i think that's the right way. you need a balance between the two. you're not going to do this by simply cutting the budget. which results in the consequences of laying off police officers, firefighters, teachers, et cetera. they've taken the brunt unfairly, and so have the middle class. we're going to try to make it even. there is no such a thing is perfectly even. but just be fair in who we look at in taxes. this president has not raised taxes. he has not raised taxes in over three years. so what are they talking about, larry? >> here's what i'm talking about, because i want to report this thing fairly. the bill was signed extending the bush tax cuts for two years that extension runs out. >> that's correct. >> as of january 2013, the entire bush era tax cut goes away. the entire tax cut. >> yes. >> and furthermore, because obamacare kicks in, billy,

you're going to have another tax increase on payrolls which will hit the capital gains tax for upper end people. this kind of tax hike is the cbo said will drop growth to only 1% next year. that's why i say stop the madness. >> larry, larry, you know just as well as i do, and so does tom that the bush tax cuts of 2001 and 2003 get worse as the next ten years goes on. so the greater part of the deficit in 2020 will be because of those tax cuts. some of those tax cuts i think are legitimate, those that help the working poor and the middle class. those tax cuts when we talk about millionaires and billionaires to me are over the line and produces less revenue. so you could squeeze everything you want out of social programs. some are vital. some are unnecessary. and to invest in education. business needs investments. >> transfer payments are out of

control. tom price, 20 seconds, last word. >> what we need is spending reduction. spending reductions here in washington. decrease the regulation, provide certainty in the marketplace so that the economy is thrive. not washington making decisions. >> the president is right, larry. i'm sorry to tell you about this. god bless you. >> it's great to see you. bill pascrell from new jersey. tom price from georgia. that's it for this evening. we'll be back with much more tomorrow night. i have to be a tree in the school play. good. you like trees. well, i like climbing them, but i've never been one.

good point. ( captain ) this is your captain speaking. annie gets to be the princess. oh... but she has to kiss a boy. and he's dressed up like a big green frog ! ewww. ( announcer ) fly without putting your life on pause. be yourself nonstop. american airlines.