book manager, buy it it makes sense, that price is going to be a good one. there's always a bull market somewhere, i promise to try to find it for you here on "mad money." i'm jim cramer, see you tomorrow. hey, larry, what's topping your list? jimmy, donald trump hires mitt romney, fires newt gingrich, and i'm still looking for a stock market meltdown. this is the "kudlow report." sizzle story number one, that's right, donald trump says you're hired to mitt romney and you're fired to newt gingrich. take a listen. >> mitt is tough, he's smart, he's sharp, he's not going to allow bad things to continue to happen to this country we all love. so governor romney, go out and get them. you can do it. >> all right. top romney adviser, former minnesota governor tim pawlenty is going to tell us what if anything this trump endorsement really means. plus, jim demint of south carolina, he talks to me about ending corporate welfare and

earmarks. then again, is ben bernanke bankrolling trillion dollar deficits? and stocks fly today, but what about a stock market melt-up? that's right, a melt-up. we welcome back tim pawlenty, he joins us now to talk about trump's hiring mitt romney. now, governor, before we begin, take a listen to what the donald also said earlier. >> we bring a lot of people, not because people like me, but because they agree with what i'm saying and how our country is -- we are being just ripped to the tune of trillions of dollars by other countries and other places. whe whether it's china, india, opec -- and i don't think that's going to happen with mitt romney. >> ripped by china, india, and opec. in a moment we're going to hear from our "a" plus panel. let me talk to governor pawlenty. welcome back. let me go to that last clip for a second. donald trump is telling everyone one of the reasons he's

endorsing mitt romney is because romney is super tough on china. and trump is a great china basher. does this mean now that governor romney will be more of a china basher? >> well, larry, we should all be for free trade, but we shouldn't be for being stupid. and when somebody cheats, whether it's china or anyone else, we should call them on it. what mitt romney has said and i think thoughtfully and accurately is we want to be for free trade, but when we know when we know there's manipulation or violations, we're going to call them on it, we're going to call it as it is, not pull our punches, and if necessary, we'll impose consequences. i don't think there's anything wrong with that that's anti-free trade, it's anti-cheating. >> anti-cheating, but also labeling china a currency manipulator, many are fearful that will trigger a trade war. >> they are a currency manipulator, larry. i don't think -- the alternative is to turn our heads, duck, bob, weave, not be strong enough to call it as it is. mitt romney has the courage and

fortitude to look the american people in the eye and the chinese in the eye and the world and say they're a currency manipulator. >> i don't think they are a currency manipulator, i think they pirate our goods and intellectual technology. i think you're right on that, i think the currency's a different matter. how about -- trump mentioned india. is india part of governor romney's litany of bashing? >> he has spoken very forcefully about china. we know when you go to china, if you have a -- and you want to do business there, the conversation goes basically like this. how big is your plant going to be? how many employees you going to have here? let us see your intellectual property. and by the way, if we steal some of it, the recourse here is nonexistent or minimal or delayed if you can get it at all and down the list. you know this story, you know it well, you know they cheat. so mitt's not out of bounds in calling them to account for it. >> i think they should be called for account, but i'm worried about the currency war. i want to play for you governor

romney's recent comment about the poor people. >> i'm not concerned about the very poor, if it needs repair, i'll fix it. i'm not concerned about the rich, they're doing very fine. i'm concerned about the very heart of america. >> all right. tim pawlenty, let me ask you. on this quote, do you remember my mentor and great friend the late jack kemp. he always used to say a rising tide lifts all folks. growth is really the answer. how do you worm out of this mistake and this gaffe from governor romney? can't you switch the conversation to growth? the best anti-poverty program is a job, governor. >> el with, that's exactly right. and you know, by the way, jack kemp's dad was a truck company person and truck driver. my dad was, as well. i knew jack and we miss him. he was a great visionary for growth and passionate adequate for it as you are and i am, as well, and so is mitt. and here's the thing, the best safety net is a job. and the way to grow jobs is not

to go to washington, d.c. and ask a community organizer or the republican opponents who spent their whole life in washington, d.c. or in parasitic relationships with washington, d.c. there's one person in this race who has been an entrepreneur, job provider, investor, a starter and grower of companies and a provider of jobs and it's mitt romney. and so he's unquestionably most qualified for that. and that's to the statement, he's addressed this many times before, and what he meant was he wants to emphasize the need to help the middle class. he didn't say he doesn't, you know, isn't going to do anything for the poor, he's going to reform those programs, make them more efficient, the safety nets exist and can be better. it's out of context. obviously he could've said it better, he's acknowledged that. but the point was he's trying to emphasize growth and opportunity particularly for the middle class. >> that's the thing, i don't like that particularly for the middle class. i want it for everybody. again, jack kemp, a rising tide lifts all boats. we need all the boats to be pulling. >> that's right. >> i want to ask you, is governor romney going to pull back now?

because in two of his victory speeches, he said if you expect a bidding war for government benefits, i'm not your man. and we are spending a fortune, 35%, $600 billion increase in the last three years on transfer payments, which many believe created poverty trap, in other words, on an after-tax basis the benefits are worth more than if they go to work. can you fix that? seems to me that's really the issue. >> absolutely. and you know he's got a very detailed and bold plan for reforming entitlements, including having medicare remain as one option, not kicking anybody else off, but moving that to a market-base system and have it be one of many options in a marketplace. he also has proposals to fix and reform social security for the people on the program but the ones coming up. and if you look at mitt's proposals in that regard, they're very strong, very bold and go a long ways to getting those programs back on track, which as you know are the thing that's weighing down government spending and running the budgets over the cliff.

>> well, it seems to me the obama strategy. spend a lot more and try to tax millionaires and billionaires and who knows everyone else. when's the new tax reform going to come out? the governor did acknowledge what you told me that there is a phase two -- >> phase two, i've been telling you. you've been -- >> you gave us a great fear. you're a terrific, honest guy. and i appreciate that. the question now is when is it coming? will it be pro-growth? will it appeal to tea partiers and other conservatives in the gop? >> well, and i know you've been a lighthouse, a beacon for this, thank you, and as you know, phase one is to eliminate capital gains and interest and other taxation and bring that corporate rate way down. and phase two is to move a flatter, simpler, fairer tax system, the details and timing of that are yet to be developed and announced, but it is being worked on and it's something mitt addressed to you when he was on your show many weeks ago. >> many thanks, tim pawlenty, we appreciate it.

let's go to our panel. we have columnist mike barnicle, joe scarborough, host of "morning joe" and robert costa of the national review. thank you for coming back on. what do you think of donald trump's hiring mitt romney and firing newt gingrich? >> well, you know, i really think that what you were talking about with the governor is going to be what people are going to be talking about for the next week or so. and that not donald trump, it's actually more about mitt romney and what -- what did mitt romney mean when he said that he wasn't going to be concerned about the very poor? because as a conservative, like you, like jack kemp, like paul ryan, i don't think that way. that if you are adopting conservative policies you're only helping one class. i think like you said a rising tide lifts all boats. this is one more example of how mitt romney's not just connected from middle america, i think mitt romney's disconnected from conservatives. it's like he's never read a

margaret thatcher speech before. he wasn't really listening when ronald reagan was in the white house. he certainly never heard jack kemp speak a lot and didn't take that to heart. that to me today is the news regardless of what happened in vegas and that's going to be what's going to be haunting mitt romney moving forward. >> you're probably right. >> does this guy believe? >> stay on that, buddy. because you know what? mitt said if they don't have a big enough safety net, i'll fix it. we don't want a safety net. we want incentives to grow, we want to make it so if they move out of food stamps, if they move out of unemployment benefits, that on an after-tax basis it pays them to work. i don't want a bigger safety net, i don't think you do either. >> well, you know, larry, the thing is, you don't believe, i don't believe, jack kempf didn't believe that giving people a safety net and relying on that more than free market was going to help them in the long run.

we -- listen, i don't know about you, i know that if i believe that it will help the poor move into the middle class and be more productive, i would have been for it a long time ago. but we have seen for 30, 40 years, that's not the ticket forward that after all of these years, the best social program is still a job. >> absolutely. >> i don't think mitt gets it in his gut. i'm not saying we don't need a safety net, i'm just saying mitt romney doesn't seem to understand free market conservatism in a way that i think a republican nominee for a president in 2012 should understand it. >> mike barnicle, you've got two on the table. by the way, welcome back, mike, i appreciate it. >> thank you, larry. >> you've got the trump endorsement, i don't know if that means anything or not, and you've got this poor people issue that joe scarborough eloquently discussed a minute ago. >> i think joe was right on it

actually, larry. in one sense the trump endorsement is meaningless as well as puzzling. why he had to stand there on the stage with donald trump is beyond me. but while it's meaningless on one hand, it's something, it means something on the other hand. by that i mean the white house in the obama campaign actually released a tape of the endorsement of trump with romney. when you twin that with romney's misstatement or says misstatement now about poor people in this country, what he misses and joe alluded to this, he misses the fact that there are many, many families in the middle class, which is widening unfortunately the other way, the i don't think way, who think of themselves as maybe being on the verge of being poor because they can't go to the movies every saturday night the way they used to. they're worried about a college tuition payment, their own mortgage payment, money is tight, they're in fear of losing their job, the anxiety factor in this country is sky high and

it's now adding to what i think is the resentment factor among the electorate. and the resentment factor is this and it's our version of class warfare. people beginning to resent the rich because they think the system is rigged for rich people and more and more people as they get anxious about their own economic circumstances resent poor people because they think they're getting something for nothing. it's not a healthy situation for the country, and it's certainly not a healthy situation for our politics. >> robert costa, does the trump thing play right into what mike barnicle's talking about? donald trump, first of all he has low favorables, has high unfavorables, and he's another rich guy. he's another rich guy standing there with mitt romney, so you've got two rich guys. what is that? how does that stack up, robert costa? i'm not sure i see the political logic here. >> we're seeing, of course, president obama playing the gordon gekko line with mitt romney, the politics of this are very interesting. on tuesday night, we thought we

saw a different romney. but since then, he's confused conservatives with his poor remarks and today he's embracing the circus of donald trump. doesn't help him with the general election and with conservatives, it's a strange situation. trump is probably the most unpredictable surrogate any campaign could ask for and now romney's going to have to be answering questions about what donald trump said yesterday, it's a little bit of a mess. >> joe scarborough, is costa right? is he responsible for donald trump's statements? is that the way this is going to work? >> well, that's how the mainstream media's going to treat it moving forward. and again, i've got to question the timing of this endorsement. first of all, polls have shown that romney's going to win nevada by 20 points, 25 points already, why do you have the day this poor statement comes out donald trump coming out on stage, a billionaire that bathes in money, wants people to believe that he bathes in money,

at least. and i'm just talking, again -- >> it's because, joe, romney still feels -- you hear from conservatives all the time about not being the anti-establishment candidate, and he needs to shore up that anti-establishment vote in some way and trump's a way toward those voters. >> donald trump may be a way toward those voters, be but the fact is right now he's in trouble, he's in trouble not with swing voters, he's in trouble with conservatives like larry, like you and me and bob like you. and there are a lot of us that just believe that this guy sounds like the -- said hey, you know what, bob? you should run for congress because you've owned a business and he goes up to washington and doesn't have any idea what it means to be a bill buckley conservative, to be a jack kempf conservative, to be a margaret thatcher conservative. he probably thinks hayek is the field goal kicker for the new

england patriots. and let me tell you why this matters, it matters because people -- i've seen it -- they get to washington, d.c., they get their heads turned around, and they become big government republican sadists, and that's what we had with bush for eight years and i'm afraid that's what's going to happen with mitt romney if he doesn't understand free market capitalism more than he does. >> does that mean mitt will back off spending reductions? more government benefits is not the answer. there have to be incentives for people to move off the government dole and into the private job. do you think now mitt will retreat and throw away -- he's got some pretty good budget-cutting plans, do you think he's going to throw them away out of guilt because of this statement? >> you know, larry, you know what the problem is and you started talking about it with the governor before. the problem is, he needs to put out his plan for tax reform. >> right. >> he needs to put out his plan for balancing a budget. in seven years.

he needs to put out his plan for reforming medicare and social security and medicaid. he needs to put out his plan to save this country economically from the mess that -- >> what about embracing paul ryan? embracing paul ryan? >> or embracing paul ryan. but because he won't do that, because he's running an issues-free campaign and he's playing it safe, he catches himself in these problems instead of talking about issues that would excite conservatives like us. >> yeah. i'm out of time, i'm sorry. terrific conversation. i'd love to go longer. joe scarborough, thank you ever so much, robert costa, thank you, mike barnicle, thanks for coming back on. coming up tonight on "kudlow," jim demint is trying to ban earmarks and stop crony capitalism corporate welfare. that's the right idea, but it's a tough slog. he's going to join me right after the break. and joe scarborough said it, free market capitalism, it's the best path to prosperity. i'm kudlow, i'm still saying it.

we'll be right back after this short break.

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despite near record low jobs approval for congress, the senate today rejected a proposal for a permanent ban on congressional earmarks.

my goodness, dumb, dumb, dumb. anyway, a short time ago, i spoke with influential south carolina republican jim demint. and i began by asking him how a sensible bill like killing earmarks could've failed. take a listen to what he told me. >> well, larry, i don't either. with our country nearly $16 trillion in debt, i can't believe that the majority here in the senate still think it's our job to take on the bacon to their states and their special interests. i was really surprised by some of the republicans who voted against a permanent ban. the democratic caucus has even voted to extend the ban that is underway right now. but we're working on a bill that supposedly is going to keep members of congress from benefitting from inside trading, but many more members have abused and benefitted from the use of earmarks than from inside trading. so we tried to add that as an amendment, pat toomey led the effort on that. and unfortunately, we only got

about 40 votes. >> i just thought it was already republican policy in the house and the senate and on the campaign trail. to ban earmarks. you know, senator tom coburn has taught me through the years that earmarks early are the gateway drug to more and more spending. i don't get this. >> well, larry, and a lot of people don't understand that. they say it's only oh, $20 billion or so a year, but that's how they pass all these bills, the bloated budgets. sprinkle a little sugar in there for everyone around the senate and the house and we pass these things and we shouldn't be focused on local interests when our country's going bankrupt. this is something i think the american people need to take a look at for this election, which members of congress in the senate are willing to take a stand against these local -- what we call a favor factory and keep our eyes on what we're here for and that's america. >> i mean, it's not bad enough the cbo just said we're going to

have another trillion dollar deficit, this will make the fourth consecutive deficit, and it is dragging down the economy. they have very low growth for 2012, even worse for 2013, and so that brings us to the second point. what about the term limit vote? maybe, in fact, these members don't deserve to be reelected. maybe that's the tea party message that's going to come out in this november election. >> well, i also have an amendment, larry, to this bill that would at least be sent to the senate that we should pass the constitutional amendment to limit our term, it didn't even specify the years. the reason for that is we know power corrupts. all the cases of bribery and corruption i'm aware of is a result of people here too long, there's too much opportunity and temptation. if we want a good government, we need limited terms. so it failed, we only got 24 votes, americans again need to wake up.

we see the state legislators around the country that are vibrant and working, many of those are under term limits and that's what we need to have up here. >> let me ask you about another piece of legislation you're promoting, this ending corporate welfare for the whole energy sector. i believe you're cosponsoring with senator lee of utah. this would end corporate welfare, this crony capitalism. can you tell us about that, please? >> well, the president and the democrats complained about this and we're very willing to get rid of it, but i don't think we'll get much democrat support. we're going to eliminate all the subsidies and tax credits that we give to energy companies whether it be big oil or solyndra. let's just have a level playing field, let the markets work, let customers buy what they want. but let's stop picking winners and losers from washington with taxpayer money. so the companies can still have their deductions for business expenses, but that's the same across the board regardless of what kind of business you're in.

but as far as subsidies and tax credits that are special for particular industries, this bill would eliminate them. i hope we can get a little traction on this and get maybe some democrat support because they keep talking about corporate welfare. and we're with them if they want to join us. >> so would this bill be the model for a broad-based business tax reform, corporate tax reform, lower the rate and get rid of all the crony corporate welfare deductions and special carve outs? is that what you're angle for? >> that is. and actually i have a tax reform bill with mike pence. it's just a simple flat rate of 17.5%, and it just creates a lot of simplicity and it helps manufacturing in our country because it's border adjusted. you can export without built-in cost of taxes. so there are good solutions. i don't think we're going to e get it done this year with this president. while he talks about it, we've never gotten the democrats to support any form of tax reform that i'm aware of.

they just like to complain about it. we're going to lift up to the american people the things we're for this year and call their bluff on loopholes and subsidies for big oil and see if they'll join us. >> as i get this picture, we are in a heap of fiscal trouble on the edge of bankruptcy, the economy is badly performing, the jobless rate is too high, and what i'm hearing is nothing. nothing, nothing, no simpson/bowles, no corporate tax reform, no end to corporate welfare, no end to earmarks, this is why you see these polls running against congress as high as those polls are. i don't understand it. >> well, larry, it's like the folks up here don't get it, there's not a sense of urgency. despite all the hoopla and shutdown threats last year to cut the budget, we passed a bill at the end of the year that spends more this year than we did last year. they won't get rid of earmarks permanently because they want to take on the bacon.

the voters out there need to look at everyone regardless of party and send us reenforcements up here. i think they will, i think america will be paying attention because i think by the time we get to november, people are going to realize how much trouble we're in because between now and then, the euro could collapse, dominos could start falling here in america, and we just need to wake up because i really do think this could be our last chance to turn things around. >> thank you, sir, appreciate it. senator jim demint of south carolina. great stuff. hope to see you soon. >> thanks, larry. all right. coming up, the $30 billion man. we're going to put a face on that story and all the late-breaking headlines coming into the cnbc newsroom. please stay with us.

facebook founder and ceo mark zuckerberg. he may be the $30 billion man. more on that and all the latest break in headlines coming into the cnbc newsroom. good evening, seema. >> that's right, facebook's initial public offering may value mark zuckerburg at $15 billion. that may make him on par with ellison who started oracle 35 years ago. not bad. and the world's largest diversified commodities trader is in talks to buy a mining group in a transaction that could combine close to $80 billion. the merger would create one of the world's largest mining

companies. and china snaps up three energy deals. chinese institutions unveil three separate energy deals in north america and europe that underscore beijing's need to seed its booming economy. and potentially bad news for pfizer, recalled birth control pills could spur big losses for the birth control giant. it's possible women who become pregnant after taking the def t defective pills could sue pfizer for unwanted pregnancies. so-called wrongful pregnancy cases similar to medical malpractice. and turning to news overseas, thousands clash in cairo and other egyptian cities following the deaths of at least 73 people after a soccer brawl in the city. last night's brawl was the bloodiest outbreak of lawle lawlessness since the oust of mubarak a year ago exhibiting the failing of the government to reestablish order. back over to you, larry. >> thanks very much. coming up, ben bernanke spoke before congress today.

is he bailing out trillion dollar budget deficits? in spite of this, however, might we still be looking at a stock market melt-up? you don't want to miss this, the "kudlow report" will be right back.

welcome back to the "kudlow report." i'm larry kudlow. let's do some stock market work now. joining me is david malpass, former reagan treasury official, and ken heebner. i have been channelling and rechannelling your market melt-up. now i get to give due credit. in brief, tell me why you're such a big optimist? >> hi, larry, i began changing in november, and it's because europe stepped back from the brink. you know they were a big risk, something very bad might have happened, but the ecb has now stepped in and i think that's a plus. and then on the u.s. side, we do have growth coming back. you see it in the auto sales for january. and that may be enough given the amounts of cash on the sideline in the pent up demand to give us a real recovery in 2012. >> ken heebner, do you agree?

and i want to add, jobless claims fell today. ism manufacturing very strong yesterday. ken, are we in a market melt-up? >> the ingredients are all there. particularly the acceleration in the economy. car sales at 14.1 is the highest since the spring of '08. and the home building industry, which has been dormant. i see signs of a dramatic turn to the upside. i've been following an index of home building orders of 20 years and it has spiked in the last month to levels not seen since '06. and this comes against a background of we have been producing housing at about half the rate of new household formations. we had to work off a surplus, but once we normalize home building, you can see almost a double. and that would ripple through the u.s. economy. and as david pointed out, the threat of a meltdown because of european sovereign debt defaulted and wiped out the

capital of the european banks, that's been receded by the brilliant execution of the ecb of a combination with hundreds of billions of dollars of three-year 1% credit to the banks so they can dodge the sovereign debt as well as selective buying of the debt by the ecb itself and that crisis is gone. the italian debt yielded over 7%, now well under 6%. >> david malpass, you guys are basically in ingredient, fascinating, market melt-up, a lot of things are breaking right, i like that. let me ask you about some of the issues, okay, out there. we're facing huge tax hikes in 2013. huge tax hikes across the board. the budget deficit is not getting solved. the spending issues are not getting solved. we had senator demint on, he can't even get his own party to end earmarks. should we be worried that washington is going to be a head wind against this market melt-up? >> i think we can worry that washington is really not going to be helping in 2012. so the question is, can the

economy do it in spite of washington? now, on your specific issues, the tax issue. you know, there's more negotiating power for, say, the republicans than you might think because the alternative minimum tax expires at year end, and also the lower rates on the 99%. you know, the bush tax rates applied to everyone. and so, obama's going to have to negotiate on that, and then with regard to the spending, i think we just have to count on them blowing out again in 2012. cbo just put out their estimates day before yesterday, and it showed basically $1 trillion deficit for as far as the eye can see in the alternative baseline, a likely one -- >> that can't be good. ken, we don't have a lot of time, but would you be buying the cyclical growth type stocks now, ken? >> exactly. i think first of all, the banks

will benefit from a rising -- from movement in the economy. and i think the airlines are an industry where there's been tremendous improvement, but negatives has held them back. they're the cheapest of the cyclicals and the retailers are attractive. >> what about the industrials and the commodities, ken? >> well, i think there's opportunity in these stocks, i think there's more opportunity in the ones that are most out of favor. the reason i say that is, there's been a fair amount of investment in companies like caterpillar and the other commodities driven companies because investors have been bullish on these types of stocks to some extent. >> all right, we're going to leave it -- go ahead, david malpass, you want to add something. >> two things, the fed is keeping the rates low, so big balance sheets are okay, a lot of debt is okay if they're putting the money into asia, that's what bernanke is basically saying. and second is, they should replace the debt limit with something that actually works. congress is circling around on

itself because they have a very harmful debt limit that we've been saddled with for the last nearly hundred years. it doesn't work. >> all right. we'll leave it there, gentlemen. thank you, david malpass and ken heebner. now, let's do fed work, we just did stock market work. chairman bernanke testified before congress earlier today. now, take a listen, please, to an exchange between the fed head bernanke and committee chair representative paul ryan. >> the federal reserve whose primary goal is to manage our money is involving itself in fiscal policy. sort of bailing out fiscal policy because the branch of government in charge of fiscal policy of this branch is not doing its job. >> all right. let's bring in bill, former president and ceo of the st. louis federal reserve. bill, thank you. is bernanke, in fact, bailing out these trillion dollar deficits as paul ryan fears? >> hey, larry, good to be with

you again. sure, if the fed has another round of quantitative easing, which the fed has left open, it might be $1 trillion worth and the fed might be buying the whole new output of government bonds, yes. >> that can't be good. and doesn't the zero interest rate out to 2014, what does that say? the fed is never going to get back to normalcy in our lifetime. this can't have a happy ending, this is what bothers me. >> larry, let's read the language exactly from the statement that the fomc had at its meeting. the committee decided today to keep the target range for federal funds rate at zero to .25% and currently anticipates the economic conditions including low rates of resource utilization, subdue that for inflation over the medium run are likely to warrant exceptionally low levels for the federal funds rate, at least through late 2014.

okay. so there's a lot of hedges in here. but this pledge, parent pledge through 2014 is a terrible mistake, as the optimism that you were showing that i generally share about the u.s. economy could blow this prescription out of the water with even -- with the employment report tomorrow. >> so the fed may be dead wrong is what you're suggesting. and bill, i want to ask you, a lot of the house members on the budget committee today asked bernanke if he's willing to sacrifice his inflation target of 2% in order to keep stimulating the economy to get unemployment down. you see the 2% inflation target thrown to the side under the bus? >> not in any formal way, larry, but the danger is that we will continue to talk about that target and let things slide and all of a sudden we'll look back and say, wow, look what has

happened, and we've got an inflation underway that is hard to reverse. >> and in that case, which may or may not be the worst-case scenario, i don't know, maybe it's a likely scenario, is the fed throwing the dollar under the bus? the exchange rate? >> lots of things will come unstuck if expectations of inflations take hold. the value of the currency is one of them on foreign exchange market. there will be big increases and interest rates on treasuries and other such securities that's going to produce losses and portfolios that have those long-term bonds. there will be probably some slight end to collectibles, land, commodities, all sort of expectations will come unstuck. >> it's kind of a repeat of the mid 2000s and maybe on a smaller scale i hope of the late 1970s.

that's what i hear. just last quick thought. >> yeah, well, actually i hope smaller than the 1970s. but the fed is on a course that will be very difficult to undo because it's got this parent pledge in there, 2014. they can't change that estimate every other meeting, so they're going to be stuck with it for quite a while and have difficulty walking away from it. >> we'll leave it there. many thanks for the expertise, former head of the st. louis fed now with kato institute. coming up, folks, one of america's leading private equity bankers. he slams president obama. and mr. ross supports mitt romney. wilbur ross will tell us why when the "kudlow report" continues.

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are you okay with a president romney? he's going to get the nomination, are you good with a president romney? >> well, i think i'm delighted with the idea with a president romney because one of the things we've been lacking in somebody who really can manage the country. and i think never hired the current administration to run any business, and i'm confident romney would populate the agencies and cabinet with people who know how to manage things. >> let me ask you a question, donald trump endorsed mitt romney today for the nomination. and as you know, donald is very, very tough on china. he's really a china basher and india basher also. are you worried that mitt romney who has already been tough on china might lead us into major hostilities regarding trade and the currency? >> well, i'm not a china basher, and i don't think that america should be china bashers because

that's not going to change anything. if you want your currency to slope more, which they are gradually doing, the wrong way to do it is to scream and yell at them in public. that simply doesn't work with the chinese. so i hope mr. romney would understand that. >> are you at all worried regarding the private equity business? are you worried that with mitt romney running, president obama is going to go what newt gingrich did with newt's bain capital bashing and raise that to the tenth power, might end up hurting a very valuable industry to private equity business. does that concern you at all? >> well, it concerns me mainly because i don't think that the way to help the 99% improve is to try to tear down the 1%. we need to build a more growing economy and we need to improve the educational system so that the people can return to an

aspirational society. and that's a lot of what's wrong with what's going on there now. >> let me ask you if you had an hour with mitt romney, maybe you've already had an hour with him now. i don't know, what would you say to him? what would your major issue to be to advise him? >> well, i think that he's doing a very good job of annunciating his policies. he made the most detailed economic plan of any of the republican candidates. i don't see anything fundamentally wrong with it. and i think very right he has a pretty clear vision about the fact that we need an energy policy, we need policy in the number of areas as opposed to wasting money on solyndra and these other half-baked things that are trying to be solutions. >> all right. we're going to leave it there. wilbur ross, many, many thanks.

we appreciate it, wilbur. >> good night, larry. all right. up next, are we going to get an extension of the payroll tax cut? and will it include a green light for the keystone pipeline? we've got members of both sides of the aisle joining us after the break.

for another extension of the payroll tax holiday. and what about the keystone pipeline. is that going to be in it? joined by members of both sides of capitol hill this evening, from the house, rob andrews, democrats in new jersey, and from the senate, republicans from idaho and mwelcome, gentlemen. senator crapo, you're going to get the payroll tax cut done, but i'm reading about a revival of the millionaire surtax as a way to finance it. say it ain't so, sir. >> i don't think there's much chance at all of that happening. and frankly, if you look at cbo reports, the average millionaire tax return today is already taxed at 29.6%. the bottom line is there's no reason for us to be increasing

taxes in our economy right now. and frankly, we've got to stop this notion that we want to raise taxes in order to justify failing the continual explosion of spending at the federal government. >> let's get your take on that. are you in favor of the millionaire surtax? or can we finance payroll tax cuts by cutting back let's say on government workers and their outstanding disagreement with private sector workers. they have a 16% differential. why not cut government workers back? >> i think there's some ways that we can cut back. here's one i would suggest. why don't we let the medicare administration negotiate the price of prescription drugs the way the v.a. does? the estimates indicate that might save $200 billion to $300 billion over ten years, why don't we do that? that's a way to reduce outlays but not reduce benefits to people and really let the competitive market work instead of having fixed prices. >> senator, what do you think of

that? >> well, actually i think that the price fixing comes when the federal government which has the total control over that segment of the health care market steps in and says what it will pay for prices of drugs. we've seen prescription drug prices go down under the system we have in place now that allows for competition and allows for private sector bids and competition to help drive the cost of those drugs. i guess i would ask who pays more the v.a. or medicare? medicare pays a lot more than the v.a. does. i don't think seniors think prescription drug prices have gone down, but i think this is a way that the congress maional budget office has said we can pay for this tax cut and i would support that. >> senator -- >> go ahead. >> no, you go ahead. please respond to mr. andrews. >> i was going to say, again, the notion that the federal government can actually force drug prices down and claim savings is correct except it's a

short-term thing. price fixing by the federal government which is what would happen if the government were able to do so under this proposal. never works in the long run. >> senator crapo, can i ask? we don't have a heck of a lot of time, keystone pipeline, is that going to stay in the bill? a way to green light the keystone pipeline? and i know that one of the co-chairs of the conference, max baucus senator from montana is very much in favor of the pipeline, would he go rogue on the administration? and support a green life for the pipeline in your final deal? >> well, larry, i wish i could have -- i wish i knew the answer to that question. but i can tell you that we are going to very aggressively push for the keystone pipeline fix to be included in the final deal and i don't know what senator baucus will ultimately do. whether it's included in the final deal for this conference committee or not, though, the issue will not go away. and i'm very confident that we will continue to see action in both the house and the senate to push for a legislative solution to the issue. >> all right. terrific stuff. thank you, gentlemen, we

appreciate the update. >> thank you. all right. many thanks, congressman rob andrews, senator mike crapo, we appreciate it. folks, tomorrow night, please tune in, former republican presidential candidate herman cain, he's going to be with us. we'll talk more politics. that keystone pipeline is so important, to create jobs, we're talking energy security. i hope they stay with it. we'll see you tomorrow night. so, how was school today ? 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.

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