number validates that we've moved this much and allows us to build on it. i always say there's a bull market somewhere, i promise to find it just for you. i'm jim cramer. see you monday. hey, larry, what's lined up tonight? jimmy, the big jobs number is a huge game changer for everything across the board. good evening, everyone. i'm larry kudlow. this is "the kudlow report." that's right, folks. our sizzle story tonight and our major theme, the big jobs numbers. 243,000 non-farm payrolls. get this, 847,000 small business household employment. incredible number. all summing to an improving 8.3% unemployment rate. with this game-changing jobs number the stock market meltup we've been talking about should continue. and the game changer should spark an end to the fed's crazy zero interest rate policy. and the big jobs gain may also be a game changer for the presidential race, boosting president obama's chances. and let's get right to our top

story because this is more fun than i've had in ages. today's game-changing jobs number. let's go right to former labor secretary and cnbc contributor robert reich. he's the author of "aftershock." and we welcome back former republican presidential hopeful herman cain. he's endorsed newt gingrich for president. herman cain, right to you. happy days are here again. america and finally recovering. what do you think? >> not so fast. not so fast. they forgot to count those that have given up or dropped out of the job market. that number is deceptive. i wouldn't count this as happy days are here again until we see this happens for three or four months more. >> well, we've got several months running on this. and when you say, by the way, they forgot to count, that's not true. they count them. the trouble is until recently people are leaving. but robert reich, i'll go to you as a former labor secretary. the reality is 508,000 people re-entered the workforce in the month of january, but

unemployment went down anyway because 847,000 people were counted as job increases in the household survey. so i'll ask you, are happy days here again? >> yes, i think they are, larry. i mean, there's still a long way to go. i think herman cain is absolutely right, we're not completely out of the woods. but if you look at the trend, since september we had 9.1% unemployment in september and it's been going down every month since then. we've also seen gains in terms of the payroll survey. so despite critics from the right and despite conservatives who say oh, obama has been doing all the wrong things, we'll never see a positive trend, we are seeing a positive trend. i think obama's been doing exactly the right things. maybe he could have been doing more of the right things. but we are doing what we should be doing. >> rerman cain, exactly the right things? do you read it the way brother reich does? >> with all due respect, businesses are trying to make something out of nothing. they're trying to make lemonade out of lemons.

look. look at the gdp of last year of 1.7%. and it's already off to a slow start this year. look, the unemployment number is -- that's just one indicator. the big one that i look at is the gdp growth. and when you look at the gdp growth of all of last year, 1.7%, that's not enough gdp growth for this to be a true indicator of job growth. this is why i say let's see what happens over the next three or four months relative to gdp as well as the job numbers at around about june. >> but you know what, robert reich? it pains me because i think i'm going to argue your position, at least partly so. >> i have never been on this program when you've done this, larry, and it makes me nervous. >> it happens once every 10 or 20 years. but the fact is ism reports are showing 3% plus growth. we've had a big car sales component that's showing 3% plus growth. chain store sales are showing 3%. i mean, robert, it's not 6%, which is where it was at a comparable stage during the reagan recovery of course, but

it is 3%. and i think with all respect to my friend herman cain it's going to be better than he and others think. robert reich, how strong is this economy? and will it last through the election year, most importantly? >> well, you know, obviously nobody knows the future. i think one of the soft spots, what i would worry about, is that income, real income growth is not yet what it needs to be in order to really provide the comfortable margin with regard to the demand side of the equation. but there's no question about it. i mean, employers are hiring. factories are being fired up. there is much more economic activity. things are going in the right direction. it is too early to pop the champagne corks. i think the president has got to be careful when he talks about this not to create the impression that we are in the promised land. but he obviously is -- and the white house is obviously getting a huge boost. it's going to be much harder for

a republican presidential candidate, whoever it is, to make the case that this economy is in terrible shape. >> is that true, herman cain? that's the key question. will it be harder? i notice obama picked up a couple of points today on the in trade, pay to play betting parlor. he's now 50% chance of becoming president. what do you think here, is reich right? >> i think he is partially right. but here's what you've got it look at. you've got to look at -- there are some positive indicators. hooray. i'm glad for these positive indicators. and i'm looking for other positive indicators, also. but you've got to look at the big indicators. gdp growth is one of the big indicators. and even though you might find some positives in some sectors of the economy, we've got to see robust change in other parts of the economy. i'm just still cautiously optimistic as to whether or not these small positive signs are really an indication of what's going to happen long term. i'm just not convinced yet. that's all. >> let me just say, if herman

cain is cautiously optimistic, that means a lot of the public is cautiously optimistic. and if a lot of the public is cautiously optimistic it's going to help obama a great deal. it's also going to help the economy because to the extent that economic growth and economic activity is to some extent a pruvthd a self-fulfilling prophecy, people are more confident, they buy more, there is more hiring, then cautious optimism is pretty good at this point. >> herman, what do you think about that? he's saying confidence is going to rise just because the data is better. and i want to ask you, with respect to the republican -- i know you're for newt gingrich. but i think it's fair to say mitt romney's the big favorite. what must republicans, whoever they are, what must they do to say we can make this better and faster and stronger and more like reagan? is that message getting out, herman cain? because as these numbers roll in, the public may say, well, it's not so bad after all. >> the republican candidate must be bolder and more specific with what their plan is for economic

growth and jobs. the thing that president obama's going to have to deal with over the next several months is this little small thimble of an increase called the payroll tax increase. they're going to argue over that. see, the president has not put a bold proposal on the table. he's talking about raising taxes. he's talking about raising taxes on the rich. and i believe that that is going to dampen this temporary optimism and these temporary positive results that we've seen. the republican nominee has to be bold with a specific plan that's going to really boost economic growth. this president has not put anything on the table that's bold. he's just waiting for the businesses to basically pull it out based upon their productivity improvements and things of this nature. >> let me just say in response to herman cain that republicans have been saying all along we don't want a bold white house, what we want is businesses, the responsibility here is on the private sector. and obama's been too bold. what obama is now calling for is

actually very, very modest and that is an extension of the payroll tax cut and also an extension of extended unemployment benefits, both of which seem to me to be much more likely now that obama has been calling -- >> why? now is the time we don't need that stuff. we're just going to bust the budget. go ahead. >> larry, with all due respect, the businesses don't want bold spending and they don't want timid tax cuts. that's what they don't want, secretary reich, with all due respect. they want some bold tax cuts. and what this president is saying is he wants to increase taxes and he's playing the class warfare card. >> no, i think what this president is saying is that you're not going to have much business expansion without consumers who are ready to buy. and what he is doing and what he is saying are entirely consistent with that message. i mean, extended unemployment benefits are necessary because what we see in today's unemployment report is that the one segment of the unemployed actually going up are people who have been unemployed for more than six months. there are still 3 1/2 job -- people looking for jobs for

every job opening. you need to extend unemployment insurance to put money in their pockets so they can turn around and maintain job growth. >> secretary reich, with all due respect, that's a thimble in an ocean. we don't need bold spending. we need bold tax cuts. that's what businesses are saying. and that's what it's going to take to really get this economy going. >> see -- >> with due respect. with due respect to herman cain, let me just say, now, businesses are sitting on over a trillion dollars of cash. they don't need tax cuts. they are actually -- the fact of the matter is they are expanding, beginning to expand without any additional tax cuts because they're seeing consumers beginning to come back. >> herman cain, you know what? the bottom line answer is business is recovering in spite of the white house. >> yes. in spite of. >> the resiliency of the free enterprise system is so great that even all of robert reich's mixed witch's brew of stimulus can't stop at least some growth, herman cain. that's the bottom line.

>> that is the bottom line. just think of what businesses would do with all of that pent-up cash if they had some positive stimulus. >> you know, both of you, if unemployment were going in the opposite direction, you would say the same thing. i mean, it doesn't make any difference. >> i've got to leave it there, gentlemen. there is a lot of respect on this panel tonight. that's for sure. >> yes. >> robert reich, thank you. herman cain, all best of luck, sir. >> thanks, larry. >> coming up on kudlow, are happy days here again? stocks are roaring. the nasdaq at an 11-year high. the dow closes at a 3 1/2-year high. is this the big market meltup we've been talking about all week long? our market experts are standing by. and don't forget, folks. how great it could be. we could be having 6% growth and $400,000 a month -- 400,000 jobs a month. if, if free market capitalism was ruling as the best path to prosperity. i'm kudlow. we'll be right back. americans believe they should be in charge of their own future.

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all right. january jobs report had the bulls running today, giving the three major averages more than a 1% meltup. meltup. that's my key word. market milestone says the dow

closed at a 3 1/2-year high. the nasdaq settled at an 11-year record. so is it a game changer? joining me live on set, steve weiss, managing partner, short hills capital. phil orlando, chief equity market strategist federated investors. and stephanie link, director of research for thestreet.com. phil orlando, welcome back on the set. i want to know, i don't care about this 3 1/2-year high. when do we beat the all-time highs from october 2007? i'm ready. i'm waiting. when do we do it? >> our best guess is that we get up to the 1450 left by the end of this year. that puts us maybe 100 points shy of that. if we get some decent election results the end of the year, europe and the emerging markets continue to move in the right direction, that could be -- >> what kind of election results? give me a hint on that. i love a guy who does a little politics with the stock market. >> certainly what we've seen this morning was good news for the president. the important thing, though, is maintaining control of congress.

i saw a report that deutsche bank put out not too long ago. said the key thing is maintaining both houses of congress. in that event the stock market over the last 80 years or so has been up in those years about 15%. >> wait a second. you mean a split congress, a gridlock congress? >> a republican-controlled congress, even with a democratic presidency, much like we saw with bill clinton, the key is to maintaining control of the congress. >> stephanie link, earnings coming in, i've been noticing this, we're about 2/3 of the way through earnings season, and they're starting to creep up now. 9%. 8% revenues. if i do 1$110 a share i've got 2 times earnings for this coming year, that's not ultracheap but it's pretty attractive. how bullish are you? >> pretty bullish. i think today as you say was a game changer because the economic data has been pretty good up until this point except for jobs. so this was a big deal. i think the leading indicators

in the job report were also encouraging. >> so what's the lead indicator? >> hourly work, temporary work all was pretty positive. and it was pretty broad-based in terms of what group. >> hourly earnings times the average work week increase gives you a wage income proxy of about 5 1/2% per year, which is about three percentage points above inflation, which means you should be buying consumer-related stocks. are you? >> we are. we're buying a lot of cyclicals, a lot of beta. industrials and energy we've liked for a while, they just got so dirt cheap. but i think that actually the cheapest of all the suck lickals right now are the financials and technology. financials could go either way. you've got a flat yield curve for a while. i think it's going tieb little bit of a struggle. higher markets drive that group. and technology, that sector has kind of lagged, actually. there are some real winners there. >> tech is roaring. the nasdaq is roaring. year to date, steve weiss. tech is up 10% in the s&p. nasdaq itself is up 11 1/2%. banks are up 14%. but the emerging markets, which i think validates the new growth cycle, right?

that's kind of the tip of the iceberg. they're up 16%. what does that mean? the emerging markets up 16% year to date. >> first of all, it means they had a really bad 2011. so in rallies -- >> that's not the right answer. >> sorry. that's what i have. so in rallies the market goes to the junk first. not that it's junk. but it's the most beaten up -- >> but the highest risk. >> exactly. but here's the real key. today was a good number, the jobs number. i actually got bullish sooner, got very bullish yesterday. the reason is that you're having fixed income assets reach full pricing. so there's not a lot of value there. so you're starting to see money, number one, come back to equity funds. and the asset allocators without a doubt in my view are going to go after equities more and more. >> so common sense gauge, stay with that, it's a great point. people are going to read the big headlines tomorrow about the improving jobs story and along with that there will be isms and car sales, all of which looks like 3% growth. so they're going to say to their brokers on -- and their planners

on monday, i've got to go into stocks, the economy is growing, all this talk about the new recession, the double dip, obama is wrecking america, it's not right. >> here's also what's going to happen. that's sort of it, but really what it's going to be, it's going to be we get the next ltro from europe. >> what's an ltro? >> it's basically -- >> an emergency loan. >> exactly. >> another trillion. >> 500 billion euros to a trillion. trillion would be great. my concern is if it's 500 may be a little disappointing. but you have massive liquidity from every developed nation and even some undeveloped nations, some developing economies. that's just flooding into the market. you can't really go into fixed income at this point because you're not -- >> good, stay out of bonds. >> so buy equities. >> what's your big shop, what's your crew doing? >> we've been overweight stocks since the bottom of the market i guess in that october, november period last year. i'm right with stephanie. the sectors we like best domestically are technology, financials, and consumer discretiona

discretionary. we are overweight emerging, overweight small cap. ? you're overweight emerging too. >> yes. >> do you think it's just because they had a bad year or are they showing us a new -- emerging markets, they're like the junk bonds. they're the highest risk but they're the leading indicators. so with where does that -- why aren't you going to worldwide imdss, worldwide commodity material stocks or worldwide energy stocks if the world is recovering? >> we like commodities, but the thing about the emerging markets is that the stocks -- the sectors we think are extraordinarily cheap because of the concern about a hard landing. we think the hard landing fears are overblown. we think they've stabilized. >> europe, all that's gone -- >> exactly. growth stabilized. >> soft landing in china? >>ing in china. >> one of the china indexsize up 12% p the other one is -- >> brasling is our favorite market. mexico, chill yeerks south korea. >> did you say the u.s.? do you like that emerging company called the united states? >> we do like the united states. but small cap over large cap in the united states. >> small cap, you buy that? you're kind of the big cap

traditionalist, aren't you? >> well, there's good value in large cap. and i think domestic,er, it's certainly the place to be. it's where there's the strongest growth right now. but i also agree in terms of china, we've been talking about china for a while. we do think there's a soft landing there. and so a combination of some global industrials, to your point, but then also -- >> favorite picks. be specific. >> so on the industrial side i like dover and i like eaton. in technology i still like the semiconductors very much. they're leading indicators and they've been very strong, but still cheap. like a broadcom is very cheap. and the apple derivative. financials, i still like the insurance companies. i like prudential a lot. and -- >> and last one. when do we break the all-time highs of october 2007? when, when, when? >> let's just take baby steps here. let's get excited about what we have here. >> baby steps p i want the vision thing. s with your vision thing tonight? >> we're just getting the ball rolling here. let's enjoy it. >> game changer, folks. that's all k say.

stephen weiss, phil orlando and stephanie link. coming up on kudlow with the economy improving a zero interest rate from the fed seems absolutely absurd to me. does the fed have the whole story wrong? we're going to ask an expert. former federal reserve governor randy krausener from university of chicago is going to have to suffer through me in the next segment. i am kudlow. we'll be right back. >> what makes scottrade your smartphone's

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. all right.

game-changing jobs number. economy improving. why in the world do we need an ultraeasy fed way zero interest rate until 2014? does the fed have the story wrong? well, we have former federal reserve governor randy crossner, professor of economics, university of chicago, booth school of business. hi, randy. i just don't get this. we're growing at 3%. we're not melting down. you're running the same -- your friends at the fed are running the same zero interest rate. no matter what happens. the economy's growing. it wasn't then. but you're still at zero. everyone's getting more bullish on wall street. you had a game-changing jobs number. the fed is so far behind the curve, what are they thinking? >> well, i don't think you would have had the strong jobs number without the low interest rate policy that the fed's had for a while. and also, we've had a couple of false starts. about a year ago we started to see job growth more than 200,000 per month and then it faded away. >> you know, randy, my friend and your friend john taylor from stanford hoover institute, the

taylor rule, which i am told is used by some in the fed, says that now with the economy expanding, and it's been expanding for a couple years, albeit slowly, the taylor rule says the fed funds rate should be 2%, returning gradually toward normalcy. what's wrong with that? it would be a vote of confidence if the fed started raising rates. >> well, certainly if we really see a good foundation for growth. i'm not quite sure that the taylor rule would have us there quite yet given that the unemployment rate is still quite elevated. it's over 8%. i mean, it looks like it's getting better, but we still have to see whether this is a false stone or not. as i said we've had some of these head fakes before in this recovery. so we really want to make sure the foundation is there. but i don't think we'd be having the growth we're having now without the low interest rate policy. >> well, okay. but, but, but you've got to return to normalcy at should point. >> for sure. >> here's another point. if you look at the inflation expectations, the five-year forward inflation model that's used the at the fed and the san francisco fed, it's saying 2 1/2% inflation.

the fed target is 2. all this with negative real interest rates. what i'm saying is are you sowing the seeds for another liquidity bubble? are you sowing the seeds for another commodity bubble and for bad markets down the road? >> i don't think we're there yet. i mean, obviously in the year two we may have a lot more information, but i think the fed's got to provide support because as you well know the fiscal authorities are not helping us out and trying to get the recovery going. the regulatory authorities are not helping out on that score. so it's really only been monetary policy that's been supportive for coming back. >> let me ask this. let's suppose, let's have a little thought experiment. let's suppose the gdp in real terms for the first half of this year is 3%. >> okay. >> and let's secondly suppose that we pump out 200,000 non-farm payrolls. not 250 like today. just 200,000 employment reports and 3% growth. would the fed start to raise the target rate under those circumstances? >> it would really depend on where they see -- and whether

they see inflation pressures coming or not. because i think inflation has been coming down in recent months. even though the economy has been -- well, the jobs market seems to be a bit stronger. so right now they seem to have a little bit more leeway to try to make sure this recovery really goes forward rather than being another false start. >> what are the circumstances, then? so far you're shooting me down in every scenario. what are the circumstances under which the target rate would be raised? it sounds like there's no reason to ever raise the target rate again in our lifetime. >> well, i could only hope that's not the case, that we will start to see a little bit more growth and potentially then some more inflation pressure. and it's exactly then that the fed is going to start to pull back, when they start to see those expectation that's you mentioned move up more significantly. when they see wage rates start to move up more significantly. we say little growth in wages in the most recent report, but it's still not robubust wage growth.

>> randy kroszner, university of chicago, former fed governor, shoot meg down at every turn. appreciate it. was today's better than expected jobs number a game changer for the presidential election? is it time for romney to prove he knows how to put a better policy to the to get better growth? our powerhouse political panel goes at it next. obama wins today. but so does the rest of america. [ mom ] to me, chex is not just a little bowl of cereal, 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?

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welcome back to "the kudlow report." america's had a wave of solid jobs numbers, giving the economy 3% growth momentum. looks good. not quite reagan good but good. here's what the president had to say about it today. please take a listen. >> these numbers will go up and down in the coming months. and there's still far too many americans who need a job or need a job that pays better than the one they have now. but the economy is growing stronger. the recovery is speeding up. and we've got to do everything in our power to keep it going. >> kind of a little low-key for a guy who had a pretty good day. today's jobs report a game changer for his re-election in

2012? let's talk to democratic strategist bernard whitman, radio talk show host mark simone, and cnbc contributor jimmy pathakukas of the american enterprise institute. i go to you, mark simone. big jobs number. and the momentum almost every data point is getting better. so if the republicans whine about the bad economy, obama could win. >> if it keeps getting better. but gingrich had an amazing victory in south carolina. but that was one week. you know, you've got to do this month after month. it's still just january. >> you said if the economy keeps getting better obama could win. >> he's a turnaround artist and if it's good you don't want it turned around. >> jimmy p., do people understand that? does romney know he's got to do more than just whine about the economy? which isn't reagan. i get that. but it's not going into a double dip. it's not going to have 10% unemployment. there's no conspiracy theories about bureau of labor statistics

wienies pumping out good numbers to protect their boss. >> if 2012 is going to be like 2011, assuming romney's the nominee, i was thinking that would be a catastrophic defeat for president obama. but if we don't get that, 3% in growth, 200,000 jobs, then i think it's a horse race and mitt romney's not going to have to say obama's not working. he's going to have to say why romney is working and make the affirmative case, pro growth case. >> in trade gave obama about another point and a half today. in trade, the pay to play betting parlor, said about a 50% chance the president will be elected. it's up actually about three points in the last week or so. what's obama's strategy here? in other words, that was a very subdued president regarding these -- doesn't he have to do a little crowing? doesn't he have to say that his dumb stimulus plans and all the nonsense he put out there with big government, keynesian tax the rich is actually working? >> no, not at all. why, larry? because the numbers speak for themselves.

243,000 jobs this month. 200,000 jobs last month. over 20 months of dnd job growth. 2.4 million jobs created under this president. 2.6 million jobs lost under the previous president. the growth rate -- >> i'm not asking you -- >> -- is now plus 16 -- >> 1.8 million new jobs since the whole recovery so-called 31 months. reagan at this stage had about 6 or 7 million -- >> we were in a much deeper hole. much deeper hole. >> i want to ask you this. is obama afraid to talk about his policies because he knows people hear his policies he'll lose? in other words, he should talk about the numbers like you are. but what if he talks about his big spending stimulus, this is the fourth straight year of a trillion-dollar deficit. isn't that his achilles heel? >> you know what people want to hear about? hope, prosperity. they want to hear about jobs being made available in their communities -- >> oh, you've raised the bar. you've raised the bar to prosperity. we're not at prosperity. if that's what you're talking about. he's not going to talk about that because that's not where we're at. the whole point -- remember -- >> prosperity starts with a job.

and 240,000 people have jobs now. >> that's not where we're at. which is why you saw a very subdued barack obama. >> that's not true. the fact is mitt romney has had a problem for a very long time, because this guy actually doesn't know how to create jobs. he knows how to fire people. he knows how to cause bankruptcies. he knows how to walk away -- >> no, this is very interesting to me. i think the public believes that mitt romney is the experienced businessman. and i think the public probably believes that he does know the economy's workings better than obama. but the public doesn't know exactly in a detailed, specified way how romney would make the economy more reagan-like in growth than obama-like. people respect romney, but has he shown them how he's going to make things better? >> no. and he's had that 57-point plan, which is ridiculous. you wrote a column today, it's on the cnbc website. two paragraphs. just jumped out at me. i knew exactly what you would do. it said more than his 57 points.

he's got to have a plan -- i think he's got it. i know he's a chess player. and maybe he's holding it back, he'll do it in the summer. this way gingrich doesn't have time to spit all over it. this time obama doesn't have time to co-opt it and start implementing some of it and take it away from him. remember clinton triangulated bush, stole his -- >> but the guy's been running for president for five years. i think the american public should know how he plans to -- >> he's like nixon. he's the new new romney. >> it didn't work for gore or kerry. >> this is the tricky part. he says to the american public i am going to make things a lot better. the american public i think is saying how. has he told them how? >> no. there was the 57, 59, i'm starting to lose track, point program. no, i think he needs to come out with that tax plan which he keeps hinting at, showing a little ankle here and there, a little -- >> to help the poor as well as the middle class. >> that's right. >> i thought he didn't care about the poor. >> we need mitt romney to have a little jack chemical np him. >> yes. >> a little jack kemp.

entrepreneurial -- >> why -- don't pick up the individual boats. >> it's not about the individual classes. it's about all the classes -- >> a job. >> 243,000 americans have that had month that they didn't before. romney's got a major problem. he's got to change his playbook because the economy is growing. it's been growing for 20-plus months. it's going to continue -- >> but you're going to have to dial down this -- the obama boom a little bit. dial it down. >> the numbers do not lie. confidence is coming back -- >> you know what? >> you know what i tweeted this morning? does the economy know something that we don't? >> is that his biggest hurdle? do people trust mitt romney to make it better? >> i think he's got to get that across -- they know he's got a solid record as a turnaround artist. they know obama inherited this bad economy from his first three years. so -- >> a turnaround artist? >> romney's got to reset the button on his budget plan. you're exactly right. bernard whitman, thank you. mark simone. and jimmy p. we appreciate it.

now, special guest. the question is still is romney bullish for the economy? here now is the always outspoken t.j. rogers, the great ceo of cypress semiconductor. t.j., let me just pick up where our panel left off. do you think that the public believes that mitt romney can make things better? i think the public thinks he's a good businessman. but do they trust him that he can get the job done to make things better? >> i think he needs to make the point more strongly that his business, the reason he made a bunch of money, his business was to take organizations that were sick, analyze what was wrong, fix them, and bring them back out as healthy companies. that's how he made all his money. and i don't think the average american understands what private equity is, what bain capital did. but i think he needs to let us, everybody understand that's what he does for a living, analyze problems and fix them. >> do you think he has made that case up to now, essentially selling bain capital, he was the ceo, it's a turnaround, this

great troubled company of ours called the u.s. government inc. needs him? has he made that case? do you think he will make that case, t.j.? >> i think he needs to make it more strongly. and just having listened to your prior guests, i think the point i would make in his shoes would be don't tell me about the great turnaround, the obama boom, somebody who's bragging about unemployment going below 10%, that's not the standard. if you remember, ronald reagan and jimmy carter. reagan asked people if they were better off. we're certainly not better off. we're certainly still in trouble. the economy is certainly sick, and there are a lot of unemployment people. and that needs to get fixed. and you know, one jobs report, wahoo, now we have the obama boom, i would attack that right away. >> t.j., tech stocks are very hot. the nasdaq is hot. i want to ask you, you're in the thick of it, as always. is there a serious recovery going on? >> i just reviewed my backlog

today. and by sitting in the room and looking at the orders my company has, you couldn't tell we're in the midst of the obama boom. or maybe if you were sarcastic you would realize that you are in the midst of the obama boom. we do not see it. and my company sells -- our two groups of customers, one is datacom. so we sell to the companies that build the internet backbone. and the other group of companies we sell to are consumer products companies that make cell phones and gadgets for people. and both of those markets are -- there's barely a heartbeat in those markets. and we're now into the new year and i'm not seeing it turn up yet. >> all right. so you're not convinced. let me go back to romney for a second, t.j. a, are you confident that romney can make the case that he's the guy? and b, are you confident of romney? just period. are you confident? is he the right guy? >> well, romney is one of my a.b.o. candidates. anybody but obama.

certainly he's got the intellect to do it. i am very concerned because he's done some obama-like things. you know, the massachusetts health care plan. socializing health care in massachusetts is not something a person who deeply believed in free markets would do. so i'm concerned about that. but if he campaigns, i believe he's an honorable man. and if he campaigns about government spending and socialistic policies, then he's kind of obliged to follow through on the other end. certainly he has the capability of doing it and he has the skill set to do it. >> t.j., is there a better pick in the republican litter, a gingrich pick, a santorum pick, a ron paul pick? i'll give you the last word on this one. >> well, i like ron paul. but that's kind of an idealistic pipe dream of mine. no. i think as in many presidential elections, and i talk to my friends and we always say who's the lesser of the two evils? i think romney, i don't think he's the lesser of two evils. i think he's a good man and he's

got a great record. but i don't see anybody inspiring. there is no ronald reagan out there today. >> one thing you would say to romney to make it better for him and his campaign, what would it be? >> as opposed to being a consultant and simply analyzing problems and offering solutions, bring some philosophy into it. bring in the philosophy that the government that takes your money and intrudes in your life is not the government of the american dream and we need to change that. >> all right. t.j. rodgers, cypress semiconductor, thank you ever so much as always for your wisdom. next up "the kudlow report" we've got some breaking news coming to cnbc. there has been a shake-up in the romney campaign. we're going to bring you all the details next. and the latest on the investigation on the small plane crash that killed a ceo. we'll look at the news headlines when "the kudlow report" continues.

mber the day my doctor told me i have an irregular 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. breaking news. politico.com is reporting that brett o'donnell, he's the debate coach who was credited with turning around mitt romney's debate performances, he has been dumped by the campaign. politico says o'donnell was an

apparent victim of internal tensions over how much he was being credited for romney's performance. oh, my gosh. here are some of the other headlines coming into the cnbc newsroom tonight. the national transportation safety board investigators are heading to boise, you'd i'd. that's the scene of the crash that claimed the life of micron ceo steve appleton. appleton was piloting a homemade experimental plane, was the only person on board. appleton was 51 years old. the company's c.o.o., who had quit weeks ago, is going to take over until a successor is named. new york state's attorney general is suing bank of america, jpmorgan chase, and wells fargo. they're being accused of deceit and fraud, saying the banks used an electronic mortgage registry to fake documents in foreclosure proceedings. the caterpillar plant in muncie, indiana might come out a winner now that the company is closing a locomotive factory in london, ontario. 450 employees will be let go

after a wage dispute and lockout. some of the ontario workers were paid at twice the rate the muncy workers make. after an enormous online activist furor the susan g. komen foundation has reversed its decision to cut funding to planned parenthood. the breast cancer charity had promised to cut funding because of an ongoing investigation into whether planned parenthood used federal funds to pay for abortions. and finally tonight, the fbi admits the international group of hackers known as anonymous were also eavesdroppers. the bureau says the hackers listened in on a supposedly confidential call between the fbi, scotland yard, and other international police agencies about that group. a 16-minute tape of the call showed up online today. all right. up next on "kudlow," president obama says today's jobs report is proof the economy is picking up steam. the republicans are pointing out it's nothing compared to the reagan recovery. i don't know.

i think it's proof that big government bailouts and stimulus pale in comparison to the strength of the free enterprise resilient capitalist economy. but we'll debate when "kudlow" comes back.

today's jobs report looks like a game changer to me. are happy days here again? however, republicans are correctly noting that 31 months into the reagan recovery 8.7 million jobs were created. during the same 31 months under president obama only 1.9 million. the post-war average, by the way, at this stage of recovery is 3.9 million. all right. let's talk. we're joined now by house budget committee member paul tomko. he's a democrat from new york state. and kathy mcmorris rogers, republican from washington and vice chair of the house republican convention. i've been reading today you feel this is not such great news and the reagan recovery is the one

we should strive for. >> absolutely. we can do better. this is economic recovery despite the policies driven by president obama that continue to make it very difficult for people in america that want to create jobs. for example, what if the president would have said yes to the keystone project? how would have that impacted this jobs report? i continue to hear from small business owners, from people that are out there trying to create jobs, that the policies driven by this administration have not just made it difficult, they're making it harder and worse on our economy. and whether it's the stimulus package that was passed three years ago this month, $787 billion in new spending and the president said if you pass this stimulus unemployment won't go above 8%. well, we know that wasn't the case. this is the 36th month where unemployment's been above 8%. we had health care reform. we've had a long list. >> all right. there are obstacles, mr. paul tomko, but i want to ask you, is it possible -- i'm going to be

very balanced on this question. is it possible, as many of the -- team obama is saying, that the stimulus is working, it just took longer? is that going to be your point of view? >> i think it's absolutely the case. i disagree with my friend and colleague from washington state. i think now that we have seen 23 months in a row of private sector job growth, that's a good indicator. and today, looking at the close of the market, larry, that was powerful news. >> you look at the stock market as a congressman? >> why not? >> that is awesome. totally awesome. >> i think the dow jones industrial average rising to a point better than before the 2008 financial crisis, growing by some 130 points, was an awesome outcome, as was the nasdaq index where we saw an 11-year high come into play. >> all true. >> so you can't argue with that success. and i think my colleagues in the majority in the house, the republicans, simply cannot take yes for an answer. >> all right. cathy, you heard paul tonko.

now, the stock market is voting in favor of a better recovery. but i want to ask you, these jobs are starting to roll in. they're not as strong as reagan. that's just a statement of fact. i get that. but why do we need a budget-busting, social security-busting temporary payroll tax cut if things are getting better? it seems like a waste of money that could really destroy social security. why do we need this payroll tax cut? >> well, i would say that the economy is still very slow. it's very sluggish. we still have 8.3% that are unemployed. when you look at the people that have just simply stopped looking for a job, it's near 10 1/2% of the population. there are still a large number of people in america that are struggling, have been laid off or trying to find work and can't. and this economy has been very slow. and the administration has been staking the approach that government and government jobs is more the answer. you look at the solyndra approach by the presidential, using taxpayer dollars to

support a particular company, versus what i believe is a better approach through private sector, through keystone project and other free market approaches to getting our economy going again. >> but paul tonko, i'll ask you a similar question. why do we need another 99 weeks of unemployment insurance where you're paying people not to work when it's very clear that for whatever reason and motive the economy is doing better? why, again? isn't this just a waste of money? wouldn't this even deter employment? >> i think the congresswoman is arguing against the facts. we have had 23 months in a row now of private sector job growth. so it is working. i think the president's policies are working. and he has asked that congress get out of the way, just allow for progress to continue with the policies, provide for the reigniting of the american dream. do it through small business investment. do it through the underpinnings of support for -- >> what about balancing the budget and having tax reform? >> i think you need a thriving middle class to get that circulation of money out there.

and i think the payroll tax holiday was a strengthener. and i think we should find a pay for, move forward -- >> you won't get a pay for -- cathy mcmorris rodgers, i give you the last word. i am reading articles all over the web today that you are going to be the vice presidential candidate on the republican ticket. daily caller, a whole bunch of articles. is it true? can you tell us on this show tonight that you're going to be running for the veep position? >> well, it's flattering to have my name mentioned, larry. i can tell you i've been focused on representing the great people of eastern washington. and that's been my focus. and the economic recovery that we've seen in america is despite the policies by president obama. we need a new president. and that is what is most important as we approach november 2012. >> that's a harbinger of the election argument. you two get along pretty well. paul tonko of albany, new york, if that's fair. and cathy mcmorris rodgers of the great state of washington. thank you both on a friday evening. i appreciate it. >> you're welcome, larry. >> all right, everyone.

that's it for tonight's show. let me just say to conclude this, politics aside, the economy's getting better because the free enterprise economy is resilient enough to produce some decent growth in jobs. i don't want more federal stimulus. i think that's what's holding us back. and i don't want tax hikes to pay for it. just let free market capitalism take a rip at the ball. thanks for watching. i'm larry kudlow. we'll see you monday night. ♪

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