genuine business model and fantastic work by them. i like to say there's always a bull market somewhere and i promise to find it for you here, i'll see you tomorrow. hey, larry, what do you have lined up tonight? rising profits mean a rising market and 14,000 could be here by year's end. good evening, everyone. i'm larry kudlow and this is the kudlow report. i continue to sing the praises of the bull market's sizzle in stock. that's good, which is low and another big drop in jobless claims confirmed this. look at the wall of optimism. we've got a better economy, better news from europe, and better profits and i would argue better stocks. folks, we're 12,890 right now. an 8% profit rise this year, 8%, mode modest. that would get you to dow 14,000 by year's end. we'll have distinguished panelists to weigh in on that. the story number two tonight, is the $20 billion foreclosure

settlement a big bank shakedown in a war on the bank declared by uncle sam on all 50 attorneys general? how will they lend if we keep taking their money from them. the mortgage deal from hell and in a cnbc exclusive you'll hear from the first time from clint eastwood. he'll tell us why he thinks he wasn't showing for president obama and you'll hear what he said in just a moment. first, let's drill down on our market story. jobless claims down, profits carrying us, 14,000 dow. well, i may not always be right. that's my take. let's get our experts, bob dole, tobias, citi's chief u.s. equities strategist and competing with all of this brainpower, we have cnbc contributor jack bouroudjian from index futures group, no slouch himself. tobias, let me begin with you. i want to make a point, jobless

claims coming down to what? 358,000 this week. that's a low, low number and it's a great trend. >> right. >> so i'm just going to argue, lower jobless claims and the economy is fine and it may not be spectacular, but the fine economy gives us profits and profits are the mother's milk of stocks and that's why i'm as optimistic as i am. there may be holes in this point of view, you tell me. >> i think there are holes in the point of view, but i think investors continue to be worried about where profit margins are and there are some indications they may have peaked out. the markets may have moved 25%. some have missed that run and a number of people have and i just came back from ten days in europe and investors feel they've missed the rally and they don't want to feel bullish if they pulled back or they don't commit and they're struggling with that. >> just a question on profit margins before i get to the great bob dole. i always felt that profits themselves, the level of profits

was really the key driver. i know margins may revert back to some historical norm at some point, but if you go back to this whole rally, stocks have about doubled and profits have about doubled and i don't think that's a coincidence, so if profits continue to rise, that is slowly, why is that not a good thing? >> you and i can agree all day long, the problem is will investors put their money in and they've been are ska decline -- and they need to be more convinced of this opportunity that it isn't a profit margin and that europe doesn't create the next recession. that's the great concern. >> key point, and i'll add to lower jobless claims and the good signal that it is for the economy and profits. no armageddon in europe, okay? greece will be greece and they'll either make a deal or they won't. they'll be in the euro or they won't. no armageddon in europe, is that the second positive point? absolutely, maybe bigger than the first one. the less tail risk kept

valuations on risk assets very cheap, larry and as that probability continues to shrink, equity valuations move up. stocks are still cheap. you can buy the s&p 500 and get the yield very similar to the ten-year treasury. how often can you do that? there's growth in stocks and there are no growth in bonds and i get a call option for free. >> i thought i was being very moderate. an 8% rise in profits and we've had 20% plus gains and i'll plug in another 28% and that's how i get another 14,000 on the dow. i'm assuming no collapses in europe and no armageddons and so forth. why not? >> if europe holds together, i don't see why not? >> we had a target coming in when the market was 1225 in mid-december of 1350 plus. we said plus, if europe holds together. profits themselves get us to 1350 and if europe pulls together we get valuation improvement and that's exactly what happened. >> that's exactly what happened. jack bouroudjian, i don't need a

federal reserve i don't care what the fed does. i would argue the fed is too loose, but regarding profits in the market and the mother's milk of stocks who cares about it? >> what you're getting right now is the situation where the markets are learning that they have to start concentrating on the fundamentals again. you've got a market that is trading at a low p-e, larry. let's keep that in mind. these are historic lows. you're talking about 15,000 and that would put the s&p at around 1450. that's still 14 times earnings on the s&p. that's still cheap. in pack, i think you might be undershooting it. so what we have right now, though, is pure capitulation. you could hear the bears if you listen. they don't want the cheese anymore. they just want to be left out of the trap. right now, what they're looking for is a situation where they are trying to buy pullbacks. unfortunately, this is the type of market that is going to drive them insane. it's going to just keep grinding higher and higher with very few pullbacks because, quite frankly, you've got everything that you just talked about what

top y tobias talked about all working in unison. you have people underinvested and now we're starting to see the rotation out of bonds and look at the 30-year. bonds are a death trap. the whole thing, the ten-year and the 30-year, let me try this on you. we want to look for risks and we want to look for holis and want to be as balanced as i can. if you take europe off the risk listd the vix index is very low. the stock groups that are rising are riskier stocks and the pro-growth riskier stocks? what is this missing? >> i want to be completely realistic about this. it is something that worries people. >> they're looking at margins being very high historically. they're looking at the earnings trend slowing and it would be slower than what we saw last year in double digits. so is this the beginning of the next downturn? we've been conditioned to think that way. bob talked about 1350 plus and

we have a 1425 target on the s&p. and it was one of the high numbers on the street. we've been fairly bullish. can we see consolidation again? sure, that's realist being and before we put out the last year, but in december called the raging bull talking about the secular bull market in 12 to 18 months. >> what about higher taxes scheduled for january of 2013, okay? the fed talked about this, bernanke said, you know what? this is not the good idea and i was proud of bernanke, and i gave him a pat on the blog. you have the bush tax cuts that are overturned and the obama tax hikes, quite apart from the millionaire's tax. what about the rising taxes? problem. potential fly in the ointment, i think the markets are not focused on that at all and it's next year. the sequestration kicks in as well and we'll have a fiscal drag between the taxes and spending issues that increase the probability of recession if the economy is not in a

self-sustaining growth path. >> the jury is still out. i think we just don't know yet. do jobs beget spending beget jobs beget spending? >> yes. >> incomes jobs beget incomes and incomes beget spending. and the balance sheets beget some kind of capital investments which creates jobs. whether it will be as robust as we want it to be, i don't know. they're profitable and pristine. >> indeed. it doesn't have to be starting from the valuations if you're taking europe risk off the table which you do in your premise. you also have the presidential election uncertainty. >> right. it is way too early to make that call. if the president wins you might own portfolio a. if he loses you might own portfolio b. what's with the difference? energy, financials, healthcare and defense that's nearly 40% of the s&p 500. take me through a couple of

those, energy and defense. how does it affect those sectors? >> the view is republicans tend to be less willing to cut defense spending and they're wanting to put more regulatory constrain constraints. certainly health care and financials are pretty easy with obama care and dodd frank. >> interesting point. >> jack bouroudjian, a lot of people are telling me, gasoline prices at the pump are going $4. they're going $5. i heard this a year ago. i'm not seeing this in the price of crude oil, and as you know they're way low because of the fracing miracle and the fracing revolution. they may pull down gas prices. is gasoline going to end this whole euphoric, positive picture, stop the economy and stop consumers and therefore stop stocks? >> it will not be gasoline. it will be copper. keep an eye on copper prices stay above $4 and that will put in a real couple of on the plans. it will be faster than they

think. it is probably the commodity and the known commodity if you think about it for the housing industry and the preferred metal of choice for the high tech industry. bob, i'll give you last word on the dollar. >> some people have come on the show and correctly said if the dollar falls continuously, that will generate a spike of inflation and that, in turn, will knock stocks down. you get the last word. >> i totally agree that will be a problem. we don't need a weaker dollar. >> do you see that? >> i don't. the the yen strength, i can't figure that one out so i think the dollar is more likely than not to have some strength. >> favorite investment? >> u.s. equity, large cap. favorite investment. >> you have big brainpower right here. bob dole, thank you very much. tobias, levkovich, and coming up on kudlow. we'll hear exclusively from clibt eastwood on halftime in

america. it's his first on-camera interview since his controversial spot in the super bowl. that's coming up later in the show. next, the government's war on banks. this is not a good story. is today's $25 billion mortgage foreclosure deal a big government shakedown of the banks for a lot of coca maimy redistribution. don't pick on the banks. we will need them. i'm kudlow. we'll be right back.

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>> officials sealed a $25 billion mortgage foreclosure dole with five major banks and ends's year-long push for possible foreclosure abuses, but is this not just the war on banks declared by the u.s. government a shakedown which is meant to finance new government bailouts? more redistribution or class warfare? i know i'm asking tough questions, we have cnbc contributor jack bernstein, he's a former chief economist of vice president joe biden. we bring in mark calabria director of regulation studies at cato institute. i know john will disagree, but that's fair. that's why we want him.

the banks made some mistake, i grant you that some of these robe owe letters and so forth, but i don't see why that's against the law. i don't see why they should tack a $25 billion hit except to redistribute money from banks to mortgage holders who screwed up. that's my take, is there a war going on here? >> i think there's absolutely a rhetorical political war. this is geared to november more than anything else to the extent that people committed crimes, they should be proven in court. the basis of our justice system is you did something wrong, you're innocent until proven guilty. that plan lacks all of that and what bothers me even more is that most of the damage will be paid for by investors rather than banks. banks will pay part of this and pension funds and retirement funds will take a hit on this and they're not at the table for negotiations. it's not simply a war on banks and a war on savers and that will slow down our economy. >> jack bernstein.

here's the thing. mark raises a very important point, nothing has been proven in court. they are taking the action without any court action. i know the banks made mistakes. i also know, however, that fannie and freddie made gigantic mistakes lowering credit stand ars and they're not even figured in this action. what i don't get is why are we taking the bank money first before we figured out if there was anything criminal and so forth? >> because the banks believe it's in their interest to do so. no one's forcing them to sign on to this settlement. with great respect to you and to mark, you guys are very much on the wrong side here. this is not about capital, war on banks. if we were talking about a regulation or a tax, i would be happy to have a great debate with you. this is about releasing five bank mortgage servicers from liability associated with fraudulent practices. if they didn't want to sign the settlement -- >> how do you know they were fraudulent practices?

>> first of all, i know mistakes were made -- >> fraung lent -- >> the settlement leaves open future court action after taking $25 billion. >> if you read the settlement you will read about robe owe signing, forging, back dating and there were cases of 60% -- >> allegations. >> they had every right to go into court if they wanted to. they chose to settle and the reason they chose to settle is because they know they've made mistakes here and that had nothing to do with punishing the banks or war on capital. this is a settlement against fraj lent behavior that you cannot foreclose on someone if you don't hold the iou. >> mark calabria, weigh in on this fraudulent behavior and why there has to be a transfer of money from investors to the government. if the banks did something wrong then they should be penalized and whatever, criminally look, i don't care, civilly, but that hasn't happened yet. >> i would agree that this is cheaper for the bank's

perspective and that's why they want to get out of this. it's a cost benefit analysis on their part, but justice shouldn't be a back of the envelope cost benefit analysis. and the american public needs to know what's right or wrong and it was one of the big things in this is the first leans and second leans are the same. one of the basic rules of law is that you respect the priority of contracts and we mix it up just like gm when the pension holders got screwed and had the unions. it's picking winners and losers on this and it needs to go to court. >> the problem with that reasoning is that i think that if you follow that logic you would have to object to every settlement ever, and it's a very common thing in our legal system for the defense to say, look, i don't want to take this to court. i want to settle out of court. >> i'm not saying that that's an admission of guilt. i take your point. if they wanted to go to court and fight it out, they would.

>> i think a fair interpretation that they're very much liable and they want to be released from liability and it's worth 25 billion for them to do so. >> i don't see anything wrong with that. >> i think the future precedent we're settling is something that has to be discussed. mark, let me ask you one other thing. the administration wants to bail out a lot of mortgage owners. they want to refi and an interest rate reset. they're basically, mark, using this money to finance those bailouts because they know they couldn't get it through congress. to me, this is another black mark in the settlement and i'll give you the last word. >> you don't have to be financially harmed. it's simply a lottery. we'll give it to borrowers based on random characteristics and not even helping those that were harmed. it's whether you live in a swing state or not rather than how much harm you were actually done. this is not addressing real wrongs and not addressing real wrongdoers. >> as always, we never have

enough time. mark calabria, thank you. i'll just say this, folks, the statute of limitations has to run out. we want the banks to increase their capital and we want them to make loans for the economy? why do we keep taking money from them? that's what i don't get, anyway, whatever. coming up tonight, make my day. clint eastwood, exclusive next. he finally speaks out on halftime in america and what that really meant "the kudlow report" will be here to report eastwood. i love that my daughter's part fish.

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clint eastwood talks exclusively with cnbc about the halftime in america ad. cnbc's is ima moti gives us details and other details in the cnbc newsroom. good evening, sima. >> we'll get to the news after the headlines coming into cnbc. google is about to unveil the entertainment system that would stream music wirelessly using the android platform. sticking with techs, shares of lincoln soared after the fourth quarter earnings more than doubled. check out the stock movement. in other news after 130 years kodak urn bankruptcy protection will focus only on printing. it will save $100 million a year. apple shares soared close to the $500 a share threshold after all things digital, the ipad 3 will be introduced at an event in the first week of march. the late steve jobs revealed he

was being considered for a presidential appointment by president bush. interesting. >> it was parterer inning with zynga. farmville was one of them. the obama administration is releasing ten states of key provisions of the no child left behind act, and the property group behind a tiger woods-designed golf course in north carolina filed for bankruptcy. the court remains unbuilt. now a cnbc exclusive, clint eastwood is speaking out on the controversy surrounding the halftime in america super bowl ad, in an interview with "squawk box" anchor becky quick, he says he wasn't schilling for the obama administration. take a listen. >> the average man or woman on the street took it for exactly what it was and the speedy message for america, and half way through the recession, let's

work our way out of it. it doesn't mean we're -- anybody's endorsing or any particular products or any particular philosophy. it's very disappointing when you see that because the average person seems to get it. >> you can hear more of becomy quick's exclusive interview with clint eastwood tomorrow on "squawk box" at 6:00 a.m. eastern. larry, never a boring day. back to you. >> cnbc's sema america odi. >> the gop has a message for mitt romney. it's time to step it up, governor. high-profile republicans go public with long, simmering worries about their presidential front-runner. our political power panel coming up next. [ leanne ] appliance park has been here since the early 50s.

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welcome back to "the kudlow report." i'm larry kudlow. so conservatives convened in washington today, day one of the annual c pacmeeting. do they have a candidate with that platform? joining us now with all of the latest on the cpac event, cnbc

contributor, robert costa of the national review. do the grassroots conservatives at cpac see a candidate that has those conservative principles? >> they're waiting to see, larry. >> it's a very interesting day at cpac. you heard from senator marco rubio, and we're hearing from senator paul ryan. he's speaking right now. conservatives like the healthy primary fight and they want to go longer and the real message is unity. they will have to right the nominee and they want to hear ideological choice and not just make a referendum on president obama. >> and regarding not just a referendum, the events of the past year, after the tea party election, not that great. the debt ceiling wasn't that good. there's no balanced budget. obama care is waging war on religious freedom and there is no tax reform they're to put it mildly, imperfect. are the grassroots and the tea

partiers and the cpaccers a little bit demoralized? >> they're demoralized and you see that happening in colorado, and minnesota. they went for rick santorum and they're waiting to see what mitt romney will say material. is he going to come out with a pro-growth message and red meat for the conservative base. romney has been doing well, and not so well among the very conservatives. they want to see more. it's a wait and see moment. let's see what romney has to say tomorrow. >> bob costa, please stay with us. >> no more mr. nice guy. this is rick santorum and he's out attacking the, quote, gotcha politics of mitt romney. that happened today. take a listen. he's not interested in talking about the issues. he's interested in trying to pander and make political sauce when there's real substantive issues about how we'll change

the government and he's on the wrong side of them. >> all right. more than a few conservatives are always taking swings. first, let's stay with gotcha politics from mr. santorum and distinguished panel, kevin madden he's the 2008 senior adviser and he's helping the campaign this year. matt louis and robert costa is still with us. let me go to you. you heard the santorum clip. what's your reaction to that? >> i disagree with senator santorum. i think this is part of the scrutiny that he's going to endure now as we look at the contest starting to crystallize between he and governor romney. the criticism that's been lobbed at senator santorum has been one that when we're looking at a party that doesn't like a lot of spending out of washington, senator santorum has a long record of being an elected official in washington who put earmarks in lots of spending

bills and lots of appropriations bills and that's something that doesn't square with what republicans want to see from the potential nominee. so senator santorum are saying that these attacks, but this is a substantive issue, and these are facts. this is his record and he has to defend them in his primary. >> is it a substantive issue or as santorum is suggesting governor romney's team is bringing down the big hammer? there are some people, distinguished leaders and conservatives in the republican party who say this is just helping obama and it's not clarifying the issues. what's your take? >> i think i'll have to agree with kevin on this. i mean, look, mitt romney is incredibly negative and he really doesn't have a proactive message. having said that, rick santorum was a big government republican during the bush era, and i think it's fair to point that out and let the voters decide. >> bob, do you agree? where do you come out?

>> i just got off the phone from santorum's campaign manager and he's fine going negative against romney. they're catching up in this race and they think when mitt romney goes negative against them that helps them in the polls and it endears them to conservatives who are skeptical of romney and they are going cpac tomorrow and addressing conservatives and rallying the base and he'll wag his finger at romney and say he's not the true conservative. i may not have the organization, and may not have the money, but i'm the conservative for you. >> there's a huge politico.com story today in which a number of senators are critical of mitt romney including senator jim demint and senator ron johnson, but most particular, john kyl has sharp words for governor romney. here's when he said. romney's support for indexing minimum wage for inflation is something, that quote, everyone knows is a bad idea.

he goes on to say conservatives wonder, whether he, romney, has the instinks to take the conservative position on issues. you want one with a very thick view of what's right or wrong and he concludes, i think conservatives need to be persuaded that mitt has a firm fix on where the conservative star is. >> kevin madden, is mitt conscious of this? will he speak, and these are not unfair concepts raised by john kyl? >> no, they're not. >> that's really important feedback and from a campaign perspective, you always want to hear that type of feedback, particularly from a conservative as respected as senator kyl. look, cpac is an incredible opportunity for governor romney to speak directly to conservatives about the issues they care about. they care about the economy and they're very unhappy with the way washington has dealt with issues like spending and defi t deficits and they're animated about the way that the obama administration has grown the size of government.

governor romney has the opportunity about how he wants to free spending and what he will do to reign in -- >> i'm sorry, free spending to 2008 levels and that will actually be a cut and also reining in many of the regulations that have sometimed economic growth that the obama administration has introduced. he can talk about those issues -- >> let me raise, kevin. i don't mean to interrupt, but time is always short. one specific that john kyl mentioned that troubled many of us and that is the indexing of the minimum wage which almost all economists believe would damage employment, particularly the very poor and particularly the african-american and other minorities, why did governor romney say that and will he counter that? will he say tomorrow that was a mistake? i really am a conservative on these issues? >> again, this was another one of those issues where we got a lot of important feedback from

conservatives and that's something that the campaign will continue to look at. i think governor romney's main point is that he was looking to provide some level of certainty for the business sector when it came to the index and minimum wage and the spikes up and down were very much driven by politics and that's interesting to be something that working with leaders up on capitol hill and working with conservatives will be very important. >> let me make a quick point. first of all, there shouldn't be an unemployment rate -- i'm sorry, there shouldn't be a minimum wage rate at all because that raises unemployment. the fact that mitt romney has to sort of go to conservatives and get their valuable feedback, i think is indicative of the probl problem. >> not really. >> it should be discussed -- >> look at the politics here. there's a political strategy, he's going to cpac tomorrow to appeal the conservatives and remind conservatives that he's one of them. he's going to michigan and giving a big economic speech at

fords field. he's not going to seay see everything tomorrow, but he's going to look to really make different cases to conservatives, economic conservatives and military conservatives at different junctures. it's not all at one moment. >> my point is he keeps going to them for feedback. they should be on the inside of the room helping -- they should be helping craft -- they should be helping -- >> are you going to let me talk? they should be helping craft the policy first and not retroactively pointing out the flaws with that. >> this is a campaign and there's always back and forth and it's good if romney listens. >> kevin madden, i have no doubt that governor romney is listening, but don't you believe that his speech tomorrow at cpac is going to be in some sense the most important speech of the campaign so far because of some of the criticisms or back talk that you're hearing like john

kyl and jim demint. i think john kyl might have been a romney man. isn't the speech tomorrow before cpac which is a conservative grassroots which would be broadcast afterwards or during everywhere the most important speech so far? >> i think it's going to be a very important speech. i don't want to raise the stakes too high in being the most important, but there's no doubt that the campaign and the governor see this as an extraordinary opportunity to persuade many conservatives that on the big issues that we care about namely the economy and the other issues related to that economy, whether it's spending or whether it's health care, energy, deficits, all of those particular issues that he has the right plan, the pro-growth and the bold plans that will help unite the party behind him as a nominee. >> how about a pro-growth tax reform plan? you know where i'm going with that. >> i mean, look. marco rubio, senator rubio gave

the speech. he mentioned bold, pro-growth tax reform and that's becoming a conservative litmus test. will we hear it tomorrow from mr. romney? >> i think we'll hear them -- >> you will hear a lot of bio. >> in tuesday night's speech he talked about george romney. he feels like he has a narrative problem as well and not just details on his economic land, you will hear family stories and stuff about his mormon faith. he needs to convince conservatives not only that he's one of them, but that he has a heart. >> i think the biothing is terrific. i'm not here to judge and i'm not in that game, i just think people want to know why mr. romney is the man, specifically and prescriptivprescriptively, e man to make the economy better and to make the budget bankruptcy go away and to solve the entitlement problems for a balanced budget and i think he has to be prescriptive on that. i am sure he's listening. >> biois about me --

>> but he'll talk more about conservatives and what they care about and why that's important. >> i sincerely hopes he clears up this minimum wage thing. >> thank you, gentlemen. robert costa, we appreciate the inputs. next up on kudlow, speaking of the conservative movement meeting and cpac in washington, are they energized? are they demoralized? we have a senior republican congressman and a conservative leader who will give us his inputs right after these messages.

the conservative movement as muchas anything else is about tax reform and the simplistic code. the point is we stand for simplicity and formal see in the tax code. >> we don't have shared goals with the democrats, folks. their whole platform is based on promise and more on government. >> if it's halftime in america i'm fearful of what the final score will be if we let this president start the second half as a quarterback. >> all right. conservatives are gathered in washington tonight for their annual cpac conference. all four gof presidential hopefuls plan to show case their

conservative creds tomorrow and they're hoping for a win in the closely watched straw poll that will take place this weekend. so what do conservatives hope to hear from the candidates and will the message resonate in november? joining us to tell us all, we have steve king. he spoke at cpac earlier today. mr. king, welcome to the show as always. let me just ask you, we haven't gotten the balanced budget. we haven't gotten deep spending and debt reduction. we still have obama care now at war with catholics and evangelicals and religious freedom. what is the mood at the conference and what's going on there? >> well, it's surely a different scenario than it was two years ago or let alone four years ago and it's this, and i think conservatives are positioning themselves to really come together and some would ask, would they come together behind certain candidates? i look back on john mccain and the conservatives didn't get energized by john mccain in a

way that would have been useful or in a way that needed to beat barack obama then. i think you just read or delivered a list of reasons why. it's obama care and the effort to pass the tax. it's dodd frank and it's $4.5 trillion in growth of the national debt. and it's no balanced budget amendme amendment. this list goes on and on, and i think that last line, i hate to see what the score will be like if the second half is quarterbacked by barack obama, that, i think, really does ring true to conservatives here at cpac. >> i want to ask you, the debt ceiling debate was a disappointment to grassroots conservativ conservatives. we didn't cut much out of deficits and debt. the tea party, you were part of the tea party and you still are. is the tea party kind of down? is the tea party demoralized? i don't see the energy that it had a year ago. >> oh, i think that's a fair observation, but to some degree the candidates have picked up the agenda of the tea party and so that takes some of the

urgency away from them, but i think they'll come back together behind our nominee and they will then start to place their agenda out there and raise the priority again. remember, they put the priority agenda, i think, into the minds and on the platform of the 87 republican freshmen that were elected to the house of representatives and many of them were tea party candidates and, yes, the pressure on them has brought about votes that didn't reflect what they had anticipated coming into this last legislative year, but we're going to need to be galvanized nationwide and this has to come back, and i think the most important thing for us is to establish and maintain. i think it's actually establish, but maintain the complete 100% repeal of obama care with no particle left, and all of it gone as the number one plank in the platform of the next president of the united states. if we do that, we have a chance to get our liberty back and we have a chance to get our free enterprise back. i put that number one and right next to it the balanced budget

amendment because i can tell you the will does not exist in the united states congress today among democrats and republicans and whatever combination i can imagine to put them together to have the discipline to balance the budget and start to pay off the national debt. it will take a balanced budget amendment and it will take the mandate to get that to happen in congress to have the state. >> those themes of obama care and the balanced budget and tax reform, are they being portrayed and communicated on the presidential campaign trail? as you know, there are stories out today leading conservative grassroots, tea party-type senators, republican senators, highly critical of mitt romney for not being bold enough and literally not being conservative enough. what's the feeling at cpac about that? mr. romney will speak tomorrow. this will be the biggest speech of his campaign so far. >> it's going to be a very big speech for romney tomorrow and it's a bigger speech than any of the other candidates tomorrow. you have two measures on this that people will be watching

very closely. one is the straw poll which you mentioned and that sometimes reflects the national support at cpac and sometimes it doesn't, but i'm going to be listening very, very closely to the way the crowd reacts to mitt romney and rick santorum and newt gingrich. that will tell us a lot about where the energy is and where the energy can be mustered, but i don't doubt that mitt romney will bring the repeal of obama care. i don't want to diminish any expectations to that. congress needs to pass the repeal of obama cara, gen this year out of the house and send it to the senate and see if they can push a vote in the senate. last time they did that we got a 100% vote among republicans to repeal obama care. it's still out there and it's still insidiously creeping into our liberty. >> iowa congressman steve king, thanks for the rundown. we appreciate it very much. next up on kudlow, if the white house and the senate won't pass a budget how in the world will we ever balance the budget?

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no budget, no problem. that seeps to be the message

from senate democrats and the whois. oh, my gosh, if there's no budget how will we ever balance it? think of it, let's go to attorney and former clinton white house aide, and americans for prosperity and author of democrat see denied. phil kerpen this sounds like democracy denied. they don't want to have a we don'tçóçó require too muchcñ enators. =do. one of them isñi toñiñr pass anl budget. they won't even propose a budget and it's a deliberate political strategy. chuck schumer thinks if we don't put anything on the table we can sit back and attack the paul ryan budget and attack what the white house is doing. they won't defend the budget which went down 97-0 and how can we take anything they're proposing and any of the legislation they're putting forward seriously if they're not even giving us a budget and showing us how it all fits together. >> your former boss, bill clinton would never have gone

down this road. he worked with congress to pass budgets and ultimately to balance budgets. how can you stand for this kind of attitude coming out of the senate from harry reid and also we just heard it from the white house and jay carney affirmed it. they don't care about a budget. it's interesting that you mentioned bill clinton, my former boss because one thing that was in place during the clinton years that the current budget, that rey required any bill that came to the floor or to include means of paying for whatever costs. they pay as you go rules is what got us to the balanced budget and the republicans in the house do not count as a tax and they don't count as revenue and the tax revenue. it was actually designed. >> hang on a second. i want to go back to this point because i think, phil kerpen,

you put your finger on it. one of the reasons that the harry reid democrat will go along with the failure to do a budget is they don't want to vote on the paul ryan budget which contrary to what david goodfriend is telling us, ryan's budget has sharp reductions in spending with entitlement reform. >> no tax reform. >> and it was all paid for. it was revenue neutral tax reform. phil kerpen, is that the hidden link that they are scared of paul ryan and won't go on the record to pass the budget? >> larry, it's not so much that they're scared of the paul ryan budget. it's that they don't want to show what the realistic alternative is, so instead of saying what the truth is, their plan for medicare is to have a board of bureaucrats denying care. they don't want to say that's the alternative to the ryan plan and they want to pretend that the alternative is a mythical world where everyone gets everything forever. by not putting anything on the table and by not defending anything they can attack paul ryan without making clear what

the actual alternative is. >> i have to -- this is just falsehood. what democrats in the senate do is pass appropriations bills which pay for things and -- >> and where does it come from when they have no budget? >> it's interesting to note that when the white house sends up the budget under the budget act as it's about to do and it has done every year of the administration, that as you know, we understand theth legislative process on the show, right? it starts with the appropriations process and the -- >> that is not true. >> that is not true. >> the 1974. it will pass a budget resolution. >> david goodfriend, you are procedurally incorrect and i'm a budget official. i beg your pardon, the appropriators and the way this process works, the appropriators cannot set their own authorizations until the budget committee passes a budget. there are ceilings and there are

floors. ceilings on spending, and floors on revenues. >> is and they've been patting appropriations. >> no, no, you're not addressing the point. >> i'll go back to bill because you're being very extrip rouse tonight and i'm cross with you on this. >> the whole process must begin with the budget committee. you cannot get appropriations without the budget committee and therefore, phil, can erpen, the failure to have a budget resolution is a failure to have any appropriations or authorizations whatsoever, phil. that's the key legislative process. the question i have is why are democrats afraid to abide by the law set by the congressional budget reform act of 1974? >> because they've elevated political strategy ahead of doing their most basic duty as legislators and instead of doing what the law requires, they're following a political strategy of sit back, propose nothing and simply attack the republicans for trying to put solutions on the table. >> that is preposterous! the republicans in the senate have done nothing, but say no!

>> the senate hasn't done a budget in over three years! that's the bottom line here! >> it's been -- >> [ indiscernible ] >> all right. i'm going to get out of here. quite disappointed tonight, david goodfriend. >> oh, larry. >> one thing i know is what the law says having worked in that process, you can't operate without a budget. i'm kudlow. we'll be back tomorrow night.

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