going to go? it makes a lot of sense. we've had a very big run this year. i like to say there's always a bull market somewhere, promise to try to find it for you right here on "mad money." i'm jim cramer. i'll see you monday! hey, larry, what's happening tonight? greece will get fixed. and it's a great buying opportunity on the way to 14,000 on the dow. good evening, everyone. i'm larry kudlow. this is "the kudlow report." look, sizzle story number one tonight, did president obama really grant religious institutions a true insurance waiver to avoid compromising their beliefs? it looks like we saw a mere accounting change. somebody's got to pay for these mandates. that's the problem. we'll debate it. sizzle story number two, back to stocks. they stall over greece. late-breaking news. a cabinet deal is on. the point is this week's mighty sell-off looks like a buying opportunity on the road to 14,000. and also, who won cpac?

was it mitt? rick? newt? speaking of mitt, i'll give him and anyone else who wants to listen a bold tax reform plan they need before the evening is over. it's open for all to borrow. did the president obama mid-course correction on contraception really change a problem for the catholic bishops and others? or was it just an accounting change? are religious institutions still responsible for the cost of a mandated insurance package? all right. let's talk. we're going to have a rematch. igor volsky. he's the co-author of "howard dean's prescription for real health care reform." betsy mccoy is the author of the book "obama health law: what it says and how it overturn it." i'm not 100%, but betsy, i'll start with you. if employees get free contraception, i don't care who the accounting is, somebody's got to pay for it. and is that not going to be paid for by the catholic hospital or educational institution? >> well, of course, ultimately it comes out of the employee's

pocket, as all health care benefits do when they're provided by the employer, but here's the president using that weasel word, free. he told us that preventive care in health plans was free when in fact you don't have a co-pay or deductible because you're forced by law to pay for it up front in your premium. now he's telling us that contraceptives for people who work for catholic institutions will be free. >> why is that? how can contraceptive -- before i get to igor, how can -- how can any of these services be free? is this a constitutional right according to obama? >> absolutely not. it's not free. there is no tooth fairy. if the insurance companies handing that out free, right? in fact, you're going to get less of some other kind of care or your premium is going to go up. >> or it's more expensive. >> of course. >> so igor, explain to me why this is any particular change in the mandate. it just changes the accounting, if you will. it doesn't change the true cost, as betsy has said. nothing's really changed. if catholics buy insurance and the insurance doesn't have this mandate but the insurance has to pay for free contraception, who

do you think's going to pay for that? >> well, the cost is in the premium. but the new rule says that if you're a college, a university-u don't want to provide contraception, you don't have to, that's coming from the insurer. so that's the additional step the administration's going. but certainly all of this is part of the premium. but it's certainly a lot cheaper to pay for the birth control that will prevent the unwanted pregnancies, that will prevent any other kind of health risks. so we see that this kind of thing, preventive care in general, reduces health care costs over the long term. >> but that's not the issue. how about conscience? >> right-i want to go -- >> the issue is conscience. >> the issue is conscience because it just seems to me, okay, let's just take a catholic hospital, for example. >> right. >> the catholic hospital will purchase an insurance plan. now, whether the insurance plan deals with the employee on contraception is almost beside the point. there is a cost and a premium involved here which indirectly but after all directly the catholic hospital has to pay for.

so how does anything change? that's what i'm asking. >> it doesn't change. all of the preventive care including what they call contraceptives are not free. they're included in your premium. the catholic institutions are paying, and ultimately the employee is paying because of course all those costs are passed down to the employee, who gets less take-home pay when they get health care. but the other important issue here is the president stood up today and said he's making an accommodation. we shouldn't have to get an accommodation. this is a first amendment -- >> larry, let me explain -- >> -- in our country the constitution is king, not mr. obama. >> larry, here's the difference. now a catholic hospital says i don't want to offer contraception, aetna. aetna says, okay, we'll reevaluate your policy, here's the cost without contraception, it's no longer part of your package. but the employee, because they have a conscience of their own and if they want that preventive care, if they want birth control, they get it straight from the insurer. so the catholic --

>> how do they get it straight? >> it's not part of the package, larry. >> serious question. how do they get it straight from the insurance company? in other words, does the tooth fairy hire this insurance company or did the catholic hospital hire this insurance company? >> no, because -- >> that's the part i don't get. it's got to be the hospital. and whether the hospital delivers the mandate or whether the insurance company delivers the mandate, the mandate is delivered and paid for by the hospital. the delivery and the accounting is irrelevant. >> the -- if you read the reg, it specifically says that that money comes out of the reserves of the insurers. the insurers pay for it, not the employer. that's very clear. that's the change. that's the new change. >> no, but how did the insurance company appear? >> the insurance company -- >> they've taken the premium into a pool of money and so the birth control payment comes from the money that the insurers receive. it's from the reserve. it's from the insurer reserve. >> medical expenditure ratio and profits are regulated under this

law. and so if the insurance company has to pay for those contraceptives, it means you get less of some other kind of care. and that is the point. they're going to provide -- >> premiums go up. >> yes. 85% of the premium has to be spent on medical care. not one penny less and not one penny more. >> see, what i'm asking, igor, is where does this insurance company come from? is this the same -- >> it comes from all the premiums that insurers collect. that's where they get the money. >> i understand. but is it a pool of insurance companies or is it the specific insurance company that was hired by the catholic hospital? >> right. it's that specific company that's associated with the hospital. >> so therefore, okay. then using betsy's logic, and i think you agree with this logic, either the cost of that package goes up in premium terms or the services go down. but in any event, the catholic hospital is still on the hook either directly or indirectly for what is religiously anathema to them. >> let's look at what the catholic bishops say. they put out a statement just an hour ago. it was a very mild statement.

they said we'll take a look, this is moving in the right direction. and we're seeing other catholic institutions, catholics united, for instance, coming out with a statement saying we like this, we see women's groups saying we like this. so you kind of see people coming together from different sides of the issue and saying this is something we can work with. look at the catholic response. it's been very positive. >> any american who wants to like it, that's okay. but the first amendment -- >> but these are the catholic bishops, betsy. they're saying this is something we're going to look at. >> but as a matter of conscience -- >> betsy, everyone has a first amendment right, even the women who work for catholic hospitals and they want to use contraceptions. let's respect their rights as well. >> we will see. >> they can go to the drugstore and buy it. they don't have to get it from their employer. >> two things that trouble me here. number one is the idea of free contraception, just like the idea of free anything. >> there's nothing free. >> it's in the premium. >> i understand. but obama is selling it as free. now, we know in economic terms there's no such thing as a free lunch. but he's selling it as free. and i object to that. that's the problem with health care in the first case. it becomes a free lunch.

the second problem i have with this is something should have greater choice. that's the problem with greater controls and obama care in the first place. the employees should be able to choose her own health care plan -- >> or none at all. >> or none at all. and the church should be able to choose its own health care plan. this is my major problem. >> and they can. >> government controls prohibit choice, igor. that i think is the root -- >> you know as well as i do when you get to the health law you have the exchanges. within the exchanges you have an array of private plans. there's your choice. and that's where you choose. and they're not -- >> it's one size fits all. they have silver, gold, bronze, and platinum. same benefits, just different co-pays. >> you have a whole range of choices of different plans and they have different kinds of policies to fit their needs. that's what you're going to have. >> it's like everybody has to buy a sedan no, convertibles or hatchback. >> and the sick don't have a choice. that's what this law will address. >> i think the choice problem is a problem. i think the free lunch problem is a problem. i think this whole thing is a problem. we'll see how it plays out. igor volsky, thank you.

betsy mccaughey, thank you very much. up next on kudlow, there's some important late-breaking news. the greek cabinet has unanimously approved the eu imf bailout plan. that's progress. the parliament is still set to vote on sunday. is this greek mess finally going g to come to an end? then coming up, representative spencer bacchus may be in trouble. the congressman who oversees the banking system sb being investigated over possible insider trading. and by the way, did you know this law to buy stocks still allows congress to buy stocks. oh, my gosh. don't forget, free market capitalism, in health care or any place else, is the best path to prosperity. i'm kudlow. we'll be right back.

all right. let's drill down on today's market. stocks took a breather today, pulled back about 90 points, closed at 12,801. however, i think the problems in greece are going to get fixed. this week's modest sell-off a buying opportunity. we're still on the road to dow 14,000 in an improving and profitable economy. let's see what our guests have to say. we bring back ron krish efsky, president and ceo of stiff'll nicolaus and company. and steve cortez is the founder of veracruz and author of

"against the herd." ron kriczewski the news is good. the cabinet has approved this. let's ignore greece. it's a thought experiment. what's wrong with dow 14,000 in an improving economy? i ask you. >> i don't think there's anything wrong with it, larry. you have the u.s. economy improving, albeit slowly. you've got auto sales over 14 million. you've got unemployment getting better. the ism index is in expansion mode. i'm bullish. >> steve cortes, how can you not be? what's long with what mr. kruszewski said? he knows a lot. he runs this big company out there in the midwest. he's very wise. how can you buck that kruszewski trend? >> hey, absolutely. i'm a midwesterner as well. i respect and admire ron. no, i think it's built on two shoddy premises. and the first is -- >> shoddy? >> shoddy. ron mentioned auto sales. and auto sales have been improving dramatically. but you know why? because consumer credit has been

absolutely exploding. so we're starting to see the savings rate decline again. this has been a credit card binge by consumers. we're at multiyear highs again. the frugal consumer has suddenly thrown off the shackles. but i'm saying that's not a good thing, that they're willing to borrow that -- >> hey, the consumer's buying. that's a good thing, isn't it? >> well, not necessarily if it's debt financed. and i'm saying it has been. the second thing, and i think this is more important. and larry, you might agree with me on this, is that this rally in stocks has been almost completely predicated on dollar weakness. the second ben bernanke came out and gave us whatever you want to call it, qe 2 1/2 -- >> no. >> you put a chart of the euro currency or the aussie dollar next to the s&p, and they are identical. >> i mean, look, i agree the dollar's about 20% too cheap if you wanted to value it properly, if you believed in king dollar. the gold price is about $500 or $600 too high. i agree with all that generically. but i think what you're missing here is jobs are improving and therefore so are incomes improving. and the second thing you're

missing here is profits continue to rise. profits are the mother's milk of stocks. they have basically driven this stock market for the past three years. that's where i'm going. >> and, larry, you're talking about a yield on the s&p 500 of 7.5%. stocks are not overly valued. stocks even with tepid earnings growth, 2% dividend yield, you know, the market's undervalued. >> steve, last summer when i thought europe was going down, or that risk was higher, and i thought the united states debt credit was going to be slammed and slammed and slammed, that could have interrupted the whole profits wave. and in fact it took a lot out of the stock market. but we're coming back, steve, because these temporary issues have gone away. i guess that's the point i'm making. and i think people are missing that. you're fighting last year's battle. if the dollar falls another 10 or 50 cents, you may be right. but is that your forecast? that would do it. that's the keith mccullough argument. that would do it if you think the dollar's going to absolutely collapse. >> no, larry. in fact, i am long the u.s.

dollar as of this week, a position i've just been putting on in recent days. i think the dollar decline is overdone 37 so i'm long the dollar but also short shares. and i do not believe that the international risks are gone. and by the way, i don't think those risks are just in europe. when we look at china, we got some foreboding inflation data out of china. china has slower growth, higher inflation. that is a toxic combination. i think international risks -- >> we're going to have higher inflation, too. >> well, you know what? larry, the thing about it is i do agree that the long-term problems are not solved. but this market, we're in an election year. there's $2 trillion of liquidity in the europe between their various central banks if you want to speak. the fed sin tent on keeping liquidity low here. we are poised for, you know, fine growth and the market's undervalued. the one thing i worry about is housing. i still think housing is the key. and you fix housing, buy financials, buy tech. >> and ron and larry, i guess i would ask you folks, if you believe in the strong growth

story, and i don't, but the bond market certainly seems to be on my side. 10-year yield briefly got above 2% this week and then retreat demonstratively -- >> you've got a point. >> 10-year note rallied hard today. >> 8% profits. do the math. do 1.08 timeshe current market and you've got where the dow's going barring a catastrophe. 1.08 times whatever the market closed today and you're going to be close to 14,000. that's my whole point. unless and until profits dry up, ron kruszewski, i still think you've got to play this on the bull side. unless there's a european calamity. i grant you that. failing, that take europe out of the picture, why not? >> i agree with steve that the bond market is thinking tepid growth. i'm saying that with any kind of growth, even tepid growth, at this point this market is still undervalued. if we get some strong growth and the fed starts, you know, tightening, which i would think would be signaling a strong economy, the market could go even higher. and watch out for those long

dated bonds. >> you're right about that. steve cortes, giving you the last word. what about all these tax hikes kicking in next year? we don't know who's going to win the election. but there's a slew of tax hikes on personal income, on capital gains, on dividends, on millionaires, on investors. what about that? you've got to keep an eye open on that, don't you? >> yeah, absolutely. i don't think the market's looking that much forward yet. but that would be disastrous. i will tell you one last thing. look, the market's had obviously an incredible run. but when you look back historically over the last 80 years, only eight times has the market stayed above its opening january print for the rest of the year. and it hasn't done it in 30 years. so the odds that we're going to keep these gains all year long, i think it's very much skewed against. if you've enjoyed this good run, you want to take some profits. >> but i bet you the market's higher at the end of the year than it is at the beginning of the year. >> it's a good bet. ron kruszewski, steve cortes, we appreciate it. now let's turn to the greece situation. is the greek deal unraveling or

not? we did get late-breaking news that the greek cabinet unanimously approved debt deal. let's bring in our distinguished guests. we've got charles cupchan. senior fellow at the council of foreign relations. senior fellow at georgetown. thank you, charles, for coming back on. you know, at first earlier today one of the key coalition members says he's pulling out and he wouldn't vote for the deal. four ministers got fired or they resigned. now we learn that the cabinet has approved this. i don't know who to believe, charles. you tell me. >> i think what you said at the opening of the segment is correct, in that they're very close. they're at the 5 yard line. most of the heavy lifting has been done. my guess is that by middle of next week we will have this through the greek parliament, we'll have the eu more or less sign off on it, and we'll have a lot of sighing of relief across greece and the eu. >> charles, do you believe that the greeks believe their future lies in the eurozone? >> i think they do. i mean, i think they've baasically made a good caught

here. and that is are we better off going it alone, bringing the drachma back, or do we want to stay as part of the eu, take the bitter medicine, but see this through and their leadership has made that decision and now we're trying to get people to go with them. it's tough, but so far they're hanging in there. >> do you also believe -- i mean, this is a key point. people are hurting. the 21% unemployment rate. now, some of the issues involved, 22% cut in the minimum wage. long run, that's very bullish. short run, it's going to hurt people. 150,000 job cuts in the state sector. long run, that's great. short run, it's going to hurt people. there are no tax cuts no, pro-growth elements to this, charles. that's the problem. austerity's a killer in the short run. that's why the cops and the unions are up in arms. the cops want to arrest imf officers if they come into the country. i mean, how do you get out of the austerity trap if you're in greece? >> well, you're right to say that people are suffering. stores are closing. people are losing their jobs. people are getting hit in the

pocket book. and i think that hopefully what will happen is you'll get this deal, you'll get the austerity, and then europe will begin to wake up to the need for stimulus. there's now a prime minister in italy, mario monti, who was here for the last few days. had good meetings with obama. he wants stimulus. he's putting pressure on miracle to do more to help grow across the eu. i think that at some point you're going to get a somewhat more balanced approach to this but still there will be a significant divide across the atlantic on this particular issue. >> all right. growth stimulus, good point. very important. charles kupchan, thank you very, very much. next up on "kudlow," you know that $1.2 million vanished from jon corzine's mf global. well, that number's now going up. you'll hear how much when we check the news headlines right after the break. in america, we believe in a future that is better than today. since 1894, ameriprise financial has been working hard

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revise the number that's missing from jon corzine's mf global. revise it upwards. kntv's scott budman joins with us more on that and all the latest breaking headlines coming into the cnbc newsroom. good evening, scott. >> well, good evening, larry. the trustee overseeing the liquidation of corzine's mf global says there is more money missing than originally thought. the number is now up to $1.6 billion. and that now includes $700

million missing in the uk. douglas whitman, the founder of california-based whitman capital, surrendered to the fbi today. prosecutors accuse him of betting almost a million dollars on tips from google, marvell, and polcom. this all stems from the raj rajaratnam investigation. u.s. prosecutors are calling switzerland's oldest bank a fugitive. not a person but we goland and company. this after bank executives famed to appear at a court hearing today on charges it helped americans hide more than a billion dollars in secret accounts. bowing to anti-bank activism barclays says it will limit cash bonuses to employees to 65,000 pounds. barclays prochts slumped in the fourth quarter. guess who made out look a bandit in the bank settlement on foreclosures. warren buffett. his stake in bank of america warrants increased in value more than 150 million once president obama announced the settlement. you may remember buffett invested 5 billion into the bank back in august. finally tonight, hashtag fed

valentines has become a viral hit among the wonks who want to display their love for the federal reserve. economist justin wolfers at u penn started it. among some of the tweets, you had me at qe-1. and the folks at npr. here's a racy one from economist mark thomma. "the non-traditional stimulus was way better than i thought it would be." and even the san francisco federal reserve chimed in. "my love is elastic. my commitment too big to fail." i tell you, they're just thought. and larry, i do know that you're probably not one to give the fed a valentine. >> scott, they are so hot. and i just love it when you talk that way to me. kntv's scott budman. thank you very much. coming up, conservatives from across the country met in washington today at the cpac convention. the three leading republican candidates spoke. so who won cpac? that's next. but coming up later in the show, is the congressman who oversees the nation's banking and financial services guilty of insider trading? the ethics office is

investigating. listen to what representative spencer bachus had to say on "the kudlow report." >> i actually bought ge stock. i bought thinking that the stock was going to go up. obviously, if -- but i had no information. >> that's what he said a while ago. he denied it all. but the story not going away. we'll have much more later in the program. brad needs car insurance, but, uh,

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welcome back to "the kudlow report." i'm larry kudlow. okay, the whole conservative world meeting in washington at the cpac conference. today the leading republican candidates gave their pitch. here's the whole day recapped in 45 seconds. please take a listen. >> governor romney released his taxes. the liberals were shocked. he was only paying 15%. their answer was to raise his taxes. i'm a conservative. i believe our goal should be to get your taxes down to 15%. >> i've traveled around this country talking about how obamacare will crush economic freedom. one of the reasons i'm in this race in fact, the major reason i'm in this race is because i think obamacare is a game changer for america.

>> today we borrow 40 cents of every dollar we spend. that's unconscionable. it's unsustainable. it's reckless. it's immoral. and it will end under my presidency. >> all right. so our simple question is who won cpac? we've got three guests. they were all witnesses to it. cnbc contributor robert costa of the "national review." david fredoso of the "washington examiner." matt kibie, president of freedom works. bob costa, i saw the mitt speech on c-span. i thought it was a great good budget and entitlement reform rendition, which should be pretty good meat for the tea party. >> look, mitt romney didn't need to hit a home run today. he needed a double. that's what he hit. he emphasized his family. he talked about his record in massachusetts. but as you say, he talked about paul ryan, embraced paul ryan's fiscal reforms. that was important. he didn't make any mistakes. it was a pretty solid speech. >> all right. david fredoso, how did you see it? who was the winner? >> well, i agree with robert that romney gave a decent speech

and that he gave it well. he gave it better than he usually does. but i -- still you see the contrast between santorum in the morning and then romney in the afternoon. santorum, he speaks from the heart. romney, it's kind of like, as one of my colleagues called it, a sort of check list conservatism. what do people at cpac want to hear? i'm going to hit this and this and this and this. and it's not necessarily any more convincing for the conservative movement, which is so suspicious of romney, than it ever was when they heard it last time. >> matt kibbie, mitt romney is coming out with a tax reform plan. there's news stories all over the place. he said that to me when i interviewed hmm a week ago or so. so he did mention it today. newt mentioned his 15% flat tax. i don't know if santorum went pro growth or not. who's the pro-growth candidate? >> i really think that romney has the opportunity to be that guy and if he would talk about the up side of what bain capital is and talk about applying that same logic to government and

offering a bold idea. my frustration with his speech is he kept saying i'm a conservative instead of putting out a bold idea that said for him this is a conservative pro-growth idea. >> tell me what -- give me a bold idea. tell me what you want him to say. >> i would really love to see tax reform. let's see low flat rates. let's defend the right of rich people to get rich in america. >> and use his bain capital experience not defensively but proudly. >> right. that's who he is. >> didn't you guys hear that in the speech today? i was listening to the same speech. he talked about bain. he said i'm not afraid of being successful. i'm not going to apologize for it. this was not a major policy speech. this was a reintroduction to conservatives. i heard some good lines from bain about his experience there and about his belief in capitalism. >> how was the crowd reaction to it, robert? >> standing ovation at the end. it wasn't a rousing crowd. gingrich with his red meat got a real standing ovation at the end. but it was pretty warm toward romney. i was surprised but that. >> and dave freddoso, how was it to santorum? >> well, the crowd was pretty

excited with the santorum speech. i think most people felt like he was hitting a home run there. but you know, with each of these speeches if you're at cpac, you see that that person's supporters kind of filter into the room right before that person's about to speak. so you're usually going to see a pretty warm -- if there's a tepid reception or a bad reception, it's usually a very bad sign for cpac. >> it kind of sounds, gentlemen, like it was a push. okay? more or less. there was no clear winner or no clear loser. bob costa, is that fair? >> i think that's the exact interpretation p pi think that's where this race stands. on super tuts we'll probably see a push. newt will win the south, santorum the mitt wefd. romney's strong nationally in different pockets. this is a push. the race is not moving in any direction. it's still a big fight, big scramble. >> there's a story running late this evening that sheldon

adelson, who is newt's casino las vegas financial backer is not committing any more money. trust me, that's the story. now, you may corroborate it or not, but that's it. if that is the case, isn't that a huge body blow to newt gingrich? >> it really is, larry. even before you mentioned that, i was going to say that, you know, it's a push unless newt really implodes, and if he starts losing in the south and santorum starts winning there, then you might see the sort of logjam we're in start to break up and you might see things start to go one way or the other. but i think that robert's right. it's really hard to say right now. we could be doing this for a couple more months. >> quick point on newt. watch february 28th. arizona and michigan. if newt can't beat santorum in those two states, he's in really trouble. >> santorum -- matt kibbe, this is not your line of work, i guess, but rick santorum has a very powerful financial sponsor, foster freeze. i knew him when i worked on wall street. a very successful mutual fund manager. he's standing by rick santorum

hook, line, and sinker. now, from your lights, if santorum continues strong, does he have the kind of growth message that your group likes? >> no. i think he really needs to come to terms with the freedom growth part of the package for conservatives. and right now he's -- i think he's talki ining to social conservatives, at least talking the anti-establishment talk, but i don't see that substance yet. >> he has lower tax rates. i think he has two brackets. he has a lower corporate tax rate. he also has this eccentric idea that manufacturing should be tax-free. but does that not qualify him for growth? >> i mean, it's better than obama. and that's what you're going to hear again and again from tea partiers. but it's not bold. this is stuff that we've been talking about for a long time. it's really time to pull the whole code up by the roots and do something that can allow us to compete not just in america but across the world. >> bob costa, i hate to get hung up on it, but can you give us a

lead? when is mitt coming out with his tax reform? is it going to be at the detroit economics club in a week or two? is that when he's finally going to do? he never mentioned it today. i was a little disappointed. >> the key thing -- i cover mitt romney a lot. the key thing you've got to understand about him and his campaign is they're very disciplined, they don't like rushing things. i know we're all waiting for it here on cnbc to hear it, but look for that speech february 24th, ford's field, going back to his home state of detroit. he's going to make his big bold economic plan i predict before super tuesday. just not today. it was a different setting. >> so that's going to be a big deal. we're going to have to cover that, that detroit plan. dave freddoso, i want all these candidates to make americans rich. that's what i want. i want them to just come right out and say it. why have they got to start attacking obamas transfer payments, his entitlement stay? the volume of transfer payments is at a record high. now, does mitt romney get a pass finally for saying he wants a higher minimum wage? he didn't mention that today. i know some people have criticized him. does he get a pass on wanting a larger safety net?

these are things obama stands for. mitt didn't talk about that today. what's up with that? >> no. well, it wouldn't be what i'd bring up if i were giving a speech at cpac either. that doesn't mean he's abandoning it. look, nobody's perfect here, and i don't think that anyone thinks santorum is perfect or that newt is perfect. not only in what they've done in the past but even in the ideas they're espousing now. and there's quite a bit to disagree with in each case. but does he get a pass? probably not. but it's priced into the equation. everyone's wondering can we trust romney? they're weighing his past statements. they're weighing his current platform. that's one of the things that goes into there. and you know, i think a lot of people -- the reason we're still here, the reason we are now looking at i think it's the sixth not romney who is challenging romney for the lead is that there's just a lot of suspicion about romney, period, overall when you put it all together. >> and you think that suspicion, bob costa, lingers after today's speeches? is that fair? >> oh, sure. the one thing i did right after romney's speech is go speak to a lot of attendees, a lot of college kids, conservative

activists. they liked romney's speech. there was a golf clap going on. but there's not a warm embrace yet. still a lot of skepticism. wait waite and see. the real question is can santorum surge and establish himself as an electable candidate? that remains to be seen. for now romney is there waiting to still try to pick up the conservative vote. >> we will continue to follow closely. robert costa, david freddoso, and matt kibbe, thank you, gentlemen. next up on kudlow, did congressman spencer bachus, the powerful chairman of the financial services committee, did he commit insider trading? reports tonight that congress has opened an investigation on him. you'll hear from bachus. you'll also hear from the whistleblower who says bachus's trades are questionable. i'm kudlow. please stay with us. i'm robert shapiro. over a million people have discovered how easy it is to use legalzoom for important legal documents. so start your business, protect your family, launch your dreams. at legalzoom.com, we put the law on your side.

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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. house financial services chairman spencer bachus, he's under investigation tonight on possible insider trading violations. now, i spoke exclusively with the alabama republican about the allegations last november. take a listen to what he told me then. >> when "60 minutes" called and said you shorted ge stock and you bought etfs in the financial sector, i said that -- i don't think that's right, let me get back to you. i can't imagine doing that.

it actually scared me, larry. anytime you make money you're accused of, you know, you must have had insider information. so my suggestion -- my practice now is not to trade. i don't trade anything. >> all right. so chairman bachus now still denies the charges. he issued a statement today saying, and i quote, "i have fully abided by the rules governing members of the congress and look forward to the full exoneration this process will provide." he's being hauled in to the ethics committee, as i understand it. so for commentary let's bring back breitbart editor peter squhietser. he broke the story last fall with his book "throw them out." and you singled out, fingered spencer bachus specifically. what is happening? why is he being pulled into the ethics investigation? >> well, yeah, i named a number of people in the book. he was one of them. i think there was a couple of things going on. number one, there's been a big debate on capitol hill about dealing with this issue. you've had the stock act that passed in the senate, a different version in the house,

and there's been a lot of criticism that they've really softened and weakened the bill. so honestly i think the timing of this leak, this was a leak that this investigation was taking place. i think a lot of it has to do with a story to show how tough they are being. and i'm a critic of spencer bachus, but i think this is not a problem of one or two individuals. this is a widespread systemic problem. so i think to a certain extent they're scapegoating him in a way. >> right. and i take no position on spencer bachus because i don't know what the facts are. i want to ask you some other stuff about this whole insider trading ban. the bill passed the house 417-2. 417-2. so it's pretty convincing. but the "wall street journal" account says there is nothing wrong with members of congress trading stocks. the stock act won't prevent them from buying and selling shares. there's no suggestion that any sponsor has engaged in insider trade. in other words, let me get this right. after all this is said and done, after all the things that you have raised and others, they're still going to be able to trade

stocks? i thought that they were not going to be able to trade stocks. >> well, there were competing plans. there was something called the restrict act which had been introduced by congressman duffy from wisconsin, a freshman. that bill would have said mandatory blind trusts or you need to disclose transactions within three days of which they occur. a lot harder pieces of legislation that were ignored. the stock used window dressing. it says now it's a federal crime to engage in congressional insider trading. but larry, they're going to count on the securities and exchange commission to enforce this. look what's happened to the fbi and other agencies in the past when they've tried to enforce laws with congress. they get threats of budget cuts. it's just not going to happen. >> you know, the s.e.c. has made so many blunders down through the years. but i've got to believe they'd at least be tougher than the ethics committee. but i don't understand, peter, why this blind trust doesn't go through. i can't buy and sell stocks. i can't trade. i have to buy and hold. got to be index funds. we've got a lot of strictures as reporters and anchors here. and the blind trust business, when you work in the executive

branch of the government you're supposed to put everything at arm's length. i did this many years ago. why should congress have any different rules? >> actually, congress i think has more power. they have much more ability to influence markets. if you're a senior pentagon official, a civilian, you can't own military stocks. you can't own them. that includes coca-cola. they consider coca-cola a military stock. but members of the senate armed services committee trade stock all the time. this is a case where the rule makers are writing the rules in such a way to where it excludes them. this is window dressing. and i think we need to keep the pressure up. we need real reform, not the stock act, which is just really sort of a watered-down gesture. >> all right. we'll leave it there. peter schweizer, thank you very much. coming up next, mitt romney's most important speech to date. he's trying to woo the conservative base to support him. so let's put up the word cloud. there it is. do you see the word "taxes" or "tax reform"? look very carefully. it's a wee little thing. that means he barely mentioned

it. so what's his growth plan going to be? how about the other candidates? well, you know what? i'm going to try to help them when we come back. i have a few modest suggestions on supply-side pro-growth tax reform. it will get bigger in the word cloud if they listen to me. ♪

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you saw before the break we put together a word cloud on presumed front-runner mitt romney. the bigger the word, the more he said it. so how often did he use the word "taxes"? well, once again we show you. take a look. you've got to put your magnifying glass up there. barely see it. he didn't really go there. yeah, good speech, but didn't really talk much about taxes. now, let's take a moment. i want to give you my idea, my plan for supply-side growth. it looks like this. let's start with corporate taxes. i want 25% rate, 100% cash expensing on new investment. of course i want to limit all the crony capitalist deductions. and i want it to be territorial so we don't double-tax foreign profits. on the personal side let's begin with two brackets instead of six. 15% and 25%.

limit deductions strictly, especially for the upper end, and let's move ultimately toward a flat tax. that's my optimal policy. let me also add as we're doing this we should take about $1 trillion each year out of the current services baseline. so over ten years we'd knock $10 trillion. maybe $50 trillion in spending instead of $60 trillion. let's see when what our guests have to say about the kudlow plan. we have dean baker. he's co-director of the center for economic and policy research. we have dan mitchell. he's a senior fellow at the cato institute. all right, dean, you're probably going to disagree, but i would argue except for the left wing and the democratic party, which wants to raise tax rates on skufrls ea successful earners, what i've given you is not far from a new consensus thinking on tax reform in washington, d.c. >> i'd say it's very, very far. almost no one wants to see big cuts on taxes for wealthy people because they know arithmetic. there's no way you could balance the budget.

there's no way you could meet our needs in terms of building up the infrastructure. i don't know many people that want to have multitrillion-dollar deficits as far as the eye can see. so i'd say no, it's about as far from a consensus as you could possibly be. >> well, we'll disagree. dan mitchell, i'm arguing essentially simpson-bowles consensus. i'm a little bolder than simpson bowles. i'm saying take their deduction as way, give them a lower rate for a true incentive effect. what do you think about the kudlow plan? am i so far out of bounds here? >> well, i'm going to write your name in in november. >> you got my vote, too. d.c. doesn't count. >> here's the key thing. and this is where i think obama is way oust mainstream. symptoms and bowles, yes, they wanted the government to collect more revenue, but they understood that class warfare is just a self-defeating strategy. so yes, they took away $2 of deductions but they would give us a dollar of lower tax rates in exchange. so even though as you said it doesn't go as far as the kudlow plan, it was based on an

understanding -- >> simpson boles is a very's big tax cut for the richest people and the fact is they couldn't get their own commission around them. a lot of people running around talking about the bowles simpson commission. that was bowles and simpson, that's it. >> 8 out of the 14 supported it. >> the rules and the commission was 12 of 16. they didn't. >> they didn't get the super majority they need but the key thing is moderate centrist democrats still understand the lesson of 1986 that lower tax rates are very important for competitiveness and growth and obama has just staked out i guess we'll call it's french position -- >> president bush came in, lowered tax rates, and the economy went down the tubes. bill clinton raised tax rates and we had eight years of good growth. i'm not going to say that was the reason. but the story doesn't fit. >> but here's where i'll give you a deal, dean. i'll go back to bill clinton's tax rates if in exchange you agree that we go back to the federal government only spending 18.2% of gdp if we get rid of

t.a.r.p., if we get rid of sarbanes-oxley. >> we have to get rid of t.a.r.p. but unless you can make people grow younger, i don't see how you can do 18.2. i could probably pick some games for you. we could put some things off budget and then we'd be at 18.2%. but you know, much of what we spend is on people getting older. and i'm sorry, we're getting older. >> dean baker, i'm kind of crushed to hear this because i thought you wanted to abolish the deductions and the special carve-outs. i thought you were a tax reformer. and i want to add to that, what about the corporate tax? i'm going for a 25% corporate tax. that would put us even with canada if they have federal and provincial. i had dinner last night with the ambassador. 25%. get rid of the -- >> larry, i'm sympathetic to that but -- >> 100% expensing provisions and have territorial -- obama except for the territorial, obama's going to try to punish companies operating overseas. that's a terrible mistake in my opinion. however, obamas other tax reform stuff is not going to be too far from the kudlow plan.

>> no, no. corporate taxes i'd say it's not that far apart. the expensing we have, right? we're doing that now. >> right. >> so we're already there. territorial we're going to have some arguments on. but you know, in terms of lowering the tax rates, getting rid of deductions, i think there's a lot of agreement on that. now, there's still a question where you end up. because if the starting point is we're going to do this and we'll end up revenue neutral, i think all of us who've been around washington for a while know that means you end up with a revenue loser and that's unacceptable. that's why i want a starting point with the idea we're going to raise some revenue with the hope we end up with a little more. i don't expect to get a huge amount more. but we're near the bottom of the ocd when you look at what corporations actually pay and i don't think we should be at the bottom. >> dean, in effect you're making a laffer curve point. we have the second highest corporate tax rate in the oecd and we collect about the lowest amount of revenue. >> and i'm fine with that. >> that's because -- >> lower rates -- >> -- companies don't want to be competitive in america. >> lower the rates and get rid of these deductions. but again, the toorth my view has to be you end up with a bit more taxes, not a bit less, and

i worry that if we start out with the idea it's going to be neutral we might end up with quite a bit less because you know the way things work here. everybody comes in and says okay, we're going to lower the rate and get rid of the deductions. we end up lowering the rate and keeping the deductions. we've been there before. >> i don't want to pick sides here. i'm just saying romney's developing his own tax plan, that's what prompted us to put this in. what do you think? do you think romney will have something similar to what we're talking about tonight, or do you think we're all going to be terribly disappointed? >> well, based on what romney's already said, he wants to extend the bush tax cuts. he wants the corporate tax rate at 25. so he's sort of where you are on that. but he doesn't really have anything to match on the spending side. >> right. >> and the reality is even for us hardcore supply siders you can't just cut taxes and do nothing else. >> i want to give him credit. he wants to get rid of medicare. that should get a few points -- >> you know he doesn't want to get rid of medicare. >> ryan plan. >> the ryan plan is a hybrid

that has choice and the pivoting system. by the way we've got to cut a trillion dollars a year out of the current services baseline on spending. that is crucial. dean baker, thank you. dan mitchell, thank you. mitt romney and all the other candidates, thank you. that's it for tonight's show. all i want is a nice special supply-side growth plan like paul ryan, who's our special guest tuesday night. we'll talk budget and tax reform. ttd#: 1-800-345-2550 let's talk about the cookie-cutter retirement advice ttd#: 1-800-345-2550 you get at some places. ttd#: 1-800-345-2550 they say you have to do this, have that, invest here ttd#: 1-800-345-2550 ttd#: 1-800-345-2550 you know what? ttd#: 1-800-345-2550 you can't create a retirement plan based on ttd#: 1-800-345-2550 a predetermined script. ttd#: 1-800-345-2550 at charles schwab, we actually take the time to listen - ttd#: 1-800-345-2550 to understand you and your goals... ttd#: 1-800-345-2550 ...so together we can find real-life answers for your ttd#: 1-800-345-2550 real-life retirement. ttd#: 1-800-345-2550 talk to chuck ttd#: 1-800-345-2550 and let's write a script based on your life story. ttd#: 1-800-345-2550

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