moment. and michelle caruso cabrera is also with us this morning. becky is off today, still spending a little bit of time out on the west coast. meantime we're listening to adele this morning because, yes, she dominated last night's gr gramm grammys. record, sopg, and album of the year. she tied beyonce's record for most wins by a woman in one evening. more on some of the other big winners and the tributes to whitney houston. we'll do all of that a bit later. first to this morning's top story. violence erupting in greece after the greek parliament passed an unpopular package of pay, pension, and job cuts. demonstrators clashed with police, buildings were set ablaze, and this has been one heck of a weekend. >> a terrible weekend. two points that i make. all of those guys are dressed in black. they have masks and bats. those are the anarchists. the size of the defensemen on

stra demonstrations were far smaller. they would have liked the parliament to vote against the measures because that vote would have brought on anarchy. the vote the parliament took was for more stability. it will be bad. this was the least of the worst options. >> it will be bad for how long? in terms of what we're seeing. >> in terms of the violence? that is hard to know. in terms of a very tough economy, years. >> a number of interesting articles by a number of economists suggesting that the austerity plan may work to the extent that it matches these numbers early on but the growth story. >> it has to come from the greeks themselves. they have to make the choices they are going to liberalized the closed professions. it's a way to say they're going to get rid of the barriers to entry. if you want to start any kind of business in greece, it's nearly impossible, which means if you can't start the business, you don't hire. and the greeks themselves have

to change that horrendous bureaucracy that is thick through their economy if they're ever going to grow. nobody can do that for them. >> why are you here? was there a discussion about you -- >> about me going? yeah. it looked like they were going into the abyss and what it did it do? >> tear gas canisters would normally mean you would be -- >> you're right. absolutely right. i think the greek story was far more important to the markets on a grander macroeconomic scale. >> that's why i thought you would have -- >> she is not there. but we do have cnbc's julia chatterley joining us with the latest. julia, good morning. >> reporter: good morning. i took on the gas canisters instead, michelle. the vote passed, though, in p l parliament last night to reforms. the next step for the troika is the remaining two coalition leaders to agree that no matter what happens in the election in april, as it could end up being,

these reforms will be passed no matter what. next step two, of course, they have to vote on the implementation. so there are a couple of things still in the pipeline. now what we saw last night was 43 members of parliament voting against this deal and as a result they were expelled from parliament. at the same time, of course, we've had nine cabinet ministers resi resign. a cabinet reshuffle is essential and a government official has said to us they expect that to happen as early as today. but while that vote was going on, tens of thousands of protesters were gathered in the square last night to protest not just against the wage and pension cuts but also the government and their handling of this crisis. it actually started quite peacefully but some extremists began throwing rots and petro bombs to police who immediately respond responded with tear gas. estimates suggest now that 150 shops were looted and more than 30 buildings set alight.

over 50 people at the same time injured. people are not expecting a continuation of that violence into this evening if only because it's a monday now and people are back at work but because nothing has officially been organized in the same way we saw on friday and on the protests saturday and sunday will continue to monitor the situation heading into the euro group meeting. back to you. >> thank you so much. let's check on the market reaction out of greece. positive moves in asia result of it and the future shows the dow open higher. the nasdaq would open higher by nearly it 21. europe open positively as well and continues that way. the athens composite higher by 4%. the cac higher by half a percent. the asian markets higher across the board with the exception of shanghai which barely budged. the price of oil at this hour is higher across the board.

wti $99.66. brent is about $118. what's going on with the treasury note and the ten-year yield and we are seeing a sell-off of the third of a po t point. that's pushing the yield back above 2%. get out your party hats on that one. currency is weaker against the euro and the pound. $1.32. the wake of the vote by the greeks and the yen is at $77.65 and the price of gold higher by $4.80 an ounce. other headlines this morning, china invest omt corp remains wary despite a plea from angela merkel. the head of china's $410 billion sovereign wealth fund says he will look for opportunities in infrastructure and real industrial projects. >> and as joe mentioned early yerp in the show the s.e.c. is

bearing down on private he cequ investigating private equity firms. some funds may be calling themselves bigger than they are to it attract new investors. they sent a letter late last year to funds calling an informal inquery. it's an interesting issue given that romney is in the news. >> the issue being looked at is this and we've talked about this on the show before. so many firms hold their portfolios at a different value even for their assets so you could have them owned by a consortium of firms, one firm may hold it on their books at $40 or whatever a share it is. the other guys may hold it at $42. the question is on the same asset the question is why are they being val is you'd at different values and is that

impacting -- >> how long has this been going on? >> since the beginning of time, my friend. >> interesting or not? >> you're going to suggest the timing is political? >> you don't think it's interesting that suddenly -- >> look -- >> the fed has decided pe is something we want to look at more closely now. the presumptive nominee ran a pe firm and he's up against the person who is heading the federal government. i'm just wondering, could it be possible -- >> it's possible. >> that you could read the obama administration could read some interest into the s.e.c. interest? >> i'm going to take two steps back and say, first, "a," i doubt they're going to find much in truth. >> doesn't matter. >> a lot of time looking at this issue. >> where there's smoke there's fire. >> and, two, in truth, after dodd-frank there was a lot of talk about regulating private equity firms. by default if you come under the

purview this is not an investigation, i would suggest. this is them trying to understand and study the industry and try to get a sense what have this is about. >> 0 oh, is that what it is? trying to increase their knowledge? >> they do do that occasionally. >> they need to. they have demonstrated in the past they need to know what they're doing like bernie madoff. >> did i say do-do? thanks. >> you didn't hear it? >> becky would have called you out. >> and i'm sure you'll be putting it on a replay. >> do we have a squawk ward moment? >> i don't know that we need that. sometimes you need to say that. you do do. >> are you going to give us any color on pebble beach at all? mickelson amazing. >> the tiger/mickelson matchup was made for. cbs has to be ecstatic but it was great.

>> you had fun. what was the most interesting thing? >> it was great. bill murray, i have a shot side-by-side, we can show it later if you want. my wife hates that thing i do when i go like that, so i have a side-by-side with him, both of us doing that on the same side of our mouth. i won a contest in 1979 imitating him. >> when you were 4? >> exactly. you saw amy mickelson. she looked great. it was a great quote. a 64, are you kidding me? and that's what you would say if you shoot 64. the greens were like glass. you saw what happened to my pro, steve elkington was my pro. he had to leave on the second day, reinjured a rib. so i was alone. you can't play alone.

left to your own devices -- and it had to be spy glass, too. i was wearing new shoes and i have a new blister. you want more? i have more excuses. i have more excuses. you saw my birdie? >> i did. it was gorgeous. can i say the problem was your caddie was in the way of being able to see the ball. >> that was the cameraman's fault. no one was expecting anything to happen, believe me. that was the first hole they had cameras on number 16. i didn't know the cameras were there. >> i was proud of you. >> i have some nasty mail about that. they said we now know how effective your makeup is at cnbc. >> an unmade bed. >> all these wrinkles. >> what else is going on in the world? president obama will send his budget to congress today. the spending plan will project a deficit of $901 billion, down

from $1.3 trillion this year. the numbers are higher than the white house estimated in september. the budget will include a multiyear request for job creation programs and spending on roads and our surface infrastructure. the chief of staff making the rounds on the sunday talk shows. >> the time for austerity is not today. we need to be on the path where we bring our deficit under control. right now we have a recovery that's taken root and if we put in austerity measures right now, it would take the economy in the wrong way so "the new york times," for example, has argued that 2012, 2013 is not the time for austerity. >> congress is free to ignore the president's budget proposal and they have declared it dead on arrival. in other washington news, paul volcker expect ed to file publi comment on the rule bearing his name. he will argue the u.s. financial system will be healthier with a ban on proprietary trading by

banks. the form earp federal reserve chairman is expected to say too much liquidity leads to people endlessly raise aing asset prices on the assumes that a greater fool will always be found. volcker believes the complexity of the rules is unavoidable. financial firms file letters oppo the so-called volcker rule. >> in global headlines japan's economy shrinking 2.3%. manufacturers were hit by the strong yen and weak export demand and the european debt crisis and the flooding in thailand which has hurt u.s. firms much more than you would have expected depending on how much business you did there and whether you had suppliers. emerson electric. also hurt the japanese economy which is number three in the world. get to the global markets report. carolin schober is standing by in london.

good morning, carolin. good morning to you, joe. it's a lot of green across the board here on the stoxx europe 600 currently higher by 0.7%. european markets are staging a bit of a relief rally after that greek vote in parliament last night but it's a very, very cautious relief rally let me tell you this because there's the massive risk of implementation and keep in mind eurozone finance ministers haven't even signed off on it. they will probably do that wednesday. keep in mind we'll get fourth quarter gdp on wednesday. that could hurt sentiment as well. this is how markets are trading. the xetra dax off session highs. similar gains for the cac 40 up and the ftse mib in italy trending higher by 0.7%. the banking stocks are really driving this rally today, obvio obviously they are cheering the situation in greece. very quickly we also had an italian auction today where yields for the 12-month bill fell to around 2.2% compared to

2.7% from a previous auction so that's positive. demand was lower than at a previous auction and that could indicate some fatigue on the part of investors. the bank of italy says that a technical glitch could have cost the unsatisfactory auction. your money, your vote. a good weekend for mitt romney. the presidential front-runner winning the maine kcaucuses and an influential straw poll. first the sports buzz. this was pretty amazing since phil and tiger were in the same group but phil outplayed tiger. tiger looked like he's almost back in terms of his long game but the putting was really suspect yesterday. he did win, though, phil did, for the fourth time in his career with a 64 and he birdied the last hole. total pga wins now 40 for the 41-year-old and a 64.

>> should we mention his partner? >> barclays guy. should have been bob diamond. >> skip mcgee. very interesting banker. former lehman guy. one of few who stood up to dick bols and said we have a problem. >> i played in phil's group before but bob diamond was his partner. i think he's still lying low because he's a banker. check out the global marked headlines.  oh! [ baby crying ] ♪ what started as a whisper ♪

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welcome back on this monday morning, we are looking at u.s. equity futures this morning. they are higher off of news and what's coming out of greece over the weekend. in the meantime, though, making headlines. the average price for a gallon of regular gasoline rising nearly 12 cents to about 3.51. industry watching. the pump prices likely will rise a few more cents in the short term. retailers have yet to pass along all the recent wholesale price increases. apple launching a new legal attack on samsung phones. the iphone maker wants a court to block samsung from selling its new galaxy nexus smart

phones. joe, back to you. two big political stories this morning, president obama delivering his 2013 budget to congress. the republican presidential hopefuls continue to slug it out on the campaign trail. john harwood joins us from washington. john, you were -- i don't know if i've seen you since you had that brief little -- you were out a couple of days. people were shocked that our iron man was out. where are you now? >> reporter: all i can say, joe, get the flu shot next time. i'm going to. >> because that's what it was? i'm still torn on that. >> i don't. >> you don't get them. she thinks it gives you the flu. are you on your march romney will be the nominee by march still? have you changed that at all? >> reporter: i'm getting shaky on march. i think romney is still in good shape, a nice psychological boost out of maine and the cpac

straw poll. he has to win a primary. i talked to an adviser after the maine results came in and he said we have michigan and arizona at the end of the month. we have to win both of those. they have to prevent santorum or gingrich from breaking through on super tuesday. gingrich has some southern targets he's going to focus on. rick santorum says he will make a stand in michigan, interesting choice. it's a blue collar state. it's also mitt romney's second home state so we've got a ways to go. >> now i think about mitch daniels or christie because we've gotten to the point they've looked everywhere else, even santorum is looking good at this point. it's staggering, isn't it? >> reporter: it's a very, very unusual race. i haven't seen one quite like it. >> i don't want to say every dog has had his day because that wouldn't be nice, but every

candida candidate, there's been enough -- i used to think why is he hanging in there? why is he still -- ron paul won something or came in second. >> iowa, remember, stop talking about santorum. he is irrelevant. >> reporter: what you always have, joe, in these campaigns are big, mainstream candidates who raise a lot of money. they have a lot of infrastructure. they fight it out for the big states and then you have candidates who can live off the land because it's basically very small staff, as long as they can fly to debates and individual states for media events for a primary or caucus they can stay in it. what's happened is you only have one of those big aircraft carrier candidates and people like santorum. they are scaling up now but they can stay in a long time. if it's just you and your plane ticket, and what's happened is those people because of the resistance to romney out there, those people have been able to get lift when they get into the

spotlight, when they get contrasted to mitt romney. one of the national polls showed him 15 points ahead. i don't buy that. that seems a little over the top. rick santorum is clearly rising nationally and in a reasonable position. it's remarkable he's gotten it shall. >> the excitability question, that's what has been written all weekend long, again, about romney. that's come up a lot of times. i don't know whether that's -- >> reporter: he needs a little insanity in his campaign. >> i guess that might be part of it. what do you make of the birth control controversy? "newsweek" i saw a piece and "newsweek" has become a de facto arm of the dnc, i really believe that, de facto. but the latest one is that this is a really smart way for the

president to throw up a straw man and this will work with women and the like and people aren't going to come down on the side of the catholic priests. >> reporter: it's not clear to me that the white house expected -- some of its allies think they did not expect and got the blow back after this rule was formally announced that was more than they wanted. however, it is true that social issues in this election, democrats think they are an offensive weapon because, remember, evolving democratic coalition has a lot of upscale, upper middle class independent and affluent voters who see social issues as a reason to be for democrats though the democrats want to raise taxes. >> it said that the republicans need a bunch of foo canned can datz who are democrat because these conservatives really need all these new guys who should

have democratic. did you read that piece? >> reporter: i didn't. >> you want someone who is fiscally conservative but liberal socially? >> get rid of the old sacred cow for the base of the republican party. >> of course we want a fiscal conservative and a social liberal you go with someone like ron paul. >> reporter: michelle? >> yeah? >> reporter: what did you think of the whole birth control controversy? >> i think the whole health insurance discussion starts at the wrong place. we talk about whether or not it should be government providing health insurance or companies. we should buy our own and then you don't have the government deciding what businesses can -- what other business does the government say you can sell this but you can't sell this? come on. >> reporter: that's a different question. if you have the government

outlining a set of priorities for what insurance anies, take that as a given, include free contraceptive coverage. >> i can't take it as a given. that is the problem. that is the core of the problem. >> the other article -- >> we e-mailed this yesterday. we agreed 100%. >> we had a moment where the safety net piece in the "times" said that a lot of people who receive the government -- they need them but they don't want them. >> they don't want them viscerally but ultimately they need them. and the question is how do we deal with that. >> talking about social security and medicare? >> you have to somehow find a way to grope the economy but cut back on some of the services and how do you do that? >> you means test. you tell which elderly people that we have on the set all the time who still get a social security check, who wait until they're 65 to get the knee

operation. >> reporter: that's not enough. >> it's ridiculous. >> reporter: you can't fix medicare and social security flew through affluent to pay more. it's something but it's not different. >> the tom brokaw teases, the wealthiest retiring generation in history and they want to tax young people who are just starting out to pay for things that they should pay nor themselves. >> reporter: right, michelle, but we also have more affluent, wealthy people than ever before. do you think we can fix our whole problem? >> absolutely not. >> reporter: that's my point. >> i'm glad you acknowledge that. i wish they would. >> all right, john, welcome -- well, it's not welcome back. you've been healthy for a couple weeks, haven't you you're good. >> he's looking good. >> what doesn't kill you makes you stronger. >> reporter: did you watch the grammys last night? >> i saw that one guy -- i don't

saw the beginning. >> bruno mars? >> talented. wow. >> reporter: have you saluted whitney houston on the show this morning? >> did we what? >> we haven't mentioned whitney houston. >> reporter: i think we need to give a little r.i.p. >> a moment of silence for whitney. we should do that and, by the way, not a moment of silence but congratulations to adele. i thought right at the end when she was crying -- >> you watched the end? >> i dvr'd it and watched it this morning. >> ambitious. >> i wanted to make sure i saw it in case we talked about it. >> is music like that coming back, bruno mars? >> he's been back for a while. >> my kids knew about him. he reminded me of a cross of james brown, little richard, michael jackson.

i remember seeing the american music awards the first time michael jackson -- it was like this. >> i remember when he was on the grammys. >> no, it was the american music awards. when he first did the moon walk. if. >> felt like a -- >> remember when ricky martin -- >> there will be iconic moments again you will remember. maybe it was the lights were so bright and the outfit. and they lost me with cold play because i know you listen to cold play while eating your spinach dip. >> and drinking chardonnay. >> he is married to gwyneth paltrow so give him credit. >> see you later, john. sorry. we digress. >> the budget battle to "squawk box". former economic adviser to 0 vice president biden jerrod bernstein and douglas

holtz-eakin go head-to-head in the next hour. it has been so cold in atlanta that this fountain was completely iced over. look at the cute hats on the kids. probably had to dig them out of a closet. in italy cold weather is causing canals in venice to freeze over. the gondolas are covered in snow. the opening bekd weekend of the carnival. a look at last week's winners and losers.

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lynch global research joins us. david, good to see you. violence in the street but not to sound mercenary like, business news, we kofrp the business aspect and the euro is moving higher as a result. is that the result you expected? >> probably sometime this weak we'll find out the details on psi and we'll find out about the private sector. it's less than 90, above 70 which is our expectation. the ecb still has to cough up its profit and we might not be able to avoid a forced restructuring that triggers the cds. from our point of view it has been a long time thinking about this. the market is way ahead of the event.

what does that mean? >> 125 and 135, sort of the next three to six months. i think if greece were to default, i think the euro would be a lot stronger. >> this is the commentary? >> basically last week as we know the loan groat number disappointed. local governments are now basically -- i mean, i think very indebted and leveraged and i think over the last couple of years, if anything, we learn about the market is china is much more important than greece as far as the euro is concerned.

when china is doing well, emerging markets are doing well. the euro is doing well. >> david, good to see you that morning. thank you. >> thank you. >> comments, questions about anything you see here on squawk, shoot us an e-mail. still ahead we're going to need a referee for the next one. in the democrats' corner jared bern steen and in the gop corner douglas holtz-eakin. we'll ring the bell on the budget debate up next. (

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welcome back on this monday morning. we've got some green arrows across the board looking ahead to the market opening. the dow jones up 81 points higher. s&p 500 higher around ten points, nasdaq around 20 points higher, off the back of the austerity plans in greece. making headlines this morning and some sad news to bring you, roger aaron has died after an illness at the age of 69. he was the head of the corporate law practice at skadden and led work on the likes of general e motors, a one-time protege of deal lawyer. i knew roger very well and his son and good people. in other news this morning, senior goldman sachs partner

george mattson will retire. he did ubs, caterpillar, starting to see a lot of the big executives at goldman sachs. given what's happening across wall street and what that means. >> you know him. >> i do. he's involved with one of the political campaigns. >> i'm assuming because he's a friend of yours -- >> no, he is, but he wasn't always which is what the interesting thing is. last time around like so many goldman people they're on the other side. >> you said given what's happening, what's happening that's forcing him to retire? >> i think you're seeing comp come down across-the-board. and so a lot of these people who grew up in the business, who stayed up until 4:00 in the morning every day are saying the about business is no longer the business it used to be. do i want to be in the business anymore and is it possible you

see somebody like mattson show up at a boutique six months, a year from now possibly? i don't know. >> the other side of the story was so many were so wealthy for so long. they retired in their 40s and 50s and left way before. and you wond earp twonder the snottiness. >> he is not a three ipo partner, i'm pretty confident. nonetheless, i think what's happening in the advisory business where comp is getting sucked down because of the rest of what's happening with the other firms they're saying, maybe i shouldn't be doing it here. i should be doing it elsewhere and what does that mean? >> a bit of a lifestyle change. >> there's other things that are part of the story. in other news this morning, president obama set to deliver his 2013 budget today. joining us now douglas holtz-eakin, white house economist, and on the set jared

bernstein, former chief economist to vice president biden. and, jared, since you're here, we're going to get the budget today. >> yes. >> whatever the budget is, the one number that matters, i think, to most americans or we'll see in the headlines over and over again is the fact we're going to have another trillion dollar deficit this year and next year we're going to come close to that and the president clearly articulated the vision several years ago that his plan, his ambition, was to cut that deficit in half and clearly he is not doing that. >> that is a big, important number. contradicting you a bit, if i may, for most people according to what they tell pollsters what they really care about is jobs and growth. that is ranked pretty low. i grant you there's going to be a lot of discussion about the deficit issue. from the perfespective of the economy that's still climbing out of recession, an

unemployment rate -- you nope the numbers -- i think at this point adding to the deficit in the interests of short term economic makes a lot of sense. i like the way it is structured in terms of short term economic boost, longer term, stabilizing the debt to ratio which this budget does accomplish. i think the big question is -- >> how do you accomplish that? >> through $4 trillion of deficit reduction. >> over how many years? >> ten years. if that sounds familiar, that's the same deficit savings in bowles simpson in terms of the bottom line number. the big question is here what does this mean to anybody given that he's raising $1.5 trillion in new revenue to a congress that -- taxes, new revenue, that congress isn't exactly welcoming toward. but it does stabilize the gdp ratio. >> doug, is this just political silly season? does this matter at all? we've heard from folks in washington including paul ryan this is dead on arrival.

>> well, it's not a serious document for governor of the united states. it doesn't have $4 trillion in deficit reduction. this already happened. so it's full of budget gimmicks. what's more important is what's not in there. serious fundamental tax reform of the type was recommended, a se serious entitlement reform, the time that bowles simpson recommended. what's not in there for the second budget in a row is anything that his own fiscal commission said was necessary to avoid our national moment of truth. this isn't a serious document that says how will we serve our children well, preserve the social safety net. this is a campaign document that shows up with enormous spending in those places where you could have transportation and is full of handouts to his favorite constituencies. that's all this is. >> one factual point, numbers aren't out yet. it's my understanding the $ .2

trillion of discretionary spending is not, in fact, counted in the $4 trillion. i saw some preannouncement saying if you counted that it would be $5 trillion. i don't think doug is correct on that. >> i could be wrong about that. i bet there are $2 trillion in gimmicks. >> i bet doug is 100% correct this is a mril nonstarter with congress. i don't think it makes it an unserious budget. i can't imagine a budget president obama would put forthright now that congress would embrace. >> what could he put forth that congress would embrace? >> it's a good question. and the reason why, it's a good question with no good answer. the president has been extremely consistent and forthright on the following point. we cannot achieve fiscal sustainability without focus. spending cuts and new tax increases. this has both. some members say absolutely no and ergo, doug is one of those people, it is an impossible -- >> doug, is that true?

is there a budget you would be happy with? >> what is a budget supposed to be? a budget is supposed to be the statement of the president's priorities for the nation. it's not the actual budget that comes out of congress. the democrats and the senate have refused to do baujt. they're not even doing one this year. that is the president's problem. he should call harry reid and do something. this document he controls in its entirety. it is his statement much of the way to govern the united states and his plan has consistently four years running put the united states into a debt spiral. this is unacceptable. >> a simple question, doug, would you accept -- would you endorse a budget that included some new revenues? >> yes. bowles simpson says do fundamental tax reform. it has been agreed upon across the spectrum from the left to the right as something necessary. the president has never put forward a single serious proposal on fundamental tax reform despite saying he wants. it. >> so bowles simpson raises like

$2 trillion in new revenue. it goes further. >> and it had republican -- >> i understand that. >> that broadens the base. >> it's not going after just the wealthiest americans. >> wait. you keep asserting no republicans -- republicans signed off on bowles simpson so get your facts straight. not the stuff he puts out, this is a joke. >> i think it's encouraging you agree and i agree with you. broadening the base, lowering the rates, is absolutely the key to tax reform going forward. >> do you think democrats are prepared -- >> call your old buddies at the white house. lower rates. broader base. raise revenue. >> do you believe democrats are prepared to truly broaden the base and i ask that in light -- we were reading about the safety net, the social safety net that has grown -- >> not only -- >> when you start picking apart that safety net -- >> not only are democrats ready to broaden the base but there are base broadeners in here.

this budget is going to be much like the september budget. take the loophole. that is the base broadener. the minute you start equalizing the rates of nonlabor income like -- >> i'm not going to -- >> that broadens the base. >> i think what we're talking about is truly wrod broadening the base not strictly after going just after the wealthy americans. i'm not suggesting that you shouldn't but to really change the equation, to change the plot, if you will, you need to broaden the base and go much further down the food chain. >> so you're talking about raising taxes on 0 people below $250,000. i agree with that. i don't think now is the time. the bush tax cuts should fully phase out. i go further than the president. but not for a ynumber of years. >> doug, where are you on that? >> i think the great tragedy is on the other side, on the spending side. we have a social safety net -- medicare, medicaid, social security.

crucial programs that americans rely on that is frayed -- social security 23 we're at 25 and we do 20, we have to start there. and that gets frustrating for conservatives. >> i don't -- i definitely don't stipulate that spending cuts or revenue increases are bad for

the economy. . >> for every dollar of revenue increase they may have a ratio you like when you start to see the numbers. i think the president is going way outside the comfort zone of most democrats. there's not a lot of fat in medicaid to cut. i actually give them credit for that. >> gentlemen, thank you so much. thank you, jerry. doug 0, thanks so much. we'll see you soon. >> still to come on "squawk" a live report. an austerity package there save

that country and calm the global markets? stay tuned. coming up on wednesday he's too big to fail. he's the hammer. what happens when too big to fail faces on the brink? it's another "squawk" exclusive you won't want to miss. hank paulsen only on "squawk box."

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coming up, it says you hear the music. ♪ there it is. it can only mean one thing that walker, taxes ranger, is in town. it's a real stretch. >> good one. >> the nation's formest top accountant david walker on the set, great guy to have on the day we get the budget, his take on that, the gop battle and taxes and he's right down the middle, right, an independent. >> center right. like the way the country is. >> "squawk box" will be right back. [ male announcer ] we know you don't wait until the end of the quarter to think about your money... ♪ that right now, you want to know where you are, and where you'd like to be. we know you'd like to see the same information your advisor does so you can get a deeper understanding of what's going on with your portfolio. we know all this because we asked you, and what we heard helped us create pnc wealth insight,

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deficit control, president obama delivers his budget plan

to congress today. >> in the eyes of a ranger, the unsuspected stranger. >> our guest house general david walker will weigh in on the president's call to increase taxes on the nation's top earners. then reaction from both sides of the aisle, republican jeff henserling and marcy captor square off over spending and taxing cuts. then master of the markets. >> watch out! >> blackrock's bob doll on a fight to make a profit in the market and reaction to the key austerity vote. ♪ a letter from my heart and does it fail you rose to claim it ♪ ♪ it was dark >> a little adel fe for us aftea big grammy win. i'm andrew ross sore kin along with joe kernen from pebble

beach and michelle caruso-cabrera. more on the controversial austerity measures in greece in a moment. the dow jones would open up about 76 points higher but in other news apple escalating its patent dispute with samsung, asking a california court to block samsung from selling its nexus phone. gasoline prices jumping over the last two week, average price about $3.51, up 12 cents over the past two weeks. analyst trilby ludberg ohhig sa higher prices for crude gets the bulk of the blame. the upcoming film "sparkle" will be released into august and the investigation into the cause of whitney houston's death is

ongoing. greek lawmakers passing an'ser itily bill and four measures there, the deal igniting more protests in athens. cnbc's julia chatterley is there with the latest. julia? >> reporter: thanks, michelle. the deal was agreed by parliament overnight. now the troika will look for signatures and written confirmation from the two remaining coalition leaders that whatever happens at the election due in april, these reform measures will be implemented. now the political situation here is key, what we saw early hours of this morning is 43 mps being expelled from their two respective parties for voting no on these reforms and it's quite interesting there's a poll published yesterday that said over 60% of this population want immediate elections and that's up from around 45% just two to three weeks ago so it gives you an idea of how fragile the political sentiment is right now. now i saw firsthand yesterday how the mood changed very, very quickly from something that was

a peaceful protest to extreme violence, and behavior towards the police. they're extremists here ready with gas masks even before the police retaliated with tear gas to the violence we saw. this morning when we left the hotel there was gra featie on one of the buildings one in particular said "your wealth, our blood." the view here from people is that the violence we saw last night is not going to happen again this evening, primarily because it's a monday and people are back at work but because nothing official has been organized but i point out the political uncertainty here is certainly not helping the mood. for that, guys, it's back to you. >> julia, thank you. back in the u.s., president obama will deliver his 2013 budge net a few hours. we actually, this is interesting, spoke to clint eastwood last week after he declared halftime in america, in a controversial super bowl ad. we this to say about the way americans spend.

>> the last couple regimes have been, are putting us deep in the hole, and i don't know why it's so, such a basic thing. your parents always tell you, when you don't have a dollar in your pocket, you don't spend $2, and that's sort of a basic philosophy of life. but some people think you can just put it off, if you put it off, they print money, that means the money in your pocket becomes devalued and it's not worth as much, and eventually it comes down to zero. >> reacting to this and more our guest hosts david walker, kr, eo of the comeback america initiative and former u.s. controller general. we just had a discussion about this, jared bernstein and douglas hoelts-aiken. if you have 15% revenue and 25% of spending you know one way or another that 25% has to come down. i want to look at ways to get

the 15% up, whether it's growth or whatever but you know 25 has got to come down and i think clint's point was if your parents say you got no money, don't spend $2, you don't say to your parents give me the $2 so i can spend it. you just don't spend it. that's not what's in the budget. >> the fact of the matter you talk about spending 25% now. we're on the leading edge of the retirement baby boom generation. >> are we headed to 35? >> 30 plus and growing over time so you can't just look at the 25. the try ut uth is you can't spe $1.40, charge it to the credit card and not expect to have a day of reckoning. we saw greece. there's an analogy here, the greek government was not truthful with its people. it was not truthful with its lenders. government grew too big, promised too much, waited too long to restructure and when the bubble burst you have to make dramatic and draconian changes

and the people don't like it. so we need to learn from that and we need to be more truthful with the american people about where we are and times of things that are necessary. >> david we heard it's not a real budget that's being proposed, it's a political document because it's got no chance of passing congress at this point. >> if it is a political document, wouldn't it have been more effective to put big spending cuts you know are not going to come out or this is a re-election document? >> it is largely a reprise of what the president sent so the so-called super committee, with more debt financed investments, if you will. now the president is putting certain things on the table, like for example medicare and medicaid reductions but he's not specific enough. he's not talking about transformational tax reforms. he's not talking about reconsidering our promises in health care because we've way overpromised. he's not putting social security on the table. he's way short of cutting the budget deficit in half by the

end of his first term, if you will, and so what we need, quite frankly, is we need to be more truthful to the american people, that it is going to take more revenues. we have to renegotiate the social insurance contract. >> because when you talk about being truthful it's set up as this false choice at least in my opinion. we can't do austerity now. that would hurt the economy and right now we need to grow the economy. but when you talk about overpromising in health care, you can make long-term changes now that don't hurt the economy now. you can do a lot of things that help the budget, if you make changes when it comes to people's incentives and choices in the long-term that have nothing to do with helping or hurting the economy now. >> do you think that right now politically it is palatable to make the changes? can obama do that and get any bipartisan support realistically? this is not in defense of what he's doing. i'm saying we're at this moment. >> we're not going to see any significant tax social insurance

or other reforms before the election. we're not. but understand what this is. this is the president's proposed budget. it should have been much more specific, much more substantive than it is. at the same point in time, who is responsible for passing the budget? the congress. the congress hasn't passed a budget in over 1,000 days and counting. guess how many years in the last 60 years that congress has passed appropriations bills on time? four. out of 60 years, and even when it passes a budget and appropriations bills on time, do you know how much of the budget it controls? 38% and declining. you can't run a family this way. you can't run a business this way. we can't run our country this way. we need dramatic and fundamental reforms. we need more leadership from the president, and we need leaders of congress to start acting on behalf of the country relative to their party. >> when it comes down to it, this is an argument we have in the election whether we continue to expand the social safety net

or whether we bring it back a little bit. in greece, i watched springsteen last night and couldn't help but thinking we take care of our own, we want to take care of our own, we do, but they wanted to take care of their own in greece, too, they wanted to take care of people from the cradle to the grave and you see what happens when well intentions run amuck and there's not enough. >> and suddenly you're telling an 80-year-old, you know what? we're cutting your pension now, when they should have told them when they were 40 your pension isn't going to be as big as you thought. >> you put your finger on the answer. what we need to recognize is the difference between the short term and the structural changes. we need to address both. you don't want to have significant spending reductions, tax increases now, but we need to reach an agreement on what are we going to do with comprehensive tax reform that would generate more revenues? what are we going to do to renegotiate the social security contract and save the safety net but reduce spending? how do we reduce it without

compromising on national security, we need to agree and implement it over time. >> andrew asked you if it's politically palatable now. the problem it's politically palatable never. even after the election something might happen? >> 2013? >> let me tell you why. this is the 20th anniversary, monday, next monday is the 20th anniversary of ross perot declaring for president for the first time. he ran on four things, fiscal responsibility by the federal government, political dysfunction in washington, declining trust in government, and declining confidence in the future. >> nothing's changed. >> it's worse. here's the key it's much worse today and we're losing ground but here is the story within the story. he woke up the american people with the facts and the truth. he helped to set president clinton's agenda. we made dramatic progress from 1993 until 2000. we've lost all that ground and more since 2003. we can repeat history. we must go back to the american people. the president, the republican

candidate, the americans elect candidate and there will be one, need to go to the american people, build a case for dramatic transformation reform so no matter who wins the people are prepared for tough choices and we need to phase them in so that we can help get our finances in order, create a better future, keep america great and make sure that our future is okay. >> the "new york times" piece we keep referencing, what was the real this rurust? i think it was some really poor people think a lot of people that aren't poor enough are getting too much of the social safety net? was that really the thought there? >> i thought there were two threads. >> the social safety nets but we want to help the middle class. >> two components to the article were interesting, the social safety net originally built only to help the very poor has sort of moved up the food chain and is now helping the middle class as well. and a lot of -- >> the middle class needs it. >> -- to the extent we believe

they are supposed to maintain this middle class sense of a lifestyle if you believe this is a version of middle class. some people -- >> they want to do it themselves the middle class. we need to allow the middle class to do it themselves >> so many people in this town that was profiled suggested, they were part of a tea party, they said look, viscerally i don't want this, but then when it was explained to them about how much they were actually taking, they said actually i need that and if i don't have that, then there's another problem. so that's very challenging. >> greece, it grew too big, promised too much and waited too long to restructure. the u.s. is doing the same thing. our social safety net is not a social safety net. we're in middle and upper income welfare business. let's take medicare as an example. >> millionaires and billionaires use it. >> in medicare as an example, there are two voluntary programs, part b, which is physicians and outpatient, and part d, prescription drugs.

95% of americans get a 75% subsidy for voluntarily signing up on those programs irrespective of their income and wealth. is that a safety net? no. and by the way, the affordable care act which expanded government promises will cost $12 trillion more than the politicians claim. government's grown too big, promised too much, waited too long to restructure. we need to get on with it. we need to make phased changes that we'll get the miracle of compounding working for us rather than against us and yes we need more revenues. how you generate the revenues matters. we need to do it through comprehensive tax reform. >> david, you're here until 9:00, you'll be back. >> i look forward to it, i'll be back. sons of the american revolution and cpa, that means i'm a patriot who can add. >> you're advertising you're a cpa? >> what's wrong with that? >> in case you have some greeks

afterward, the ladies come up and go hey, are you really a cpa? wow. yeah, right. >> you're not my type, joe, i can tell you. >> how do you know and besides that's not a big selling point all the time? maybe it is. >> i've never had anybody complain about it until now. >> wear it, wear it, kcpa. >> you have one of these for me? >> if you pass the exam and get the experience. >> if you've got comments or questions about anything you see here on "squawk box," any cpas out there, shoot us an e-mail sidewalk squawk@cnbc.com. >> we'll find out where republican jeb hensarling and republican marcy kaptur stand on the budget. and bob doll give us perspective on the market when "squawk" returns.

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checking the futures right now, green arrows across the board. dow looks like it would open up 81 pints higher, s&p 10 points higher and nasdaq would open up close 2021 points higher. british police arresting five more top staff at "the sun" part of a probe into journalists paying police for tip-offs in

part of a wider investigation into illegal news gathering practices. joe you're giving me a look, how can you like "the sun"? i used to live there and read it regularly and it's -- >> it's a tabloid. >> like the "new york post" except page three has a nude girl on it. >> actually naked. >> on page three every day, every day, every day. >> i mean in spain they have milk ads and they're naked. i guess it's just the body, right. >> really? >> yeah, a bill baby looking at their mommy and she's totally -- >> really. >> now is it's gotten squawkward we turn to a squawk master -- >> poor bob. >> joining us is bob doll, chief equity strategist for bloc rock and regular page three reader of "the sun" i know about that actually, bob, but it's good to see you this morning. you know, last time we talked

you were suggesting a little bit of a pullback or you were worried about that, so you seem to be taking your foot off the gas and now putting your foot back on the gas but i wonder is everybody going to be putting their foot on the gas right now given what's happened over the weekend? >> yeah, look, the good news that we got is somewhat anticipated. i think we can't shrug it off, but i think the market run of the last four or five months of 25% on the s&p has been europe and greece are getting a little better, the u.s. economy is a little bit better. now we've got the information, do you buy the rumor, sell the news? i don't think necessarily but markets tend to move in stair step functions. we had a big move up. i think we're going to get a little consolidation and sideways move here. >> bob our good friend joer can nan is calling for 30%. >> whoa, calling is a strong

word. 20% by the end of next year. >> 15,000 by the end of the year. you can hope 15,000, not 1,500. >> i'm hoping for the possibility, there were three years in the '90s it was 30%, back-to-back-to-back. we need it. >> let me guess, bob, united health care, right? >> we do like it. it has outperformed. it will continue to outperform, buy some more. >> all right. okay the overall market you're like an 8% guy, right, every year 8%? >> i think that's the pattern we're in, 6% from earnings, a couple percent from yield. we do, we are due i would agree with you some multiple appreciation as things from the credit bust continue to ease. it's like an earthquake. the first quake is the big one, does the damage, the aftershocks are not fun but tend to be less and i think that's what we're going through. >> so many good things are

happening, bob, that you figure why '11, is there something out there people fear? every time you read soros, he says if europe imploedes it's going to be a horrific situation. there's a black swan out there with 2% rates and even the fed you wonder, why is the fed walking so cautiously, talking about three or four years of low rates? what do they say that the stock market doesn't see? >> i still think they see a debt situation around the world that's not very pretty and if we have some bumps along the way, that's what concerns them. housing is definitely better. all of it is better. the direction would be up but never a straight line. we've had a straight line for four months. >> what about the fact that we still have millions and millions of americans who are underwater on their mortgages, that they've lost a tremendous amount of

their net worth which was in the form of home equity and yes house something better but it's not good. what is it going to take in order to try to be able to deal with our housing situation and therefore get consumer confidence up for sustainable period of time which is what it would take to get double digit increases over time. >> that's not going to happen all in one cycle. it took us years to get into that mess. the bubble popped. it will take years for that to heal. as joe mentioned, the housing market is improving. the prospect of another double-digit percentage decline in home prices seems to be shrinking every day and there have been a lot of bears out there the last two or three years preaching that and it hasn't happened and i don't think it's going to either. >> our good friend black -- he really is our good friend, bob, thank you for joining us this morning. appreciate it very much. coming up what is at stake for america? is president obama getting ready to deliver his budget plan to congress? we'll talk to republican jeb hensarling and democrat marcy

kaptur, they'll join us live. more "squawk box" is ahead.

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we're back. "the valow" took in over $51 million in ticket sales. north american ticket sales running 19% ahead of last year. rachel mcadams, channing tatum, is that what it is? >> who knew we were supposed to see that. >> together. we're going to go there today. >> a chick flick. >> you want to see it again? >> you haven't seen it? >> "the 40-year-old virgin" you're talking about? >> thank you. >> how many times can you see it? you'll saw it twice and go again? >> only if we go together. >> only if i'll go with you. >> this is the 40-year-old -- >> no, going to see "the vow" together. >> the chick flick. rachel mcadams. >> we were just talking about "the vow" he just did the $51

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welcome back to "squawk box." among our top stories, overseas markets and the euro getting a boost after the greek parliament approved austerity measures that will help it secure a bailout deal. greece dealing with the aftermath, sweeping rocks and broken glass from the streets and putting out fires set by protesters overnight as that vote went down about midnight, 1:00 their time, 7:00 p.m. our time last night. officials have begun the process of removing a 00,000 gallons of fuel from the ""costa concordia"" ship. that is expected to take 28 days. former fed chairman paul volcker will say the financial system will be safer with the ban on proprietary trading in place. let's get a jump on this week's

trading, shot shaladay with icap u.s., at the cme in chicago. greece passed the austerity measures despite the violence in the street. we see the euro moving higher. is the reason why the equity markets are moving higher? >> absolutely. it's going to be the hear no evil, see no evil don't fight the tap today it's going to rally because of the relief trade. we've had this time and time again but it's interesting to note, i listened to rubini speak a week ago and there's a consequence to the austerity measures and it's like a firm trying to cut their way to profitability. it doesn't work in the long run. >> yes. no, agreed, they could have done a number of things that wouldn't have been about austerity, they could have done reforms if they had done those a couple of years ago. that being said did we kick the can far enough down the road we've put a cordon around greece that whatever happens now, most

of that bank debt has been written off, the french were the most concerned about that, they wanted to socialize the cost of their banks to the rest of europe and basically managed to do that through this deal. are we at least to the point where now it's tough on the greeks but in the end the financial markets can look past it? >> they can only look past it as far as the next country that will do the old me, too, what do we get now? we see things flowing over to the italys, the spains and the portug portugals. >> you're suggesting other countries will want a cut in their debt because greece got one as well? >> i think absolutely "me too" contagion flowing from one country to the next. they had a chance to cut greece loose and say we'll take our pain now but they didn't want to do that. we'll watch this slowly unfold. i don't think that they have the ability to deal with it. i really don't. >> what about the fact that the data here in the united states seems to be getting better. is that not enough to offset what's coming out of europe in.

>> it's perplexing. we've still got a tenuous situation here and talking about slowly but surely even people like me, i'm a minor pessimist, but getting happier about 2% or 3% growth which is insane. we're looking at things not negative, they're flat to slowly positive. we're all starting to think 2% growth is going to be super. i this i that we really still have to worry about what the knockout effect could be. let's skip over europe and think about what the knockout effect could be to china. we've had stuff come across our des that can says if we have a huge european meltdown, which may or may not happen, there's 25% to 40% chance of that happening, could you see 3% or 4% to the gdp of china cut. this by no means, means anything is settled or done and i think let's watch what germany has to say, keep an eye on what we've got coming out of our europe

economic figures and see how china deals with this as well. >> from a practical standpoint you're right, greece is the tip of the iceberg, you have portugal with serious issues, you have spain, you have italy which are obviously much larger economies and the stakes are much greater for the eurozone if you will. is the market really looking ahead at all to these inevitable challenges that have to be met? >> that's the great question and the answer is no, it's not looking ahead. we don't manage our books anymore on a three-month or quarter by quarter or year by year basis. we've gotten so used to managing it on a day by day basis. if you look at the volatility last year and the dow and the s&p 500 you will see how we manage that day toy bay. it was pretty tumultuous. no, the market is not looking forward, ahead. if you're short you're going to fight the tape or sit on the sidelines and see what comes out tomorrow. ultimately there will be bad news and we'll be back where we started. >> are you watching the euro as it goes between 1.28 or 1.35

some estimate. what is the biggest factor in trading do you think? >> that's a big one. being short that euro has been a crowded trade and ultimately that's why it's not breaking like a lot of guys thought it might and i think the shorts in that trade are the weakest hands because they're not getting the negative news that they need right now to continue to have that thing weakened to 1.25, 1.20, 1.19 some are calling it. that's number one. number two, i think it's very interesting to see the u.s. economic figures come through not as bad as expected and reporting the company did well and i'd like to think we are on some sort of footing and we've had a great start, the best start since 1991, and if you look at the returns you've got on our equity markets since october lows it's been phenomenal. it's hard to argue with that but i think we're very dicey. >> good to see you this morning, scott, thanks. >> all righty. coming up next, president obama unveils his budget today, representatives from both sides of the aisle will weigh in on

the massive budget. we'll turn to republican jeb hensarling and democrat marcy kaptur and later crunch numbers from former treasury secretary roger altman. "squawk" is coming right back.

♪ a little pearl jam this morning. checking futures, green arrows across the board. dow would open up about 85 points higher, s&p up about 10 points and the nasdaq would open up about 20 points higher. president obama delivering his budget to congress today. joining us is representative, i was going to call you jim hensarling, reflecting back to when the president called you jim but i won't do that. >> you have a good memory. was that on purpose? you know him, don't you? was that an accident? >> i don't know. you'd have to ask the president, i assume so. >> chairman of the house republican of congress, he was the co-chair of the joint select committee on deficit reduction and representative marcy kaptur, democratic member of the budget and appropriations committee. good to see you. >> good morning. >> are you running against kusinich because of, do you have to, because of the

redistricting, are you in a fight yourself there? >> yes, we have a primary march 6th, we are early, only eight weeks to introduce ourselves to the people of cleveland and lorraine so we're working hard in ohio. >> you have to argue with jeb from the left and to take on congressman kusinich, i don't know i'm confused. where are you? >> i think i understand the fiscal situation pretty well and i think if congressman hensarling and i can agree, america can agree. i don't think we need any more partisanship. i think we need to keep up our progress in terms of growing this economy and investing in our country here in cleveland. people really are interested in building bridges. they want to get more people back to work. we have to continue the automotive recovery, and obviously invest in education, so we don't need to print any

more money. we really need to invest in our country and keep this economy growing. >> what do you mean if you and congressman hensarling agree. have awe greed on some things? >> well you know we're good friends and i think the parti n partisanship that devise the institution we serve in doesn't serve any purpose, and the country can't stand any more bickering, so i think what we need to do in order to keep the economy growing is to make sure that republicans and democrats put their arms aside and really deal with what we can do together to, and help president obama keep this economy growing. >> so okay then, congressman hensarling, what in the budget do you see that you can agree with the president on? >> well, one, let me say i agree with marcy's sentiment, but unfortunately, as the co-chair of the super committee, i didn't see the follow-through with her colleagues. republicans came to the table

willing to compromise on policy. i mean we put tax revenues on the table, and unfortunately i didn't see any commensurate compromise from the other side, but you know hope springs eternal. i'm looking forward to seeing the details of the president's budget but this detail is obvious and that is he's about to give us our fourth, fourth trillion-dollar deficit in a row. i mean the nation is just drowning in red ink. there's a number of reasons why we're looking at the slowest, weakest recovery since the great depression, but frankly, this debt is a huge drag on our economy. we got to quit spending money we don't have, and so i'm very concerned at what he's trying to do and he's not really facing up to the drivers of the problem. i mean the president has admitted that the big drivers of our debt are medicare, medicaid and health care, nothing else comes close, that's pretty much a quote but yet he doesn't do anything about it in his budget

to save and secure these programs for future generations. so again i look forward to seeing the details but i'm afraid it may be more of the same and that is red ink, fewer jobs, less hope, less opportunity. >> congressman hensarling, dave walker. you will probably never have more power in your life than you had when you were co-chair of the so-called super committee, and i must tell you that that was an incredible disappointment, that it did absolutely nothing. >> well, david, i was on it, so i share your disappointment. >> my question to you, congressman is, do you believe that we can solve our long-term structural deficits at 18.4% of the economy in revenues or are we going to have to have more than that but achieve it through comprehensive tax reform? >> well, i do believe and as you well know, david, we put comprehensive tax reform on the table. it has been in our budget, that was authored by congressman paul ryan, the house budget will come out soon once again. frankly, i think we put forth

pro-growth revenues even in the super committee, that would have raised more revenue. it's not, you know we're trying to raise revenue in a way that is smart for the economy that helps create jobs and a fair, flatter, simpler, more competitive tax code would do that. we had it in our budget. the. the hasn't had it in his budget. it was not supported by democrats on the super committee, but again, i hope it will deserve greater attention, because at least growth, growth won't solve the entirety of our problem, as you well know, david, but it's a significant part of it. ultimately we're going to have to deal with our health care and retirement security programs to make them better and more cost effective, and frankly patient and senior driven for future generations. that's where the real challenge is. >> what i hear you saying is it is going to take more than 18.4% of gdp but you need to achieve it through comprehensive tax reform. >> as you well know, spending at

20% of gdp since world war ii is due to double to 40% over the course of the next generation. >> i understand. >> so you can't tax your way out of this problem. i mean you're going to have to deal with the spending side, even if we gave the president every single job killing tax increase he asked for, as you well know it's about 16%, maybe 17% of the additional debt he's going to add on to the national debt. you just can't tax your way out of this problem. >> there's no question it's primarily a spending problem, i would respectfully suggest it's not exclusively a spending problem. congresswoman kaptur on the other side of the coin do you believe we have to renegotiate the social insurance promise for medicare, medicaid and social security in order to maintain the safety net at the same point in time to reduce projected spending in those programs in a way to restore fiscal sanity? >> the most important step we can take to assure all of our social insurance programs and earned benefit programs are

solvent in perpetuity is to get people back to work and our focus has to be on economic growth and investment in this country. president obama has laid out a road map for that. i'm anxious to walk down that road, because here in northern ohio from cleveland through lorraine to toledo, we see the results of the automotive industry recovering. it is magnificent. let me tell you, it's lifting revenues in all accounts, in order thelp us fund our school systems. >> congresswoman, david walker, is she correct? could it grow enough so medicare would become solvent? at what rate would the united states have to grow? >> as a former trustee of social security and medicare and knowing something about the government's finances, i can tell you there's no way that will work. you would have to grow the economy by double-digit real gdp growth, achieve full employment for decades and that still, that's not going to happen. that's just not going to happen.

a simple four-letter word washington has to understand, it's called math. the math doesn't come close to working. we need more revenues but we're going to have to renegotiate the social insurance contract and health care is a much bigger problem than social security but it has to get renegotiated, too. >> ma'am is your party ready to renegotiate the social welfare contract in. >> i think what president obama did with at fordable health care plan was to put us on a track for prevention and to save some of the costs that are burdening us as an economy, on the health care side. those changes are going to lock in. in terms of social security, which is an earned benefit, as well as medicare, if we can lift people's economic lives, where they're working again and paying into those funds, believe me, you'll see growth and you'll see security in those funds. >> congresswoman, there's not -- >> when you have so many people sitting on the sidelines, we've got to have programs to put people back to work, building

bridges in ohio -- >> congresswoman, we obviously want to put -- >> having idle people doesn't help the economy grow. we have to keep our shoulder to the wheel and create jobs in this country. >> we need to get the economy back in order, no question. >> yes. >> having said that, as david said the math doesn't work. ultimately you have to somehow fix the safety net and what it means probably is making the safety net a little less safe. >> i'll tell you if we didn't have the trade deficits that are wiping out most of our gdp growth we would have more job creation in this country, so i respectfully disagree with the gentleman. >> you believe that -- >> the problem is we have too much drag. i do. >> glad you're on the record for that. >> based on realistic assumptions, underfunded $37 trillion and social security is underfunded $9.2 trillion, and

those numbers go up 2 trillion to 3 trillion a year on autopilot because of the power of compounding. that's where we're at and congress better start doing its job, because greece is not far off. >> we need investment in this country, sir, if so many jobs m han hadn't been outsourced more people would be working and we could sell more of our goods to choo in a and japan. a cherokee cost $85,000 in china. >> ma'am i apologize, the issue, it's not an either/or. >> we need to get people back to work here. >> we need both. >> andrew lost his mike so we're having a squawkward moment here. >> that is the longest mike. sorry, the point is it's not an either/or proposition, it's a combination and that ultimately is where we're going, congresswoman, with this question. everything you said you could agree or disagree with, depending on where you are politically, but we need to grow the economy, but the other issue is dealing with these

entitlements taken sounds like you're not prepared to deal with them. >> my primary focus is putting people back to work because i understand the drag that this level of unemployment puts on this economic growth, and from what i'm hearing you say you don't have much of an interest to reemploy the americans sitting on the sidelines and want to work. >> that's completely false. the spirit of our question was whether or not you are interested in talking about entitlement reform in a way that would ultimately help the budget in the long-term. there's nothing in any of the request ez th requests we suggested here that we don't want people to get back to work. >> i'm glad to hear that. >> we do need more investment but if we don't start dealing with structural deficits we have bigger economic, much bigger unemployment, much bigger underemployment problems in the future. >> congressman hensarling -- >> social security and medicare if i could say i was part of the congress to help restructure

that back during the 1980s. i know we can do that if we can merely sit down together and talk. i don't agree with the super committee structure because it disempowers most of the congress. so mr. hensarling tried, it didn't work. >> the whole institution is about talking and again the debt is a drag upon our job creators. i spent all of friday talking to job creators in the fifth congressional district of texas, they're worried to death about the debt. they know sooner or later they have to pay for it. on medicare i give two numbers, a half a trillion. the president and democrats took half a trillion dollars out of medicare and the president's health care plan not to shore up the finances of medicare but rather to pay for the president's health care plan. here's the other number, 15. that's the number of members of the independent payment advisory board, which is this new unelected group of bureaucrats that now are going to have the power of life and death over medicare decisions, and so you know, there are two

fundamentally different routes the democrats are going on one that will ration health care and lessen the quality -- >> we have to go. we could be here all day. nevermind, thanks, guys. >> get regular order in the congress. let's use the committees of jurisdiction to get the work done. >> we need a commercial break. thank you, congresspeople. >> oh, boy. congresspeople, hensarling and kaptur, thank you. the stocks moving before the bell, will any of them be the dog of the dow? and best in show, get it, dog in the dow? pet stocks being groomed to become winners. there's a reason we're talking about so many dogs this morning. "squawk box" will be right back. coming up on wednesday, he's too big to fail. he's the hammer. what happens when two big too fail faces on the brink? it's another "squawk" exclusive you won't want to miss, former treasury secretary hank paulson,

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we got a few stocks to watch, estee lauder was on the list first thing. no, let's start with sara lee. stocks upgraded to outperform from market perform. price target up to $24, citing

improved profitability in the company's coffee business. 's stay lauder downgraded to neutral from buy at citigroup, says higher investment spending may put pressure on earnings and i remember they had a miss i believe within the last couple of weeks. estee was down big in one session. coming up, violence breaking out in athens over the passage of the greek austerity deal. we'll get a live report. plus what will it take to get the u.s. budget deficit under control? we're going to turn to former deputy treasury secretary roger altman. he'll know. a look at the $41 billion pet industry, which companies are breeding pedigree stocks, when "squawk box" returns. optionsxpress, where you can trade your favorite products,

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better for xerox to automate their global invoice process so they can focus on serving their customers. with xerox, you're ready for real business. ♪ the greek parliament passing an austerity package to secure a bailout, and avoid default. protesters responded with a night of violence. we'll get a live report from athens. president obama said to unveil his 2013 budget to congress. we'll talk to former treasury official roger altman. the money behind man's best friend. >> she's my cookie monster. look at that face. >> the pet business is a $41 billion industry, before the westminster dog show kicks off

tonight on cnbc. >> if you're a dog or a friend of a dog, you want to circle this night in your tv guide. >> jane well also bring us her pet stocks. >> what do you see in front of me, you see a big, blue ribbon, right here in nt from of you. you want it, you come and grab it and you get it! >> the third hour of "squawk box" begins now. ♪ now i want to be your dog ♪ now i want to be your dog ♪ but i wanna be your dog welcome back to "squawk box" here on cnbc, first in business worldwide. i'm joe kernen along with andrew ross sorkin as well as michelle caruso-cabrera. our guest with us is david walker, former u.s. attorney gener general. we're back up today because greece was able to push that through. >> yet another austerity package and supposed reform package. yeah.

you're comparing our, you were looking at -- >> our finances to greece's? much bigger numbers. >> a look to the future. >> david walker brought a comparison of where we fit fiscally compared to the rest of the world. greece is the worst out of 34 countries and we come in at 28 on the sovereign fiscal responsibility index. >> down dramatically in the last eight years. we were top ten and we've just fallen off the wagon. >> it's been a bipartisan created problem. >> absolutely. there is no party of fiscal responsibility the last eight years plus have been terrible. >> and if we want to look at potentially what our future could be, let's go to athens, greece. cnbc's julia chatterley joins us from athens, where they had to pass the austerity measure in order to get the next round of bailouts. julia? >>orter: thanks, michelle. that's absolutely right. they've passed the latest reform package in parliament and now we wait for the eurozone finance ministers to sign off on the second bailout deal, as well as a written commitment, too, from the lenders, from the coalition

leaders here in greece, in order that whatever happens in the election, these guys will follow through on the promises made in this reform package. now i want to point out, what the new democracy leader antonio samura said before the vote today, he could be according to the polls the next leader of this country. he asked people to sign the deal with the ability to negotiate and change current policy. now if i was the troyia, the emf or icb i'd ask him to qualify that statement before possibly agreeing to hand over more cash. while the vote was going on, tens of thousands of people were gathered in the square outside parliament last night and into the early hours of this morning, and i saw firsthand how quickly it turned from a peaceful protest with families gathered around to something that was extremely violent, with over 30 buildings set on fire and over 150 shops looted according to estimates. now social unrest will remain a concern ahead of this euro group meeting but we've also got a

number of key risk events coming out in the bailout process i wanted to run through. the deadline for the psi was the bond writedown deal february the 17th on friday. we still need to know what the participation rate is. we still need to know if there's going to be any official sector involvement if at all and back here in greece over the next couple of weeks they still have to vote again on the implementation measures for the reform so the potential for ongoing trouble and social unrest, there's a long way to go. that's the key message here. back to you. >> thank you so much. she mentioned there's a lot of things that have to happen in the rest of the week to make sure that greece gets the money that it needs,u.s. to keep operating. remember they have to borrow every single day, even today in order to fund their operations. european markets at this hour are higher across the board, ftse higher by more than 1%, cac higher by almost 1% and the dax by almost 1% and athens 5% and

the euro is at 1.3251. among the other stories we're following this morning, average price for a gallon of regular gasoline rising nearly 12 cents in the past three weeks to about $3.51, and industry walker shoby lundberg says pump price also likely rise a few more cents because retailers have yet to pass along all of the recent wholesale price increases. president obama will send his budget to congress today. the spending plan will project a deficit for 2013 of $901 billion, that's down from $1.33 trillion this year, the numbers are both higher than the white house had estimated in september. the budget will include a multiyear request for more than $800 billion for job creation programs and spending on roads and other surface infrastructure. all right we got your fiscal responsibility index, which is a measure of a country's fiscal fitness and sustainability.

we've got 34 places, number one australia, new zealand. it will take me too long to get to the united states because we're 28 but i can tell you that italy is above us. at 27. >> that's correct. >> spain is above italy. >> that's correct. >> at 25. portugal, thankfully is below us at 34. >> they're next. >> 33, and greece is 34 and other notables include mexico and brazil, and chile -- >> china. >> and india and china. we're number 28. >> number 28. >> this is not rigged or gamed or partisan. >> it's projected debt-to-gdp over several decades and how strong our fiscal governance is, fiscal position, fiscal path, fiscal governance and it's all been in the last eight to nine years that we've lost our way. >> so that discussion that we had in the last hour, when you

hear that, when you say directly to someone in congress, directly to them and you say you know, the new four-letter word is math, it's not possible, when they come back to you and just say well, i think we just need to invest more and have job growth, but what do you think when you see that? >> they're in denial and part of the problem, they're not part of the solution. >> how many are there, how many members of congress are there? >> 435 members of the house of representatives, 100 members in the senate. >> how many are in denial? >> too many. the fact is you have to get a majority in the house, 60 votes in the senate and a presidential signature. if you have a plan and the plan can't hit those numbers, you have nothing. and the fact of the ma thor is the republicans don't have a plan that can meet those numbers. the democrats don't have a plan in congress that will meet the numbers and the president doesn't have a plan. >> it's a bipartisan problem. >> absolutely. >> you go to washington, spend time with congressmen and congresswomen, i assume the

conversation we had last hour was the same as you have with both sides of the aisle. >> it takes one, the first three words of the constitution coming alive "we the people" to put pressure on congress to make tough choices or lose their job, and the president of the united states using the power of the presidency, the bully pulpit with much more specificity than we've seen to lay out a path forward to make sure we're not greece in the future. >> ultimately that requires "we the people" to tell our representatives that we want less, and as that article that we talked about in the last hour demonstrated, wanting less and some people needing less becomes very, very challenging. >> less compared to what? the fact of the matter is there's no free lunch. right now we're mortgaging the future of our kids and grandkids at record rates, we're reducing investments in the future at a time that they're going to face a lot tougher competition. there's no free lunch. the fact is, we need a social safety net, no question about it. but we don't need to have middle and upper income welfare. we need additional revenues but how we achieve those revenues

matters. we need to do some things to try to get the economy growing and to invest more in our future, but we can't do that unless we do something about our structural deficits because those short term gains won't be sustained over time, if we don't put our finances in order. >> roger altman is here. let's bring in roger, former deputy treasury secretary and chairman and founder of evercorps partners. a pamphlet from the comeback america initiative. i want to get one over to you roger at some point that david walker -- isn't that something that we're number 28 and that italy is number 27. the budget coming today, with you satisfied with what -- you're a democrat. are you satisfied with what the administration is doing? >> i don't think, joe, that anyone is satisfied with this budget. by the way including at omb or in the white house. it confirms the dire debt and

deficit outlook and number two, of course, none or no major tax and spending changes, whether they come from the president they're proposed by congressional leaders will be enacted before the election. the most important date from a budget point of view in 2012 is december 31st. why? because that's when all of the bush tax cuts expire, not just the high earner tax cuts but all of them. that's when the $1.2 billion ten-year mandatory spending cuts under the sequester begin all on the discretionary side. >> trillion. >> that's when the debt limit is projected to be needed to be raised again. so that's a giant budget moment which provides an opportunity i think to start to fix this problem, because the new president, whoever he is, will have the power of the veto. i heard david talk about the bully pulpit. that's fine, but the veto is a

lot more powerful. >> unless you let them expire for everyone it really doesn't help that much, right? that wouldn't be maybe the end of the world in terms of just budget issues. >> if they expired for everyone, that would raise $3.6 trillion over ten years. >> right. >> and then you add that to this $1.2 trillion of mandatory spending cuts on the discretionary side and you have people will debate various ratios but you have two-thirds or three-quarters of the problem in terms of stabilizing the debt-to-gdp ratio solved. >> under the same rates as the clinton administration, so i wonder whether that, you know, that's a lot of people talk about us running into that wall but it's a lot of people from the democratic side, because they don't want anything under 200 or 250. >> roger, you put your finger on something very important. i think you're right, we're not going to see any significant progress between now and the election, but we're probably going to have one of the most significant lame duck sessions

in the history of the united states. >> that's right. >> to deal with the expiring tax provisions and scheduling sfe i sequesters. what do you see as a way forward? we need more revenue and how we achieve them matters. even if we allowed the tax cuts to expire and the sequestering to take place we have larger growing structural deficits in the outyears because of the demographics in health care costs. what are your thoughts on a way forward for the lame duck? >> as i just said, david, i think it's a golden opportunity to start fixing this problem. you have 3.6 trillion of revenue over ten years to work with. a lot of those, of the tax cuts that represent that should not be continued. you've got the mandatory cuts on the sequester, my view, that should go forward. and you also have for example

the payroll tax cut, assuming it's extended in february, expiring again then now also. so you have a giant amount of deficit reduction, which you could do, just by wielding the veto pen. remember, it's not that these, it's not that you have to stop the tax cuts. they expire by law, and so keeping in mind the veto, you'd have to get two-thirds of the congress to override the president's veto and that wouldn't happen. so he has the ability, whoever he is, to unilaterally put in place a giant amount of deficit reduction, and i just think that's a golden moment and i'm hoping, of course, none of us knows what the election will bring and the composition of the congress but i'm hoping that that moment will be capitalized on. >> roger, as you know irrespective of the election outcome the president who has the veto pen is president barack obama. he will have the veto pen at the end of this time. and you're right, that's a

tremendous amount of power and leverage. >> david, if i can interject. >> sure. >> i think if the republican nominee were to be elected, it's probably the case that the congress would go for a brief extension to allow the new president to take office and the new congress to take office. i doubt you would see this resolved in a lame duck, if the new president was a republican. >> on the other hand, the president would have to sign any extension, correct? you know, or else he could veto the extension, and then there would have to be an override. whatever. my point is this, under your scenario, when are we going to get to restructuring social insurance programs to make solvent, sustainable and secure for future generations? >> well, i wish i had that answer precisely. i've always thought that the bowles-simpson framework was a very good one. i know you thought that also was a good one. it had a lot of support in congress at the time it was put

forward, and a number of republicans on the bowles-simpson commission supported it. of course, i would hope that in the new congress starting in 2013, the new congress and the new president would go back to that framework as it relates to entitlement reform. >> all right, roger, thank you. >> great to see you guys. >> see you again soon. >> see you. coming up we'll talk strategy with portfolio manager richard bernstein and still ahead, jane wells picking apart the $41 billion pet industry to find out the winners and losers in pet stock, which company is the best in show. "squawk" returns right after this. coming up on wednesday, he's too big to fail. he's the hammer. what happens when too big to fail faces on the brink? it's another "squawk" exclusive you won't want to miss, former treasury secretary hank paulson, only on "squawk box."

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welcome back to "squawk box" on cnbc. we turn to our next guest for a look at where the rest of the markets are headed this week, joining us is richard bernstein

from richard bernstein advisers, a portfolio manager and a cnbc contributor and great to have you on the set. >> thank you. >> the last time we saw each other about a week ago i think. you were still bullish broadly but getting worried about corporate profit margins coming down. >> right, correct. >> you might have seen baron this is weekend. >> i didn't, sorry to say that. >> the cover 15,000, that's where they say it's going. >> right. >> that's 20%. joe is 30% for the year. bob dowelling' a staircase, might have to go flat or down before we take to us the next step >> right. >> what happens? >> what happens? well, i'll tell you, i think right now there's clearly a big risk on trade. risk on is simply will we reflat the credit bubble. if you answer yes the risk on trades work. if you answer no the risk on trades don't work. what are we doing?

basically giving gifts to the european banks, risk on, you're seeing all the risk on trades work. in my opinion that can't be the secular story. we're on the downside of a credit bubble. bank balance sheets have to contract through time. that's the secular story so i think longer term we'll see the u.s. do well, we'll see risk off assets do well. >> going back to sort of the end of this year, if you were the editor of barons this weekend, what number would you put on the cover? >> unfortunately i don't have a number, thank god. i used to do that in my prior life, i don't have to do that anymore. i would say i think people should be looking for better than normal. i think people should be in the game. >> but the point is that the train has not left the station yet. >> no. i don't -- >> you see what happened in the first month of the year. >> right. >> and what happened at the end of last year. some people say i got to get on the train, it's going to leave the station. when you get on the train and feels like it's already

building, all of the sudden the train goes off the track again. >> let's talk about what train to be on, should you be on the risk on train or risk off train. >> explain to viewers for those not familiar with the risk on and risk off trades are to keep attal gee going. >> risk on means assets that outperform during the credit bubble continue to outperform, emerging markets, commodities, banks, real estate, all those type of things will continue to jut perform, they're credit-related investments so they outperform. risk off means assetses that are more safe havens, treasuries or uss will outperform in this environment. my point is that the train, i think people's sphere is that the risk on train is leaving and they're going to miss it and people are piling into the risky assets assets. i personally believe that is a mistake. i don't think that's the long-term trend we're witness.

risk on risky assets do not work on the downside of a credit bubble. they can work in short periods of time but longer term i don't think that's what's going to work. >> you got a question? i see you nodding your head there. >> what are the risks associated with not getting above average returns for this year? in other words, europe, is it what's going on in europe, what might happen in china? >> exactly. i think there's a couple of things. i have personally written i think the big risk that's out there people haven't realized is the emerging markets were the biggest beneficiaries of the global credit bubble. the credit bubble was not a u.s. event, it was a global event. the emerging markets benefited directly and incorrectly. they're faced with the problem that the united states had about two years ago with inflation, not inflation. do they try to fight inflation in which case growth slows or do they try and prop up growth in which case inflation is coming back. that's what you are starting to see in china.

corporate profits are pretty good and we have the fed, even though people say take their foot off the gas, one of the articles in "the journal" today and they told us we're going to be printing for three more years, we are at zero for three more years. why fight them? >> i'm not fighting them. i'm actually a very big fan. no, no -- >> you're not board in a big way. >> no, i'm on board for the u.s. equity market. i'm not on board for emerging markets. >> end up all of this over there, too? >> look at last year, look at last year. >> you're not giving me 30%. >> last year the united states stock market was up a bit, no the a lot but china was down 20% plus, 25%. that's the view people should be taking. >> the money flashing around there's no tightness anywhere at this point. >> central banks outside the united states are still easing and that's why some of the countries are still having inflation problems absolutely. i think the united states is, here's the line i use all the

time, the s&p 500 outperformed bric for more than four years. >> were you watching last week, my zimbabwe? >> zimbabwe money. $1 trillion. >> i watching. >> i won that and i have a $100 trilli trillion. >> you couldn't buy a coffee with it but you wanted to give it to the guest and he wouldn't take it. >> 16.5 cents. >> we have to leave it there. thank you, richard. appreciate it very much. coming up more of today's top stories and a busy week for data. we'll head to chicago to figure out which economics are trading. "squawk box" will be right back. still ahead more than just man's best friend, the pet supply business is a billion-dollar industry. >> i will lick you in front of everyone to show my joy. >> jane well also join us with her pet picks in the stock market. "squawk box" will be right back.

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nice shot of st. louis. coming up your guide to the trading week, we're going to head to chicago for a look at what traders are watching this morning. "squawk" is coming back right after this. hey, did you ever finish last month's invoices?

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welcome back to "squawk box" this morning. making headlines the sec bearing down on private equity, regulators are investing possible securities law violations by pe firms the sec may be suspecting the funds could be calling themselves

bigger than they actually are to attract new investors. the enforcement unit sent a letter late last year to several private equity funds as part of what it's calling an "informal inquiry." in word on which firms received the let per >> they'll get to the bottom of it for sure. british police arresting five more senior staff of rupert murdoch's staff "the sun" daily newspaper. watch shares of ap.le this morning, the stock closing in on the $500 mark in pre-market trading. the ipad 3 we're hearing lots of speculation, rumors may be coming in early march and i'm excited about that to be honest with you. greece passing another austerity package, that's what they need in order to get another round of $130 billion worth of loans out of the european union so they can keep funding operations. remember they have to borrow every single day still in order to keep paying government employees. let's get a check on the market

reaction to that, s&p 500 by nearly ten points, dow jones industrial average higher by about 84 points and nasdaq higher by 19 points, if the markets were to open right now. joining us now, scott nations and rick santelli from the cm negotiation chicago and steve liesman joins us on the set. steve, considering last we were looking at greece potentially going into the abyss, not a whole lot of reaction going into the greek vote, pretty decent reaction this morning. as the ltro have we cordoned off greece successfully in europe, have they? >> according to european management we're supposed to plain ltro every time. >> i don't know -- >> long-term refinance operation. >> they lend money for three years. >> it's their version of qe. >> right. >> i this i that backstopped europe and i this that i markets are going to care about greece when they care about greece and at the moment, it strikes me they don't care a whole lot. i was surprised to see futures up this morning.

i was surprised -- i thought they were going to look at what was happening in the streets and get a spook and i'm struck by what you said at the break, maybe greece doesn't mat ere anymore and joe has been talking about this a little bit. it's an interesting question. greece has never mattered from a strictly financial point of view in the sense that what happens in greece is going to have an impact from a financial standpoint. it's a contagion issue, what happens to portugal and italy and we know the ltro has essentially backstopped italy and spain for the moment, with he see yields come down well below 6%. >> the first time like with the president, the president the first time and then you can call him, like with ltro. you've been having meetings with management? >> it was mentioned in a meeting, joe, they did bring it up as a very important -- >> when are these "meetings." >> i go to the meeting and i come back down with my talking instructions on the, you know. >> so you get that going for you. >> i got that going for me.

>> which is nice. >> not much else though but you want to get to the other guys but i got a bunch of stuff coming up this week, we want to look at fnfib. >> what does that stand for? they only gave you ltro? >> i had no instructions to do nfib. >> what does it stand for? >> you sit in that seat and you don't know? national federation -- it's the dunk -- >> i know. what's nahb? >> national association of home builders. >> all right, what is -- see i'm not going to -- >> ppi. let's get a quiz on us. >> we can't get anywhere. >> this isn't what i came to talk to you here. none of this is what i came here to talk to you about. i wanted to tell you we're upgrating 4q, we'll go up to 3.4, 3.2%, upgrade from 2.8%.

morgan adding to its forecast. goldman asked where is the growth to justify the unemployment rate asking the question, is okin's rule of thumb suggested? a 2 point increase -- >> who was this guy? >> okin's hero. >> economics guy, 1% increase in unemployment rate, 2% decrease in output. he's suggesting stock prices are going to be down. growth is either going to be revised up or unemployment revised down. >> rickster santelli the euro, 1.33 it looked like. >> short for the euro. >> what do you think, is that one of the biggest drivers in trading today or one of the biggest moves we should be watching for? >> reporter: i personally don't think so. i think we've gotten to the point with greece that all the kind of alan blinders, the economists in the world that think that all of these issues, and we'll use greece as a

microcosm, can be fixed in the current methodology, i think the market sees through that. i think that it's assymetric. when ultimately greece doesn't deliver on the promises even when it gets the check you'll see a downside but i think the lack of the upside really is starting to make sense. i think if you're looking to be long in the euro because you think greece will get the check before march 20th, as i do, i think you're going to be disappointed in the profitability of that position. >> how about you scott? >> i think greece mattered several months ago. i think since then jamie diamond has come on cnbc and said the risk to us of a greek default is de minimus and i also think thattest mo of the big banks around the world have had a chance to lay off most of that risk. >> they dumped it exactly. same with hedge funds. and who cares about them. >> well i mean, their job is to take risk. their job is to take risk. we had to assume that they're

taking some sort of intelligent risk and not simply rolling the dice. hedge funds aren't going to simply blow up if greece impl e implod implodes. most of the risk has been either laid off or spread around which is exactly what the capital markets are supposed to do. >> i beg to differ, gentlemen, i beg to differ. here is my argument. the sec knew well before anybody else that mf had a 6.3 billion position in europe. they didn't say a word. they had an option in august, wasn't materially important i guess. the sec didn't say a word until well after that. i don't know i have enough confidence in the sec or any of the fasb to really know. take jamie diamond at face value? >> didn't the market enforce that discipline on him, if not the government and isn't the market scouring positions of counterparties right now and enforcing that kind of discipline? >> reporter: except for things that are under a rock that we

don't know. there are things we don't know >> we can't prevent the future mfs of the world being stupid and risky. as far as our market is concerned i don't think mf or a type of mf situation is a problem. i think we're now focusing on other issues it shall it >> famous last words. >> earnings for the s&p 500 names have been really good this cycle, 70% beat on eps, that is much more important than greece. >> rick, i want to get your position right here that you think that many players in the market here or significant number have been sitting around watching these greek headlines and essentially have not dialed back their greek positions here? and that major u.s. banks remain exposed? >> what i'm saying is in an honest world mark-to-market there are many institution, maybe not all of them in the u.s., maybe most in places like france where there are festers hornets' nests we are unaware of and even something as small as

the grecian delaware scenario could cause a chain of events that we don't know the outcome. >> you make a good point, rick, the greek bailout was never about the greeks. the europeans never wanted to help out the greexz, they really wanted to help out their banks. it's been going on so long we presume that even the french banks perhaps were smart enough after two years. >> right and the best thing -- >> to offset profit or whatever. >> the first point of view is you had bear stearns and lehman brothers and for six months they sat on positions, there was not enough done. some done but not enough. >> steve has something else going. the fact of the matter is that there are limits to the market, there are limits as to whether or not the market will adequately deal with this. remember, alan greenspan thought market forces would keep from what happened with the financial institutions from happening. the other thing is that greece is the tip of the iceberg. who is to say this greece situation is resolved but it's not the only country that's got problems in europe.

and ultimately we're going to have problems. >> michelle how do you not mention something you've been harping on for a while. if this greek restructuring is voluntary, then what good are any of the credit default swaps out there protecting you on your -- >> i don't bother to go into that. i discounted in the future already which is it will not be voluntary and it will not matter. all this b.s. we hear constantly about whether or not it's going to -- the math does not work. we cannot grow our way out of our medicare spending and we cannot, you cannot make the greek situation work without forcing it on all the bond holde holders. it will not be voluntary. that was my prediction in january and it's not going to happen. >> right now it's not greece. it's some other knucklehead in the eurozone suggesting that a frenchman or a belgian or a german parachute into athens and essentially take over the greek economy. some sort of economic occupation like that will turn tax avoidance in greece, which is

now an institutional art form, into a patriotic duty and that would kill greece. >> you're okay with him saying harping on that, that makes you a harpie, doesn't that sort of? >> what's harpies? >> oh! you went there! >> i do declare, steve, that is not -- so ruining my reputation on national television. >> he leads me down the path and then he lets go, and then i -- >> there's no safety net here. >> thanks so much. scott on fridays on "options action." >> someday you're going to get it and realize just, i mean how could i do it again and again. >> we'll see you in the football. coming up more from guest host david walker and jane wells with her top pet stock picks. it is the dog show, isn't that right where y we're doing this? >> that's right, i went there

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well welcome back to "squawk box." futures looking up about 83 points on the dow if we opened up right now, nasdaq 20 points higher and the s&p 500 would open up about 10 points higher. the president's 2013 budget

is now on capitol hill. this video of the budget books being delivered coming into the newsroom just minutes ago, the spending plan projects a deficit for 2013 of $901 billion, down from $1.33 trillion. the president will speak on the budget at 11:00 a.m. eastern time and of course we'll bring that to you. >> before the westminster kennel club dog show which kicks off tonight our jane wells is taking a look at the $41 billion pet industry. jane joins us now from the barklay, upscale pet hotel and day spa, in west lake village, california, a place where you'd expect it?street from the four seasons. i'm in the academy room, this is onyx and beans. people will spend up to $90 a day to board their pets here overnight, they'll pay this. this is for man's best friend, man's paying it in a recession

which proves the pet business has been a very good dog. >> this is sammy and maisy. these dogs are my girls. >> reporter: mary's labs are like children especially when it comes to medical care. >> she had bone chips in her elbows they had to remove which was about $1,600 and when she was 3 one of her knees blew out. >> reporter: the other knee went out. zisko spent about 12 grand on sammy and maisy has diabetes. >> giving her shots twice a day. >> reporter: americans spend more than $40 billion a year on their pets, not only in life. >> the bigger the pet the more expensive things are going to be. >> reporter: at the los angeles pet memorial park up to 50,000 animals are buried. funerals started over $600, headstones can cost a lot more. >> we had one the other day for $4,000. >> reporter: much of the pet business stayed resilient during

the recession and public companies want to cash in like pet plan insurance, part of insurance giant alleance, vca antech with the ticker symbol woof. pet med express raised its dividend 20%. petsmart had same-store sales growth every quarter for 16 years. >> petsmart is gaining share. they grow at earnings greater than 20% or the opportunity to grow earnings greater than 20% per anum rate over time. >> she's my cookie monster in case you can't tell. >> reporter: thousands of dollars later mary has no regrets. who could blame her? look at that face. if you look at how the stocks have been performing year-to-date, mwi veterinary up 27%. all of them outperforming except

for petsmart only up 4.5%. oh, chelsea. >> what have you got, jane? >> well you mean right now? >> what type of dog? >> i'm a basset hound lover but this is a cavalier king charles spaniel, this is chelsea and the little chihuahua beans. we have a three-legged lab in here. onyx, onyx, come here. check out this dog. >> oh! she's so cute! >> the best. >> what do you have at home, jane? >> i'm a basset bound girl. i got a basset, and we're going to get a welsh corgie to teach the bassets to follow the rules. bassets aren't really dogs. >> some people have both but there's dog people and there's -- >> generally peopling cat people. >> i'm diversified, one of each. >> i've always been allergic to cats so i couldn't. i have three dogs and in poundage i've got over 200 pounds. >> worth of dogs?

wow. >> and other stuff, although anyway, programming note, don't, you know you have to -- you know, yeah, you can't -- >> i don't have a dog but i want a dog. >> you can't it's not fair. >>? the city. >> why do you say that? a little dog would be fine. >> a little yapping -- it. >> andrew's apartment so big cohave a big dog. >> no, but you know, carl has a dog. he has a little dog. >> it's in a cage on a treadmill. >> there he is. >> lucky. there he is. >> that is a rodent, that is not a dog. don't miss the westminster -- >> my cat is bigger than that dog. >> i know, my dog takes a something bigger than that dog. westminster dog show tonight at 9:00 p.m. >> oh, my gosh. speaking of carl we'll head down to the new york stock exchange for the latest buzz from wall street. "squawk box" is coming right back. oh!

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welcome back to "squawk" on this monday morning. let's get down to the new york stock exchange. carl, melissa and jim join us. carl, defend yourself. i don't know if you saw the segment with lucky there. >> he's a small dog. i can't change the fact that he

weighs six pounds. i just tweeted out a photo of what he's probably doing at this minute. he's probably dead asleep. thanks for running that. >> i hope he is asleep. i hope he didn't hear what we were saying. >> aside from dogs and the big dog show tonight, keeping a close eye on what happened in greece over the weekend. and wild calls on what the market could do over the next few years. >> after a couple of weeks of enthusiasm, it gets people talking. 2012 is a year where people are suddenly saying, i wrote off this asset class, maybe i did it too soon. >> joe, what was your forecast for the year? >> 30%. >> that's from the beginning of the year? >> from, no, october. >> oh, that's right. >> i believe it was october. >> he learns from all our guests. >> i do. i've been watching these guys for a long -- you know, my forecast would be totally off,

in case there were some type of negative externality which would negate all the things i was talking about. i made that clear. it's headed up unless it doesn't. i thought i made that clear. >> in which case, you're always right. >> cramer, what's your number? >> it wouldn't shock me to see it up 10% to 15%. we've been in a bear market for a long time. a lot of dow stocks are undervalued. i've been a big believer. i'm with germany. >> thanks, guys. looking forward to seeing you in just a few minutes. coming up, final thoughts from our guest host, david walker. on wednesday, we'll have an interview with hank paulson. "squawk box" is coming right back.

we had two piece of news this morning. the situation in greece and the president's budget. >> we're not greece, but we're

making some of the same mistakes as greece. government's gotten too big. waited too long to restructure. the president's not aggressive or specific enough. we're talking about a $700 billion-plus deficit ten years from now. we need to start dealing with our structural problems. yes, we need to do some things to get the economy going, unemployment down. but it has to be coupled with putting our long-term finances order. in the 2012 election, we need to make sure the economy and how we're going to put our nation in order are the top priorities. we need to repeat what ross perot did in 1992. there's going to be a third option. that candidate or candidates will end up running on substance and solutions. >> but assuming it's either romney or obama, do you, for example, seeing obama trying to tackle these issues in 2013 if he were to win or do you see

romney doing the same? >> it's important whoever wins -- >> i know you think it's important. my question is will they? >> i think it's possible that obama will. and i hope that he will. he's shown a willingness to at least put parts of the social insurance contract on the table. i believe that romney is a turnaround specialist. he's had to do it in the private sector, the public sector and the not-for-profit sector. >> did you mention a third party? >> yes. americans elect are going to put someone on the ballot. >> that's going to be a disaster. >> i expect given the stake of our country, i will endorse a ticket once we know who all the tickets are. so that means in september. >> really? >> yes. the stakes are that high. i don't know who the tickets are. it's impossible to say who it's

going to be. i don't even know, for example, if president obama's going to go with hillary clinton, which is what he should do. and i don't know whether or not barack obama is going to get the nomination and -- i don't know whether mitt romney is going to get the nomination. >> fraudian slip. >> hello. i don't know if mitt romney is going to get the nomination and who he might select. and i don't know who the third option is going to be. >> how many choices are viable out there? >> i think the answer is either zero or maybe one. i'm thinking a michael bloomberg. >> in all sincerity, that's not the case. you have to wait to see what the options are. i think obama has the ability to do it. the question is, does he have the willingness to do it? the i believe that romney has a track record of paying these types of tough choices. i believe he would likely do it.