i'm jim crime mere, see you tomorrow. hey larry, what do you have lined up. >> bullish economy, bullish stocks. that's right, folks, the dow is marring toward 13,000, 123 point gain today, largely on the strength of an unexpected 13,000 drop in jobless claims, all the way down to 348,000. that is lowest level of claims since march of 2008, once again the economic growth story is surprising on the upside. also this evening dallas fed head richard fisher says there is no way of qe 3, he calls it a wall street fantasy. and on the darker side, iran, israel, syria and oil, there is a wild card for everything, a middle east regional war in the making. we begin with breaking news encouraging economic data sent

the dow soaring 123 points to 12, 12,904. the s & p., three year high. michael and michael farr, and rebecca patterson, jp morgan asset management institutional chief market strategist and man abling director, far too many titles. i'll go to you first. i thought the jobless claims number was a shockingly good number. and i agree with my pal and former partner, jim cramer that the job story is propelling this and today the cyclical stock sectors led the way. what is your take? will we cruise through 13,000 on the way higher? >> i think we can. the job story is real, we're not back pre-crisis we had 12 out of the 13 last weeks with jobless claims under 400,000. that plus an extremely easy fed

not to mention easy central banks around the world pumping liquidity in the system, it will help people move out of bonds to a degree in stocks. >> and let me take the economic story further this was ignored in the lousy market yesterday which got me too overworried, manufacturing is hot as can be. 8.5% growth in the last three months. and today, mike, we got housing starts, really flattening out and contributing positively to g gdp, are we going to be surprised on the upside with the economy and therefore on the upside for stocks? >> don't be too tough on yourself you have been talking about this economy getting better for several months now and it is getting better and getting good indications that the surprises larry to quote yourself, it will be to the upside with the economy over the neck several months. great news for president obama i presume.

having said that, i think we also are getting less bad news out of europe, to rebecca's point and in china, once again, the news continues to be very good. so you have kind of a global thing going on, the news in the u.s. isn't great but it's getting better that is the surprise. >> michael, there are risks to this, i don't want to be toemtly u f -- totally euphoric. i want to focus on creeping oil and gasoline prices, michael farr, is that something that could get in the way of the economy and stock market? >> larry, that is one of those shocks that of course could get in the way and cause trouble particularly if they bring pressure on the straits of hormuz, that is a problem. there is a lot of cash driving this market and while i certainly have some very serious concerns about it going on and on and on, the momentum is with

those who want to buy right now. >> rebecca, are we going to breakthrough a lot of resistance levels on all three indexes, the nasdaq for example approaching 3,000 as you know. dow jones, 13,000. s&p, 1358, i'm not a technician but i ask you if you breakthrough levels in here do you just keep running? in other words, pull back or not, do investors stay long? >> i would stay long and i would look at dips as an opportunity to add. we saw huge momentum in january, record in-flows in emerging markets equities, a lot of money moving quickly in january, so we're going to have pull-backs. i am nervous about the middle east, i'm nervous about europe with a lot priced in, french elections in april and may are wild card, not priced in. all that said, i do think we should have money in equities. we want to have u.s. equities, large cap especially and i likely merging market equities.

>> mike holland, we are still, however, in this big move since october or since early october, and some people have pointed out that the increase in stocks now is about par for the course, for this kind of run-up so i ask you how investors should play this. is this a pull-back moment or is this a stay-long moment? >> for my money, larry, a stay-long moment. we talked about the last several months valuation, michael farr and i have coincided on this. the valuation for a lot of the great properties around the world are at such low valuations, ridiculously cheap is the phrase you and i have used. apple computer, short the stock as you know, i always pay attention to doug, the stock at a major move up over 20%, but still -- $500 stock with $100 in cash will earn $50 for one of the world's great companies. so it's up a lot probably could pull back any moment, but the

fact is it's ten times before you take the cash out these are crazy numbers. >> michael farr, what is your best guess on spec ific investo stocks. let's get down to brass tacks. >> you're hurting, the techs have been great they were on fire today and really driving things. the consumer staple seemed to have pulled back, energy starts to look good particularly if we have trouble in the middle east. we're not seeing any real inflation out there anywhere. that would lend itself a little bit more to the banks that would lend itself a little more to some of those commodity companies, but perhaps some of the consumer discretionary and industrials. the issue with the fed and setting of these dates just kind of makes me crazy. it's a really long, very accommodating policy in and improving environment, larry i don't get it i can't wait to hear what you say to fisher.

>> i can't wait to talk to my friend, richard fisher, either. rebecca, maybe we shouldn't worry about the fed or greece or the federal budget. >> you have to worry about the fed. >> but rebecca, how about focusing on earnings. arnlt earnings the driver for this entire economy? and earnings have surprised on the upside now really for several years but including the most recent cycle. >> they are surprising at less of a surprise less of a rate than they have been in previous quarters. so i look at that with a little caution but if we can get this virtuous cycle in the economy going with jobs and housing looking better on a relative basis we could get some more confidence and real growth coming in the economy, that is going to support stocks, that will help the earnings. i do worry next year, forget about 2012, what happens after the election in we have to start tightening fiscally, that will help put a lid on growth or if

congress decides to ignore the budget, more risk around ratings, so enjoy it while you can but i think you spread your risk, you have some inequities, you keep high yield debt. >> very bullish panel, bullish economy, michael holland, michael farr, rebecca patterson. exclusive interview dallas federal reserve president richard fisher has a message for wall street, apparently. qe 3 is a fantasy we'll get it straight from the horse's mouth in a moment. free market capitalism is the best test of prosperity, that includes profits the mother's milks of stocks, business and economy. i'm kudlow, we will be right back.

our next guest, richard fisher federal reserve bank of dallas gave a speech yesterday with a message for wall street, don't expect more from the central bank. qe 3 a fantasy. that is music to my ears, but i want to check it out. joining us now the aforementioned richard fisher, distinguished president and ceo of the federal reserve bank of dallas.

richard, wonderful to have you back, i want to make sure you said what you had been quoted to say that qe 3 is a fantasy and isn't going to happen. >> first of all, larry, that is my personal opinion, i'm one of 17 members on the committee i cannot speak for the entire committee, only ben bernanke can do that as chairman. things are summarized in the minutes after we meet, minutes came out three weeks after the last meeting. that is the authority, so that was my personal view, i would never speak on behalf of the committee and also remember larry, i don't have a vote this year. but if the economy keeps improving the way it's improving, clearly, i know certainly i'm taking note and all my colleagues will, but again i don't speak for the committee only the chairman does. >> i understand. we all understand, your personal view has been spot-on. i want to ask this almost flip side of this question, you have a rising economy, we're getting lower jobless claims, payroll

doing better, manufacturing doing very well, you had an optimistic speech about the texas economy, i guess my question, richard, given the improving economy, why is it we have a zero interest rate at all? zero interest rates for the financial meltdown when the recession was deep in the depths, why do we have the same policy today when the economy is clearly rising? >> old saying in professional football momentum is not a light switch, things don't just turn on. things are gaining momentum, we hope it continues in that direction. we see it in texas as a leading indicator for the country. and of course the committee will act according to what they believe is happening in the real economy, and if the numbers keep getting better the committee will do what it thinks is best. but larry, right now you have to give the fed credit, it is

getting this thing going. what i believe is restraining it, no one noknows what the tax will be. firms will begin to hire, economies will expand, i think you have to give the fed a little bit of credit. >> i'm happy to give them credit always as a fed alumnus many years ago. john taylor, distinguished economist under secretary of the treasury, i spoke to john, he says given the rise of gdp and given the lingering inflation, you still good 3% cpi growth as you know, richard, he feels the taylor rule which some people still use, would indicate a 2% federal reserve target rate and not a zero percent. what is your thinking about the difference between the target rate and the taylor rule? >> well again i can only speak for myself as you know, i was

against cutting rates to zero, my own personal view was we shouldn't give a date certain as to how long we would hold things where they are. so, you and i are similar opinion it's a group process, a similar committee, majority rules and the majority of the committee and their wisdom, they will adjust as we go forward. one thing you didn't mention, john taylor is the chairman of the dallas fed monetary policy, we spend a lot of time with him. he has good points to make, but the committee has to make a decision under ben bernanke's leadership. >> i want to ask, quickly if we could, if the numbers keep coming in richard as they have been coming in, jobless claims, manufacturing, housing is looking better. >> this is good news, larry. >> fabulous news, good for america, absolutely. will the fed make adjustments along the way?

a lot of people here are going to have -- hear they are going to have zero rate through 2014, might they change policy way before people think, is that still on the table? >> look, every statement that we issue, the committee issues always has a conditional clause. it's going dob adjusted according to economic developments. so these positive developments which are relatively new, are coming in to greater force, are still not robust but or better signals, of course the committee will take that in account. everybody is trying to do their level best to do what is right for the real economy. i stress the real economy because i think the street and real economy sometimes have differences of views, the main thing is to put america back to work, and increase american prospectity. prosperity. >> the fed is not locked in stone that is what i hear you

saying. >> i can't speak for the fed, i can speak for myself. i can refer you to the statements we make at every meeting when we release this, no matter what the date is, 2013, 2014 subject to developments and you know how the fed works. constantly setting the end trails, constantly look at data and models, updating views 24/7. >> are some of your colleagues as optimistic as you are on the economy? >> well, the operative word is "some" and yes, there are some i think you heard them speak, they have to speak for themselves, of course there are some and again, all members of that committee are just trying to do their best to get it right and everybody will tall note of this improved data. the question is what do we expect to happen going forward in the future that is for each to decide. get together as a meeting, 17 people, ten voters, under the

leadership of a chairman who is all trying to get it right. that is all i can tell you larry, a great group of people. >> i leave it there. richard fisher president of the dallas federal reserve bank. i like your optimism, absolutely. i hope your colleagues are on the same page. coming up on kudlow, breaking news, united nations just voted to demand regime change in syria. aggressive sabre rattling by iran as the noose tightens around them, are we building toward a regional war in the middle east? another problem out there. ♪

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two big breaking news stories coming out of the middle east. treasury department it's adding iran's ministry of intelligence and security to its terrorist list thai officials announced the arrest of three people. the united nations general assembly passed a resolution condemning syrian president basharal-assad demand regime change. here to discuss all this, nick burns, now professor at harvard's school of government and dan seymour at the council on foreign relations. nick burns, go first to you, how do you assess the threat of a regional war in the middle east breaking out?

>> i think the threat is very low of of a regional war but the middle east is in terrible shape right now and syria, the government is brutalizing its own people and there has to be a way to create safe havens to protect those innocent civilians, we ought to be involved working with turkey and the arab world to make it happen. the larger problem is iran. because they have gone after israel, they are proceeding with their nuclear problem, they are completely unreliable, the advantage we have, larry, is we had nearly a single integrated policy between president bush and president obama. we are threatening to use force, we have the capacity, we shouldn't be afraid to use force but at the right time and right now the emphasis by the u.s., europe and the others is on central bank sanctions by the u.s. against iran, and oil sanctions by the european union against iran. we have to let those sanctions play out and see if they can work. look for diplomatic opportunities to talk to the iranians, be ready to use force

at some point down the road. i don't think there is a consensus in washington among republicans and democrats that now is the time to use force. >> dan, are there in fact diplomatic opportunities and let me just throw in to a mix, another important news item that came out today, that is israeli prime minister benjamin netanyahu, he believes the sanctions are not working, he believes nuclear development continues and israel's reaction is going to be very important to all this, is it not? >> absolutely. the diplomatic process that ambassador burns is talking about i believe is only effective if it's backed up by a credible threat of military force. it's unclear to me the iranians, that tehran believes our threat of military force is credible. look at terror attacks conducted against israeli officials in bangkok and other city, the international community hasn't responded. they have been able to conduct operations with impunity.

the terror plot in washington d.c., plotting to kill a saudi diplomat in an american restaurant that would have killed ten scores of american civilians. no real response. as we do less and less in our sort of more and more passive in terms of what we project about the threat of the military option, they become more brazen against the back drop of the obama administration begging the iranians to come back to the negotiating table, begging for two or three months now and virtually no reciprocity from the iranians. >> nick burns against the back drop of rising oil and gasoline prices, european crude passing through $123, west texas crude, $102, gas prices rising toward $4, i want to ask you regarding your opening statement there is opportunities for diplomacy because we don't know what the israeli reaction is going to be. that is the piece, and syria,

israel doesn't trust either of them. >> larry, i think the proper policy here is definitely the integrate the threat of force with diplomacy, that what is president bush did and that what is president obama is doing. i don't see a big difference between them i think it's wrong to say some how president obama is begging the iranians to negotiator been softer. i was president bush's point person on iran for three years i can tell you president obama has been as tough. the way forward is for us to be very smart and skillful, build up a big international community group of countries against iran, we may have to use force at some time but at a time of our choosing. we have to support israel, defend israel, identify with israel's fears on this issue, but also hope israel acts in concert with the united states which i believe it will, and see if we can amass a global coalition that is the recipe for success going forward.

>> dan senor, can i ask economics in the whole issue, iran yesterday and pushed up oil prices said okay, okay we won't sell oil to six european union countries, but in fact the sanctions will prohibit the european countries from purchasing any oil. i'm confused. what is iran trying to do? preempt something that is already in tow, going to happen? the oil supplies will shrink down and whether they will be replaced with someone from saudi arabia or whatever i don't understand the position. >> actually us a said the e.u. sanctions are supposed to kick in july 1st. they will preempt sanctions you are implements and we will not sell to the certain iranian -- certain european countries or the entire e.u. on march 1st sh it accelerates the process between the oil-trade relationship comes to an end or suspended by a few months. the e.u. is working on forward contracts with the saudis and

other gulf countries. does it cause problem for the europeans? absolutely. the iranians are on a path toward implementation. >> thank you, gentlemen for your patience, nick burns and dan senor. >> good to be with you. coming up, rick santorum leading romney in the new poll, the santorum laid out his presidential plan for the economy today. plus, mitt romney scores a big endorsement in michigan, the governor of the state, rick snyder, will join me next to tell us why.

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welcome back to the kudlow report i'm larry kudlow. today in detroit, surging rick santorum laid out his presidential plan for the economy. robert costa joins us now with the full report. robert, how was the santorum story? >> reporter: nothing new, larry but interesting santorum emphasized his blue collar values, upbringing in western pennsylvania and tied his own personal narrative to economic agen agenda, how he will eliminate corporate tax on manufacturers and make america more competitive. >> let me ask you, i was reading

he did tackle entitlements, sounded like paul ryan, paul ryan wants to hear them all sound like. did he communicate that, that he has a broad base plan, not just a narrow plan? >> he did hint at it. was not the key part of the speech but he sounded like paul ryan. talking to republican operatives, the message was santorum may not speak in the same tile, he may not be mitt romney when it comes to detailed on entitlements but has the same core message. >> how did the business crowd listening to him react to the blue collar spin, i know it's hear heart-felt and zero tax on manufacturing, how did they react? >> wariness about santorum, not just talking about increasing competitiveness, going after wall street, zinged romney, he supported wall street bail out

but not the auto industry. they are saying is he on our side? we're okay with being competitive but we don't want picking winners and losers in every part of the process. >> maybe you don't want a presidential candidate on wall street's side, what about those politics, mr. costa? >> that is a key point. that is why santorum is surging, you're hitting what is happening in the gop primary. santorum comes out of a different mold, it's not a private equity guy. he was a senator and in the beltway but grew up in western pennsylvania, he has a different kind of economic plan. what is so important about the speech he was also signaling to the wall street conservatives he may be a working class guy, have that message but when it comes to the key issues like entitlemens, he will be a real conservative wall street people can identify too. >> robert costa, thank you very much. mitt romney is scheduled to speak to the detroit economics club next week. today, his campaign did get a big boost from endorsement by the pro-business republican michigan governor rick snyder.

take a listen. >> the job is not getting done. we need the leadership in washington to get that job done. and to do that you need the right people leading the charge. and we have a person in governor romney who has that background. >> joining us to make the case for mitt romney is michigan republican governor rick snyder, governor snyder, thank you very much for coming on and let me begin with the obvious question, why romney and why now? >> very straightford. we have a primary coming up in a or so, important to speak out. i think he would make a great president. several things, first the experience. i'm from the private sector, so is he, it makes a difference in terms of understanding what it takes to create a job. and then being a former governor, that chief executive experience in the public sector counts, and then beyond that, very importantly are his policies, job creation and economic growth. that is a big issue in this

election, more and better jobs. we have been a success story in michigan. some of those same things need to apply at the national level. we're struggling there and they're holding back the rest of the country. get a president that can move us forward. >> let me ask you some issues, one topic politically and economically was the government's bail out of general motors and chrysler. now, you favored the bail out, if my reading and research is correct. governor romney is opposed to the bail out. is romney wrong and did your difference of opinion on this cause you to delay an endorsement? >> no, not at all. what i would say is i don't see the point in armchair quarterbacking what is done. the auto industry is going strong today, i don't see a difference, more why do we want to spend time talking about what is behind us and we have good things going on, the real question in front of us that governor romney is helping to address is what do we need to do to create more and better jobs in the future for our kids? how do we drop that unemployment

rate in half it's way too high today and again we're being a great role model in michigan, we need that leadership in washington. >> i want to ask you, governor romney wrote a strong op-ed in the detroit news reminding everybody that he opposed the bail outs. is that a political football in this primary? is that something that is now or may hurt governor romney? >> well it could go either way but my perspective on it is it's a football that i think people spend too much time and energy on. i don't think it's worth recasting that one too much because it's already done, his concept of a managed bankruptcy may have worked. let's move forward, talk about jobs today. our citizens care about the future not the past. >> president obama noting the improving michigan economy, having a better time of it lately, no question, president obama is on the campaign trail saying michigan's economy, detroit's economy, all getting better because of the government bail outs of the car industry.

do you agree with obama on that? was it the bail out that is spurring your economic recovery? >> well, again it could have been other ways, too, my point is we're moving forward, michigan is a success story but not just the auto in distree. i'm a huge fan, it's fabulous to see what is going, on michigansif recovery is broad-based. agriculture is doing well. overall manufacturing, when i travel around michigan now employers holding up their hands wanting to hire, we have the best tallen in the country. michigan is the best place to be. >> looking at mr. romney's platform, a lot of people are saying he needs a bolder tax plan, he needs a bolder jobs plan, yes he's a respected businessman, the people don't know exactly how he will make the economy better. do you think he's going to have a bolder plan when he speaks to the detroit economics club next week? >> i think he has a good plan already. we had similar issues in michigan. a billion-and-a-half dollar deficit, we had to balance our

budget, we did that, started cutting our long term liabilities, revised our tax system to make it simple, fair and efficient, the same things governor romney is talking about. they worked here in michigan. now the federal government is holding back the recovery in michigan and rest of the u.s., let's see the same things applied there and we'll move forward and have a better country. >> many thanks, governor rick snyder, appreciate your time, sir. here to talk about all this, former republican national committee chairman michael steele, great to see you on set. a quick question, governor snyder didn't want to address this, is the car bail out going to be an issue, is it an issue in michigan now, obama says it's causing the economy to do better, romney said it was a bad idea. >> i think it a driver, i think you saw santorum nail that a little bit with his comment, was noted in the previous segment that he is going to go in here and talk about how from the bottom up in the community has their hand in this economy and

recovery and you have those who said you couldn't do it that way or it wouldn't work, i think the governor is right in saying woulda coulda shoulda, the president saved or created job, but the reality is there is an economic benefit to detroit based on things that were done. and you can argue about what those things were, that will be mitt romney's sort of problem when you have people out there saying you were against this, including someone like santorum who clearly said something different. >> santorum is against the bail out too, but doesn't talk much about it. tries to worm his way out of that. let me ask you another one, governor snyder says his jobs plan is okay as it is. do you agree with that? because that is not the criticism i'm hearing from my conservative and supply side friends. >> as it is, and he doesn't talk about it, that is the thing. he has 59 point plan we rolled it out and rolled it up and that has been where we are. you saw today, santorum comes out again, i think what santorum

did was pivot the blue collar angle on it and when you talk about someone like a paul ryan, that is interesting for me because what he's doing is taking the paul ryan idea, and putting it in blue collar terms and i think that will be something that will again create that wedge that divide between him and romney going this michigan, for the next week. >> santorum has low tax rates, you look at his plan, he doesn't advertise this so much, his reform plan, 10% and 28%. two brackets. drop the corporate rate by half from 35% to 17.5%. has this manufacturing zero tax, which is probably not a great idea, but is santorum more specific on taxes and jobs than mitt romney? >> to this point he has been, it didn't go in great amount of detail, he's laid out a lot of that so you get a broad sense for guys like you who look at the numbers and crunch them what this means and what this potentially means, the

manufacturing piece, you will tweak that because of the realities of manufacturing. but the reality for someone like santorum is puts him in the game, creates a conversation, about his plan and romney's sitting there talking about something. >> does governor have to, he will speak to the economics club next week. the word "bold" does he need to convince people that that word "bold" is part of his sinews. >> this is bold, baby bold. he need to be bold and he needs to give a call to the people who will drive this economy that he's the one to follow. >> with a couple of specifics thrown in. >> with specifics, you can't go out there and half step it and pie in the sky talking gentle n gentlemenigentlemeerics. >> he can do it. >> michael steele, he knows how

the numb pers work. coming up on kudlow, is president obama's big government spending budget plan putting america on the road to another credit downgrade? i'm just asking the question, house members rob andrews and jim jordan will tee it up in a moment. [ male announcer ] you are a business pro. lord of the carry-on. sovereign of the security line. you never take an upgrade for granted. and you rent from national. because only national lets you choose any car in the aisle. and go. you can even take a full-size or above. and still pay the mid-size price. i deserve this. [ male announcer ] you do, business pro. you do. go national. go like a pro.

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>> welcome back. so is president obama's big government spending and potentially stock market killing budget proposal putting america on the road to another downgrade? you heard senator jim demint say it on the kudlow report last night. take a listen. >> yes, i think we're headed for a credit downgrade, i don't know how we couldn't if you look at the president's budget and the fact after all the hyper ventilating last year, we spending more this year than last year. >> let's pick it up from there. joined by two distinguished house members, rob andrews, democrat from new jersey, jim jordan, republican from ohio, mr. jordan chairs the house republican study committee. jim jordan if i can begin with you on the narrow question of the payroll tax cut, with the holiday not financed, that is another $100 billion on top of whatever else we got, can you

vote for that, can your members vote for that in the study committee? >> some will, some will not. i personally won't vote for it. the bill we passed in december had the payroll tax cut in it and dealt with the deficit concerns there, but more importantly had the keystone pipeline, boiler epa concern, and frankly did much better on reforming unemployment compensation, the other elements of the bill this bill comes out of commerce committee weakens the reforms, doesn't have the keystone pipeline and is just not something i will support. >> rob andrews, is mr. jordan correct on his critique? >> i don't agree with him i don't think he's correct. i think it should be offset, larry, i would be more comfortable if it were job set over the 10 year period. i'll vote for it because i think $1000 a year tax increase on middle class people will retard economic growth. i think the best deficit reduction strategy is private sector job creation, the economy

is created a businesses created 3.5 million new private sector jobs in the last two years or so. a tax increase would stop that. >> jim jordan, the bigger question wha question, we kicked it around last night. you have an obama budget that doesn't solve entitlements and doesn't slash spending. you also have a dysfunctional senate that won't vote on a budget, no resolution, aren't these exactly the criticisms that the standard & poor's rating agency made when the downgrade last summer and what is the risk that we might face another credit downgrade in the future? >> senator demint is correct. the president's budget director was in front of the committee and admitted under oath in front of the committee the president's budget never balances, from here to infinity, any way you score this it never gets to balance. >> is the size of the debt relative to the economy? the president plan would lower

the deficit less than 3% of the size of the economy, the economists consensus that is a formula for growth and look, if all this big spending stuff were true, why did businesses add 3.5 million new jobs since march of 2010? >> i just want to come back to the dysfunction of no budget vote in the senate. on top of the dysfunction of no budget proposal to deal with entitlements. those were the key sticking points last spring and summer when we faced the credit downgrade, jim jordan and i want to ask you what you and your colleagues think will happen now? >> i think you're right we'll get another downgrade, it's enevidenenit's inevitable. three months ago we crossed the threshold, we have a debt equi

equivalent to the gdp. >> the echos of 1993 when republicans argued including john boehner argued a modest tax increase would kill the economy. what happened? businesses created 23 million new jobs, we went from deficit to surplus, that is what we ought to do again. >> we had a republican congress that balanced the budget. they brought spending under control. >> the budget was balanced because of the 1993 deficit agreement no republican voted for, that is a fact. >> i got to leave it there. i think mr. jordan is right, there was a second budget passed in 1995, 6 and 7 -- >> 90% deficit was gone by then. >> all i'll say is this, i think the american public taxpayers and the credit rating agencies would love to see somehow a grand design deal now such as we had way back when that made

sense. >> i would, too. >> on tax reform and spending cuts but i'm out of time you're both great. rob andrews of new jersey, jim jordan of ohio. thank you, gentlemen, appreciate it very much. next up on kudlow, companies are hiring again. the best way to jump start the economy, hire someone. why does the president want to continue paying people to stay home? and why are we footing the bill for it? we'll debate it up next. why? i l was your soul mate. no, no it's her dad. the general's your soul mate? dude what? no, no, no. he's, he's on my back about providing for his little girl. hey don't worry. e-trade's got a totally new investing dashboard. everything is on one page, your investments, quotes, research... it's like the buffet last night. whatever helps you understand man. i'm watching you. oh yeah? well i'm watching you, watching him. [ male announcer ] try the new 360 investing dashboard at e-trade. are you still sleeping? just wanted to check and make sure that we were on schedule.

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welcome back, everyone. a wall street journal editorial titled "paid not to work" calls the whopping 99 weeks of unemployment benefit as defacto welfare program. question debating tonight, does extending benefits raise the rate? here is byron dorgan, senior policy advisor, and phil kurpin, americans for prosperity, mr. dorgan, welcome back. for three-and-a-half years we had 99 weeks of unemployment benefits. in the new payroll tax holiday bill that is being finished now, 73 weeks would be the rule, historically it's been 26 weeks, so i ask you in this cycle have we been paying people not to work? >> look, this has been the deepest downturn in this country since the great depression.

the day that this president, president obama, took office, in that month, 800,000 people lost their jobs. it's turning around i know some people don't like to hear that. it went from 800,000 a month losing their jobs then, 250,000 getting new jobs in the last month, so things are getting better there are still people out there, larry, that are having great difficulty finding work and of course we should continue unemployment compensation to reach out to them and help them. that is what this is about and because of the deepest recession since the depression. >> when you have a deep recession you expect to have a steep recovery with a lot of job creation, of course that is not what we have seen. we've seen the weakest recovery in the post war period, one of the big reasons we paid people for two years not to work, decreases the incentive for people to get back in the labor force and that means there is less job creation for other people because you're creating a destimulus. >> listen there was no -- >> folks couldn't find job.

it's a welfare program insurance premiums cover 26 weeks. it's redistribution. >> let me make a point you won't have a quick recover given the hangover that came from the eight years of the george w. bush administration, when he turned over that economy shrinking at 9% during that quarter, shrinking at 9%, now it's growing at 2.5% you're expecting a robust recovery from that? absolutely not. there are plenty of people -- >> i don't think the economy -- >> they deserve the unemployment compensation. >> phil, as a throat experiment, if federal unemployment benefits have been pegged at 26 weeks, which is the historic norm, states can do what they will do. if that had been the case earlier, in your judgment, would the unemployment rate be higher or lower today? >> it would be about two percentage points lower based on the recovery that we've seen in the gdp numbers that hasn't been reflected and alan reynolds from

cato has been tracking it, relatively non-controversial. >> it's controversial here. >> they will tell you if you pay people not to work you get less work effort. why don't we pay people forever not to work and live on the government doll. >> let me make the organization and all the others out there, they say you know what let's do, let's make, let's provide more wealth to prosperous americans, americans for prosperity, and let's decide that we'll exempt -- let's exempt from all taxation investment income and keep taxing people that work and decide we don't have enough m money to provide -- >> we double and triple the tax investment. i would like to tax all income once and only once and get rid of the bias against saving and

investment. >> but senator dorgan that is a serious point. regarding unemployment benefits, whatever the time horizon is, shouldn't the people getting those benefits effectively be working for them? job training, get a high school degree, back to getting associates degree, back to some community college, shouldn't we have some restrictions on these open-ended benefits? >> larry, these are people that want work and -- >> some of them. >> haven't found work and i'll guarantee you this, the people who write the "wall street journal" ederitorial are not unemployed. >> phil kerpen, we don't want continuous welfare, we want people to have work fare, do we not? i'll give you the last word. >> 99 weeks too much. if you want to say we were in the recession, more than 26

weeks made sense for a short period of time. there is no president for this level. >> thank you very much, appreciate the debate. that is it for this evening. thanks for watching, i say benefits are fine, but work for it. i'd race down that hill without a helmet.

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