point in apple. the guys that have really done well in apple, they have just owned it. i think that's the way to play it. i like to say there is always a bull market somewhere. i promise to try to find it just for you right here on "mad money." i'm jim cramer and i'll see you tomorrow. hey larry, what do you have for us tonight? >> all right, jimmy, mitt romney and the markets bounce back. good evening, everyone. i'm larry kudlow. this is "the kudlow report" coming to you tonight from washington, d.c. this morning i moderated the business roundtable discussion on the ceo plan for jobs and economic growth. so sizzle story number one this evening. stocks come back thanks to a strong adp jobs report and a weird fed story that somehow they're going to buy more bonds without creating more money. it's all hooey. don't believe a word of it. we break it down in just a moment. sizzle story number two. once again, mitt romney snatched victory from the jaws of defeat

with a come from behind razor-thin win in ohio. but he still has a slog of a couple of months. sheer one more sizzle. the new ipad unveiled today. it's hd. it's g4. and it ipaded stocks for everyone but apple. first tonight let's turn to our market panel. maybe we can get rid of all that music that is blasting in my ear. thank you very much. we're going to do some stock market work on today's comeback. joining me now cnbc contributors michael farr. he is the president of farr and millner washington, the author of "the arrogance cycle" and don luskin. start with the good news. the adp jobs report which i think really boosted the economy. small business job creation led the parade. we may get a better than expected number on friday. so as china slows down, as the usa rising, are we speeding up, don luskin? >> it depends where you look, larry there is some evidence it looks good and there is some evidence it looks bad.

the jobs i guess look okay. but forward s&p earnings are still off their august peak. we've got terrible capital goods orders. we've got terrible diesel fuel loads in america's trucking fleet. i don't know. i think it's a mixed bag. i wouldn't get so optimistic. >> michael farr, mixed bag, okay. i'm going to play this on the optimistic side, but whatever. i want to just ask you briefly -- >> that's a shock. >> about this crazy feds story. so the fed, let me get this right. they're going to buy bonds, but they're not going to inject money because after they buy long-term bonds, they're going to sell t-bills to the dealers' reverse repurchase agreements and that's going to take the cash out. first they put the cash in, then they're going to take the cash out. that in a "wall street journal" story. some reason people in the market seem to like it. i think it's all a bunch of fine-tuning hooey myself, and they ought to just defend the dollar. but you give me your take. you think this is a wonderful thing? >> i think it's hooey.

i think that is the hokeypokey, right, the left foot in, the right foot out, you turn around. that's the way the whole thing ends. nobody can figure out how that dance goes either. the fed is coming up with some new version of operation twist. and look, we're still back to the paulson paradigm where if the economy starts to slow down, you don't need to worry because the fed is going to come in and buy stocks. and if the economy doesn't slow down and gets better, you buy stocks. so we're running this huge risk of moral hazard. these guys i think are really creating a very dangerous situation that i don't like. but jeez, you really can't stay out of markets when they're doing this. stocks need to pull back. the timing is for a pullback. these markets have to be allowed to clear without so much government money, larry. i think they're going to screw it up. >> all right, don luskin, he is making pretty good points there. you didn't sound that bullish, don, which is fine. don't get me wrong. i just want to know, if there is a pullback here, are you buying

the pullback? >> yeah, i am. just because i'm not thinking the economy is accelerating to some new boom, that doesn't make me bearish because stocks are still incredibly cheap. on the crazy fed news, i'd like to weigh in on that. i think the reason they're coming up with this incredibly contrived -- dare i say twisted is we have a couple of members on the board of the fomc that are frothing at this mouth to do qe3. it's an election year. they don't want to admit that qe2 didn't work. they want to do qe3 bigger. right now ben bernanke is the most hawkish member among the most influential members on the fed. he is coming up with stuff like this just to throw these people a bone to do the least harmful thing that can be done. because if we don't do crazy stuff like this, it's going to be a trillion dollar qe3. i would be thankful for small favors if they pull off some crazy scheme like this. >> i think crazy stuff like this could do damage too the dollar. >> i almost never disagree. >> go ahead. >> i think it will. i think it will.

but i think too, i don't typically disagree with don. but i don't see anything hawkish about ben bernanke. i think he is throwing money with both hands as fast as he can, and i think he happens to be pretty dovish. but more than that, i think these guys see real policy risk out of washington. this crowd can't get there act together. we've got real fiscal constraints that are coming down the road. we've got a very tough december. you get past this election, and all of the sudden these spigots are going to get shut down. i think the fed is setting us up to inoculate the economy against some crazy actions of, you know, sort of political rabid people who won't take a methodical approach. >> i think if the federal reserve continues to monkey around like this, they're going to damage the dollar. they're going to damage the higher inflation rate and do more harm than good. don luskin, what is your take on this new apple 4g, let me see if i get this right. the highest 4g is going to go for $629. the old ipad goes for $399.

do you like it, my friend? and why didn't apple stock go up? >> i'll tell you why apple didn't go up. it's because everybody from the shoe center here is saying buy and hold am. it's done, it's done, it's done. steve jobs is dead. so is apple. it's a movie studio of a business. it needs more hits. i mean how many more hits can they do, especially without steve jobs. it's over. >> michael farr, i got to give you the last word on apple. >> i think it's pretty well priced for perfection right now. i'm concerned about it. it is broadly distributed. but we had a tulip bubble. maybe we have a little apple bubble going on the market right now. every portfolio here in florida owns it. we don't. >> you're going to buy the new ipad? i might buy the new ipad. >> yeah, i probably will, actually. have i an old ipad. i've loved it. a little faster speed, yes, i'll use it. >> gentlemen, thank you very much. michael farr and don luskin, appreciate it. now, let me turn back to the

economy. china threw a big scare into the markets by lowering the growth to 7.5%. i want to find out what that could mean for us. a very special guest returning to the show, an old friend, bob hormats. and he is a former vice-chairman of goldman sachs international. it is such a pleasure. i loved your thought. it's the 40th anniversary of nixon going to china. and china has been on everybody's mind. i know you coffer this closely in the state department. what does it mean they're lowering their growth target? >> it doesn't mean very much. in fact, they have lowered their growth target before and almost always exceeded that. what they're trying to do i think is cool the economy down a little bit, particularly signal to the provinces to cool down infrastructure spending. there has been a lot of that, and to cool down real estate spending. but they're not going for the rapid growth before they're going for a higher quality growth, more distribution.

they're going to build a safety net in so that people will instead of saving money will spend money, consume more. but i don't think it's going to dramatically change the economy at all. >> that point you made about a little slower on infrastructure, and i'm just going to say state-run investment in general, that fair? >> state-run and provincial-run. >> will they continue along more of a market path? china still has a lot of state-run industries. they have a lot of state owned enterprises. will they continue to tamp that down and become more free market capitalist? >> i believe they will, but only very gradually. a lot of vested interests in the current structure. the one thing about the current structure, it costs them a lot of money to support these state enterprises. if you look at all the reports that are done within china, all the research, it demonstrates convincingly that money spent in state enterprises returns considerably less than money spent in the private sector. and this capital that goes in sucks money way from the private sector, which is growing in

china, and particularly from small and medium-sized enterprises. >> now, okay, state department undersecretary, china is very unpopular in the usa. and people are accusing china's currency of being too cheap. and they're also accusing china of pirating intellectual property rights and counterfeiting american goods. what do you say to calm the waters on this anti-china sentiment? you see it in the election now all the time there. >> are two points. one is they do a number of things we don't like and are harmful to our interests. intellectual property piracy, forcing transfers in intellectual property, doing a number of things to support support state enterprises which gives them an artificial advantage vis-a-vis the american companies, and a lot of things like that. we're going after them. we've made it very clear in all of our conversations with them, taking cases to the wto, many of which we have won, and all these strategic dialogues we have with them. on the other hand, the big challenge for the united states, while it appears to be china, and china certainly is the

biggest external competitive challenge, our big challenge is to get our own economic house. >> yes. >> the best way to counter china is to do well at home. to do well at home by boosting productivity, infrastructure, r&d. that's how you really come back. >> in your portfolio you have energy. i'm going to ask a tough question, the keystone pipeline, which was originally the domain of the state department, the original environmental reviews. here is the question. if we the usa had granted keystone, the license, the permit to go on ahead, would canada and would transcanada pipeline be shipping and getting ready to build an east-west pipeline to the pacific to sell to china? could we have forestalled that, robert hormats, if we had given them a green light three years ago? >> we still have a number of procedures that are under way on keystone, so i'm actually prevented from discussing keystone. but i do think that the broader point is we need to do a lot in our own economy to reduce our

dependence on recorded energy. and we are doing a considerable amount, particularly in the area of natural gas at home. there is a lot more drilling. we're trying to develop prudent environmental policies so that we can take advantage of these new gases that we found, tight gas and all sorts. >> shale. >> all the various shale gases. all that i think is really going to improve our energy outlook dramatically. >> a lot of people are saying we have opened the door to canada selling all this oil to china, and we didn't have to do that. i know you can't comment on that. that's just my mini editorial. robert hormats, as always, old friend, thank you for coming on. >> pleasure to see you. mitt romney is coming up, but he is still six to ten points behind president obama. but this has been a sparring match. romney head for the big fight against the president? and please don't forget, usa, china, the rest of the world, free market capitalism is still the best path to prosperity. "the kudlow report" is coming right back.

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exit polls show two key facts from yesterday's super tuesday primaries. first, the economy still issue number one.

and second, republican voters believe mitt romney is the most electable nominee to beat president obama. but the president is sporting a strong lead in the polls, running where from six to ten points. is romney ready for prime time? a bigger fight against barack obama? joining us now, two very distinguished senators, richard blumenthal, democrat from connecticut, and ms. kelly ayotte, republican from new hampshire. thank you. so mitt had a pretty good night last night. i'm more interested in the potential race against obama because i think he is going to get the nomination. what are mitt's best cards to play in order to defeat the president? and conversely, where is the president the weakest? >> well, i would say this first of all that his strength, just the experience that he brings from the private sector, he has to keep talking about that and contrast it with the president's experience. and even though things are

looking better, still over 8% unemployment. still very tough for so many people in the country. the things he really needs to be talking about, gas prices. people are paying $40 more at the pump when they fill up their gas tank than when the president came into office. that's real money to people. and i think the president is vulnerable on that issue, and also on the experience issue just of where we have been historical. people, even though we're doing better, they don't have that zip in their stride yet. so emphasizing his experience on the economy. >> senator blumenthal, i think ms. ayotte has a good point. business experience, i believe most people think mitt was a successful businessman. i'm not sure they understand what exactly yet he'll do to make the economy better, but the experience thing is a crucial issue. has barack obama rebut that? >> first of all, senator ayotte is absolutely correct that the economy is key and gasoline prices are key to the economy. and so the challenge for the president is going to be to surmount and fight back the

increases that we've seen in gasoline prices, which is really going to be a measure of what he can do as a president and what his qualifications are as a president. and it is a very different job than running a bank or most corporations. as heads of corporations have found out when they go into politics. what can you do about gas prices? well, number one, he can release some product from the strategic petroleum reserve. number two, fight speculation. >> you really want to go into the strategic petroleum reserve? shouldn't we hold on to that stuff unless and until there is a national security emergency? you're basically saying to me, senator blumenthal, old friend, that for a few pennies on the gas gallon, you would sacrifice our potential security if iran and the middle east blows up. isn't that really risky? >> as a number one, last resort. two, as a small amount, which has been done before. president bush did it at least

once in the wake of katrina when there is a threat to our all too fragile, all too slow economic recovery from gasoline prices for the reason that senator ayotte stated very well. and she and i as former attorneys general both know as well sometimes the markets don't work as well as they should. and speculators or con artists can influence it. >> let's go this way. i don't know if you talked to mitt romney about the strategic petroleum reserve. i just interviewed him. i didn't hear him talk about strategic petroleum reserve. i heard him talking about keystone and shale permit drilling. what is your response? >> i would say this first of all, again, with respect to what richard said, i would disagree with him on the strategic petroleum reserve for this reason. it is supposed to be an negligence reserve there. we end up spending a lot to replace it, and it's really important sometimes we end up spending more to replace what we take out. so just in thinking longer term,

it can be penny-wise, pound foolish in terms of the minimal benefit we get at the pump. but also this. you had a guest on earlier. you were talking about china. we know that china is also using much of the world's resources on oil, that they're actually holding reserve oil additional. we would be playing into their hands on the supply issue. and i don't think it will help gas prices. >> because it will be gobbled up. >> yes, absolutely. it's a world price. >> and we'll be shipping -- >> exactly. >> and refined products to china. >> let's just, again, come back to priorities, larry. we have to continue the economic recovery. i'm not saying that we should necessarily use the strategic petroleum reserve, and certainly i'm not talking fob the president. but fighting speculation is something that we all can agree. >> do you really believe this is about speculators? >> i think speculators are contributing to it. >> there is no speculator capacity in the world oil market, there is not enough

refining capacity because we're not pipe lining them into the refiners. come on. >> at all-time high in terms of the amounts of oil that is under these commodities futures contracts, and the amounts of speculation that are taking place. and i really think that we need a much more robust and muscular view from the federal government. >> more regulation, senator ayotte? i'll give you the last word. >> larry, i would say this. no. we need to use the resources we have. we have seen under this administration if you look at 14% reduction over the last two years in terms of public lands and waters from historical -- historically where we have been on oil and recovery on gas, it's been an 11% reduction. so let's look at the permitting process, because we've had fewer permits. let's use our own natural resources. and also, let's be in a position, obviously, to continue to use all energy sources and to develop those energy sources. and then again, let's approve

keystone pipeline. i don't understand why we wouldn't want to get the oil from canada as opposed to middle east with the unrest that is going on. >> this 30 seconds. >> and none of these measures -- >> do you buy into the keystone pipeline? >> not as an immediate slugsz. >> solution. >> does america need it? >> we're going have a proposal from the democrats in the united states senate that will address the need for the oil that the keystone pipeline would provide. >> all right. i got to get out. >> it won't solve the immediate problem. >> it might. the futures markets react very quickly. anyway we have to have you back. we have to talk about this some more. what you're saying is this is a good issue for governor romney. senator kelly ayotte, we appreciate it. senator richard blumenthal, i appreciate seeing you again. coming up on "kudlow," the nation's top ceos put out an important report today detailing how to boost the economy. we're going to talk too the head of the business roundtable, john

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this could be a turning point. we are all over this story. >> the right voice at the right time. "the kudlow report," week nights 7 eastern on cnbc. welcome back to "the kudlow report." mitt romney had a strong night last night. a lot of votes, a lot of delegates. let's break it all down with our next guests, one of the best in the business. ed gillespie, veteran republican strategist, former counselor to president george w. bush, former head of the republican national committee. eddie gillespie, thanks for coming back. >> thank you. >> it may not have been a perfect night, but he had a strong night, the

come-from-behind victory in ohio, and votes and delegates. is that right, or am i putting too much into this? >> i think that's right. i think that's what the process is about. you have to get the most delegates, and a majority of delegates. my view, larry, is if he had won ohio earlier in the night, the takeaway today would have been different. the fact that rick santorum had a good night in oklahoma and tennessee, they came in earlier, you know, i think that's contributed to the perception. i also -- look, he had a good night too, rick santorum there is no doubt about it. >> but he didn't win ohio, and ohio was the key. if santorum is doing a good job, that's what the exit polls show. he is doing a good job on getting blue collar support, that $50,000 a year income level. he is beating mitt. but he couldn't win ohio and he couldn't win michigan. i think those are good belt notch for romney. >> i think romney is making a point that he is winning everywhere, in every region of the country. that's a legitimate point to

make. with mississippi and alabama coming up for him, there is a reason for him to press on. but i do think that what governor romney is saying he is the only one who is winning in the northeast, in the great lakes, in the south. >> is he winning in the south? >> well, i guess some people say that florida is not a southern state. >> yeah. >> there was an argument made there. >> he is still soft in the south. he is soft with blue collar workers. he's also got a problem with romney care. the exit polls in massachusetts show that the voters, republican voters don't like romneycare at all. >> well, one of the central issues in this campaign is going to be health care. and people can't stand president obama's health care proposal. we've seen that consistently. there was a recent survey. over 70% of voters believe it's unconstitutional. and i think that governor romney is making the point that he is going to repeal that. it helps to offset it, obviously. let me be clear. i voted for governor romney in the virginia primary. i've been neutral throughout. when the time came to cast the

vote, that's where i decided to vote. >> santorum i thought had a very strong victory speech last night, or election speech. one of the things, he really punched out romney on romneycare and his inability to deal with obama on obamacare. i want to ask you, how out of the world is it? how unworldly is it to expect a romney/santorum ticket? because it looks like romney sun beatable. that may or may not be right. but what about a ticket? not chris christie, not marco rubio. what about santorum and romney as a ticket? >> it's one of those things, larry, where people would have said six months ago that rick santorum would be in the hunt. people would say that's not a credible thing to speculate. he has proven himself to be a strong campaigner, and also proven you can't predict anything in this election cycle. and i wouldn't be shocked to see a romney/santorum ticket if governor romney emerges as i think obviously very likely given the delegate count and the trajectory of the primaries.

>> and they have both made some gaffes, but they have both recovered from the gaffes. santorum has pulled back from of his austere culture warrior. santorum connects with the blue collars. he is connecting with the manufacturing workers. he is connecting with them culturally from his own background. i just wondered romney/santorum. it just occurred to me today. >> i heard somebody mention that the other day for the first time. >> no! >> i'm sorry to say that. it was only one other person. and it didn't strike me as out of the question. >> so the process. everyone is saying mitt can't lock it up. i want to ask you this. a good story in "the wall street journal" today, op-ed police by elaine kenmar. really this process is designed to pull stuff out. and really not until april and may and june do you get the big winner-take-all primary. >> that's right. >> this is going to go on for a while. i know romney wants santorum to go out. santorum is not going to go out for a while. this thing's got to run its

course. >> i said this back in november on a television program that this was going to be a long process. and it was designed to be a long process. for a long time republicans have felt like our primary wraps up too quickly. the primaries go off like a string of firecrackers. the winner take all system almost puts -- coronates a front-runner. and there was a sense that we should let it stretch out little bit and give the candidates the chance to show their chops and let some folks maybe come from back in the pack. we have seen that happen repeatedly throughout the contest. this is what it was designed to do. when you add to that the super pacs and the fact that you have outside groups spending money that helps sustain candidates that aren't raising money of their own. >> outside people. >> people, right. >> outside rich. >> and that helps sustain candidates for longer in the process. so when you combine those two things, there is no doubt that this was going to run through. and i've been saying for some time it's going to go to may. >> you're going to take my romney/santorum ticket and run with it? it's one thing for me to say it. but if you say it, it's going to

become very politically powerful. >> i appreciate that. they have very complimentary skill sets and appeals, we're seeing that right now. >> ed gillespie, great stuff. coming up, mitt is feeling pretty good after last night, but he has a big problem plaguing him. it's called romneycare. can he push past it? we're going to tell you about some exit polls that suggest he's got that problem. forty years ago, he wasn't looking for financial advice. back then, he had something more important to do. he wasn't focused on his future but fortunately, somebody else was. at usaa we provide retirement planning for our military, veterans and their families. now more than ever, it's important to get financial advice from people who share your military values. call now for our free guide and tips on planning for your retirement this tax season.

welcome back to "kudlow report." all right. mitt romney's wracking up some delegates. he is wracking up the votes. but here is what super tuesday told us. he does have some weaknesses. he has some vulnerabilities. still has months more of the tiring slog to contend with. more importantly, i think he has a message problem in one key area. i'm going to raise it in a moment. let's bring in our distinguished guests. carly fiorina, national senatorial vice chair and ceo contributor howard dean, former dnc chairman and presidential candidate, former vermont governor, and steve moore, "the wall street journal" editorial board. okay, everybody, steve moore, let me start with you. in the exit polls for

massachusetts, which of course mitt won, 51% republicans said they were extremely unhappy that romneycare went way too far, okay. and second, related to this, santorum slaughtered romney last night in his victory speech, or his election speech about romneycare. what do you make of this? how big of a problem is this for mitt romney? >> it's an enormous property. it's not his only problem, by the way, but it is his biggest problem. republicans want to make obamacare the number one issue other than debt come october, november. a lot of leading republicans i talk to, larry say that mitt romney is so compromised on the health care issue because of romneycare, he is simply not going to be able to really take to it barack obama. in fact, barack obama is going the say in the debates, mitt, how can you be against this? this isn't so different from what you pass. it's a big visibility. >> i think you favor obamacare.

>> it's better than nothing. >> let me just ask you, putting on your political hat for just a second. mitt romney still has this weakness. it showed up in the election exit polls last night. santorum is exploiting this weakness. and it's a simple argument. romneycare, which you put in massachusetts which you told us is popular is stopping you from taking the anti-obamacare case to president obama. how does that play? does that give santorum a little more of a shelf life? >> it gives santorum more of a shelf life. the problem is this is a republican primary argument. and i don't think obamacare or romneycare, which is essentially the same thing, is all that much of a liability in the general election. i know the republicans want to go after obamacare. i don't think it's going to work. >> but you me that mitt romney is going to make the case to repeal and replace obamacare. >> nobody is going to believe that 98% of people in massachusetts have health care. i don't care what the small percentage of republicans say. the numbers are overwhelmingly

in favor that everybody has insurance. >> the number one issue in the 2010 midterm elections was obamacare. that's the reason -- >> not anymore. not anymore. >> let me get carly fiorina in. carly, welcome back. it's great to have you. i know you're strongly for romney. >> no, i'm actually -- whoa, whoa, whoa. i'm neutral in this primary process. i'm totally focused on the senate. >> this is even better. then tell me neutrally how big a problem mitt romney has got with romneycare, which rick santorum is hanging around his neck every chance he gets, including the victory speech santorum gave last night or the election speech he gave last night. how big a problem is it, carly? >> well, let me talk for a moment what is going on in massachusetts, which is relevant. scott brown is pulling ahead of his democratic rival, principally because the majority of people in massachusetts agree with scott brown and with former

senator ted kennedy that obamacare is an overreach in the role of the federal government, and they are disturbed, deeply disturbed by the violation of a conscience protection clause in the constitution. i think this is a huge issue. i think it's an issue for romney going forward. he has and will continue i'm sure to make the argument about states' rights versus the federal government. and i think that is an argument that many people resonate with. make mistake -- >> but it doesn't good away. >> i agree. i agree. >> and i want to ask you this. this is an analytic question more than politics. for mitt romney to seal the deal in his opposition to obamacare, this albatross of romney care, doesn't he have to put out his own plan to replace obamacare? isn't that the end game for mitt romney, carly? >> i think actually it's the end game for any republican nominee. i think it's very important for the party and the standard bearer of the party to step forward and say it is necessary

but not sufficient to repeal obamacare. what we need is real health care reform. what we need is real tax reform. what we need is real entitlement reform. what we need is real education reform. what we need is real immigration reform, and lay out a set of positive and proactive plans. so yes, i agree with you. but i think it's beyond health care. >> all right. but let's focus on health care, because i was struck by that exit poll last night. and i was struck by santorum absolutely pounding mitt into the ground. >> i agree. >> let me go to steve. how fast can they put together a new obamacare plan? has choice in it, different options. >> you means republicans? >> i'm specifically referring to team romney. they came out with a tax cut plan almost from popular demand from guys like us, supply-side conservatives. don't they have to do likewise with the health care plan to replace obamacare? >> first of all, agreed everything with what carly just said. and carly, i hope you're on the ticket. i'd like to see you be the vice

presidential nominee. you nailed it. she is exactly right the republicans need to put forward and alternative. as you know, our friend paul ryan has a pretty good plan. i disagree strongly with the governor. >> more for medicare, but not for obamacare. >> i think that's right. the reason, howard, with all due respect i think this is going to be a big issue, two reasons. one reason is the costs are going to explode in this program. they're going to be much, much higher than the obama administration thinks. and the second reason, it gets to the whole issue of consumer choice. whether people can buy the kind of health insurance packages they want. that's what the country is about. why can't people buy health insurance policies they want? >> first of all, the thing doesn't go into effect until 2014. no consumer is going to have any feeling for this choice question. and i agree with you about the cost. i think they will be out of control. that's true. i've said that from the beginning. >> so what do do about that. >> that's why i want a public option. if i were advising mitt romney, i would advise him not to put out a plan for the exact same reason i would have advised paul

ryan not to put out a plan. this a tough issue, no matter what side of the aisle you're on. whatever plan they put out is going to have a lot of faults. in an election cycle the faults have -- we'll hammer it to death. >> health savings account. >> total disaster, are you kidding? and they don't do anything. >> they lower costs. >> they do nothing of the sort. >> we'll debate health savings plans another time. how does romney counter the assault which is an assault against romney care? >> if i were mitt romney's strategist, i would put my head down and go right through it. romney is going to win the nomination. he is going to have a tough time. last night was a little step forward, but not as much as he needed. it's going to be tough, but he has to slog through this. he cannot move any farther to the right. he has hurt himself dramatically on things like immigration, birth control. he's got to stay where he is. let santorum beat him up. santorum doesn't have the money

or the votes to catch him. >> just take it. >> when he gets through the general election, then he can move to a more moderate position, and the republicans are not going to veto for obama, they're going to vote for romney. >> including interstate health and savings accounts. carly, thank you very much. i'm sorry i accused of being for romney. i'll never do that again. howard dean and the great steve moore. i appreciate it very much. coming up on "kudlow," the nation's top ceo put out an important report on how to boost the economy. we're going to talk to the head of the business roundtable hy , himself, next up on "kudlow." ♪ [ laughter ] ♪

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all right. just what will it take to really boost the u.s. economy? who better to ask than john engler, who is president of the business roundtable where today i had great fun moderating a panel on this whole story. he has a report called the ceo plan for jobs and growth. it includes some tax and regulatory reform. governor, i want you to get the message out. only within thing i want to ask you. inside this document it says washington has failed to act. >> that's right. >> and from the nation's top ceo, that's a tough statement. >> ceos are men and women of action. i mean, they go to work every day to make decisions, to solve

problems. when there are problems, self-apparent as we have in this nation, our deficit, a tax code that has been demolished by deadlines and expirations, 100 provisions expired by the end of this year, when you have regulatory reform that is urgent, an immigration plan that is unresolved, yeah, there is work today done, and it's not getting done. no budget in the senate for a thousand days. you cannot run the government. we pointed out at one point today one of our little committee meetings. every quarter ceos have to file a report what is going on with the company. congress, no budget for three years? what is with that? >> in the panel that i worked on today, we had a lot of questions from the ceos from the floor. i didn't hear anybody happy. we were talking about washington tax policy. we got off to budget policy. i didn't hear a ceo who was happy. >> i think that's right. i think they're concerned. these are men and women who are committed deeply to this country. they run global enterprises. so they see what is happening in other nations. and they see nations out there,

our competitors who are not taking the year off because we happen to have an election in america. competitors who think well they did it in america, why don't we do it here? and in some cases they're doing what we used to do better now than we are. >> how do you see the top couple of priorities, if you could boil this down for us. >> i think the tax code. you put that at the top of list. we have 101 provisions expired by the end of the year. $5.4 trillion in automatic tax increases if nobody acts over the next decade. that's simply unimaginable. the deficit, if we can't manage our fiscal affairs as a nation, how can we lead the world? >> is that because of the deficit itself, which may be gargantuan forever if we don't solve entitlements leads to higher tax rates and less exitiveness. >> that's part of the logic. it's also part of the logic you can't have a sequestration of a massive amount of the defense budget, which secretary panetta says is simply unimaginable there.

you've got to make decisions. you've got to set priorities. we support the president on many things. we think he ought to have vast authority to reorganize this balkanized federal government and make it more efficient, leaner, less expensive, more productive. but at the same time, there are policy decisions. no immigration bill has been presented to the congress, even though that was a big campaign issue in the last campaign. we need to have tax reform. we think, and i think ceos say the president made a nice step forward when he proposed at least that the corporate rate come down. but imagine, we have to compete globally. >> international taxes may go up for the corporations. >> yeah. >> i heard a lot of that today. >> absolutely there is great concern about that. >> in the eyes of your members, top ceos, we have 200, 250 ceos? >> 210 in our organization. >> so do they feel that there is a sufficiently entrepreneurial environment for them not just to make profits, but to really grow

and move ahead? i'll leave you with that question. >> this morning we heard from the blue dogs. they talked about their frustration. we have heard from other groups of members of congress, senate and house both parties. everybody is frustrated. the ceos say wait a minute. you all are elected. you're the board of directors for the nation. you've got to start making these decisions. and frankly, the ceos are prepared to support anybody who will step out and lead. >> all right. great stuff. that is former michigan governor and now ceo of the business roundtable, an old friend, john engler. thank you ever so much for walk through it. up next, worries that high prices at the pump threaten to derail the recovery. are president obama's policies to blame? we talk exclusive where i republican senator jon kyl of arizona. scotts ez seed uses the finest seed, fertilizer, and natural mulch that absorbs and holds water better than paper can. looking good, lad!

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are rising gas prices threatening america's economic recovery? since january 1st, prices at the pump have jumped 48 cents. republicans say white house policies are contributing to the spike in oil and gas price. but president obama says not so fast. please take a listen. >> you think the president of the united states is into reelection wants gas prices to go up higher? is that -- is there anybody here who thinks that makes a lot of sense? look, here is the bottom line with respect to gas prices. i want gas prices lower because they hurt families. because i meet folks every day

who have to drive a long way to get to work. >> all right. joining us now exclusively to respond is arizona republican senator and minority whip, that being mr. jon kyl. senator kyl, as always, sir, welcome back to the show. >> thank you. >> why is president obama saying you think i want gas prices to go up in an election? is this all about the election, or is this a strategy for america to develop more fuel? >> i suspect that because there is an election going on, he would prefer that they not rise or rise as fast. but i think his policy has been very clear that over the four years of his administration, he has necessarily driven them up. and look at his actions rather than his words. he wants to impose 40 to $80 billion of new taxes on the oil companies. he supported cap and trade. his administration's epa regulations have been very difficult for the oil companies to comply with. in fact, it's alleged to have shut down refineries. he has refused to open up new oil and gas leasing. he has refused to approve the keystone pipeline from canada.

all of his actions belie what he just said. of course, it is an election year and he is not about to admit that he wants higher prices. as his secretary of energy once said prior to the time that he took office. >> well, you know today i believe he was out in north carolina. today he was out touting electric cars. now maybe that's unfortunate, because gm just shut down the chevy volt for a while. electric cars. when does he get to fossil fuels? when does he get to shale? when does he get to offshore drilling? when does he get to opening up federal lands for permits and royalties to balance the budget? when does that happen? >> and how do you develop the tryst for the electric cars? it's the items i mentioned before. you have to have oil and gas to develop the energy. or support nuclear, and i haven't heard him do a lot of that. i'm all for electric too, but you still have to produce it. and fossil fuels right now are the best way to do it. >> he also talked today for the

need or the tax credits for alternative fuels. i thought the thrust in congress was tax reform, get rid of the tax credits, stop picking winners and losers. what is up with the tax credits for alternative fuels? >> remember his state of the union speech, he said he favored reforms that would broaden the base and get rid of the loop holes. they're more loopholes except they're for his favored people instead of someone else. let's get rid of all the special provisions and you won't have the policies that he is promoting. larry, there is something else that i think your viewers will be particularly appreciative of. and that's another policy that he is supporting. it's the policy of feds easy money. the easy money policy reduces the value of the dollar which increases the price of gasoline. in fact, since mid-december, the joint economic staff estimates that the price has increased 25% simply because of loss of the purchasing power of the dollar. >> by the way, just on that point, it's an interesting point, there was a story today

in "the wall street journal" that the fed is thinking of the new round of bond purchases. they say that's not going to increase liquidity or expand their balance sheet. but they're still talking quantitative easing, senator. what is up with that? will you hold hearing on this? will people put the fed under the microscope? >> the last time that the leadership and the house and senate republican leadership sent a letter to the fed suggesting that they should be really careful before they do that because of the adverse impacts it could have, we were criticized by the very "wall street journal" saying we shouldn't tell the fed what to do. we weren't telling them what to do. we were suggest thanksgiving take a look at cause and effect and the impact of their policies. i don't know whether congress will hold hearing or not, but it probably should because more quantitative easement will continue to devalue the dollar which will and when the cost of fuel is raised it will "costa concordia" of living to increase which further degrades.

it's a never-ending cycle. once you get on these government policies to stimulate here and there, you have to keep counting for the effects of the policies in other places. and you never get off that merry-go-round until you stop government interference in the market. >> you know, jon kyl is exactly right about that. a strong king dollar from the federal reserve and the treasury would go a long way towards lower energy and fuel prices. protect the dollar. that's it for tonight's show. thanks for watching. carfirmation. only hertz gives you a carfirmation. hey. this is challenger. i'll be waiting for you in stall 5. it confirms your reservation and the location your car is in, the moment you land. it's just another way you'll be traveling at the speed of hertz.

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