and still the overall upswing in the market and take some cash, but we do have policymakers who seem to react very quickly to what's wrong with the stock market and make the right moves. so stay a little cautious, be a little skeptical and raise a little cash, but remember, it is still a decent trend. i like to say there's always a bull market somewhere and i promise to try to find it for you right here on "mad money." i'm jim cramer, and i will see you tomorrow! hey, larry, what's cooking tonight on "the kudlow report?" >> why did the president ping the phone and kill hundreds of thousands keefe stone jobs? good evening, everyone. this is "the kudlow report." he dialed up and lobbied wavering senators. what did he say? what did he promise? with $5 gas prices not too far away, all of labor and all of business supporting keystone how being the president kill the

pipe lean? here's house speaker john boehner today. >> i personally lobbying against the keystone pipeline it mean the president of the united states is lobbying for sending north american nerjt energy to and lobbying against american jobs. >> story number two this evening, obama care will bankrupt this countr rery taxes regulate us to death. there's a cost overrun and that's just the beginning. we begin tonight with the breaking news the president picked up the phone and personally lobbied senators to get the job-creating keystone pipeline scrapped. nbc news white house correspondent mike vickera joins us now with the details. good evening, mike. >> good evening, larry. >> what was interesting about this is the white house with really was not eager to put the president's fingerprint ones this. the story came in earlier today that the president was calling in wavering democratic senators and many of them trying to get

them to vote against this republican amendment put on the transportation bill and they put out a statement and did not mention or acknowledge about three questions into it today. jay karner said the president made calls on this. the bill went down 56 to 42 this afternoon, larry, it needed 60 to pass. the president still lost 11 democratic senators across the aisle and voted with republicans. the white house would not say exactly who the president was call, but you can bet that some of those senators that defected from democratic ranks were among the calls that the president made today. it is not a good issue from the president. it divides two core constituencies, as you know, labor is in favor of it and environmentalists who protested out here for months are very much against this. the white house does not want to deal with this again. john boehner will get another bite at the apple when it goes to the house of representatives. >> nbc's mike vickera, we appreciate it.

was the president's anti-keystone also anti-jobs and anti-growth? listen to what he said to matt lauer in an interview set to air tomorrow morning on the "today" show. >> any time we can connect ourselves with more suspect ply sources and the sources with more volatility around them, that will be more useful to the consumer. canada has been the largest source of imported oil to the united states has been canada. obviously, they're a country with broad economic relationships with. we're a good customer of theirs. being able to move a lot of this growing canadian crude into our refining network is going to be very important to consumers down the road. >> joining us tonight two distinguished senators, senator clara mccaskill, democrat from missouri and senator john hoeven, republican for north dakota.

senator mccaskill, if i can begin with you, it is so disturbing to hear about the obama phone calls to block this. let me ask you, when the president is making these calls to get vote against keystone, what exactly was he saying? what was his argument, do you know? >> i don't know. i didn't receive one of those phone calls. i've been in favor of keystone and have said so clearly, and so i -- i think he knows me well enough to know that a phone call to me from him is not going to make a difference if i've made up my mind. >> i appreciate that, and i appreciate your vote, but is there any talk in the cloak room? i guess what i'm asking is what was the president's main line? laborers are for theis, jobs ar at stake and it's moving toward $5, $6, and what's his line? what's his argumentation? i would even ask you what's his policy? >> i think -- i obviously

disagree with the proz thesiden this so it is hard for me to explain to you what his thoughts are, but if i were to guess he doesn't believe that congress should take over the approval process that this is a matter of the time involved and making sure the environmental studies are in place and that this is being rushed in a way that's not responsible and that congress should allow the process to take its time, and i believe that we should troy to jump-start this as quickly as possible which is why i disagreed with the president. >> i hear you. i hear you, and i thank you for that. senator holden, welcome. i want to ask you the same question. have you heard what these phone calls were. you all got 56 votes and that's closer than many people thought. were there any promises made? did it come down to promises for the president or by the president to some of these other democrats? >> larry, good to be with you, and i want to thank senator mccaskill for voting in support of this very important

legislation and you've got to remember this has been under study for three and a half years. what the president is saying that somehow it needs to be studied more. i mean, come on, three and a half years and as far as the nebraska route which was the only route where there had been any question and we fully address it and said whatever additional time is needed there you can take it. all we needed to get this project under way, you have gas prices going up every day and this would bring more canadian crude and also from my home state of north dakota and montana. reduce our dependence on middle eastern oil. this is a project and this is vital infrastructure and we need to move forward. >> senator mccaskel, how do you read presidential energy policy. i am so confused about this. is he for just clean energy? he talks about algae and he wants to subsidize electric energy een though that requires

fossil fuels. i'm just plain confused. >> well, we are -- we did net export oil last year. weir dri we are drilling more and bringing out of wells more domestic oil in this country than has occurred decades and decades and decades. they've continued to give more leases including some offshore and in the arctic. so i think that there is a desire by this administration to do more. i think i disagreed with the president on the keystone, and i think we get the keystone done quickly, but i do think the president is not opposed to drilling, not opposed to natural gas and not opposed to oil. >> senator hoeven, i also noticed that the offshore drilling amendment failed and that's another setback. there's just so much out there, why did that happen? what are people saying about that? >> larry, we're still importing 30% of our crude from places like the middle east and

venezuela. and with what's going on in the world that makes absolutely no sense. we can produce the crude that we need both here, offshore and with canada. our closest friend and trading partner, but we've got to get an administration that will work with us. we actually had 58 votes and they were missing two of our republican members. we have good bipartisan support and we're going keep working to get this done, but, you know, the president says all of the above, but he's not doing it. he's preventing us from doing the things we need to do to produce energy. >> since it was your amend am, senator hoeven, let me ask you, is it dead for 2012? >> no, this gives us grit momentum and we'll continue to vote on the house on the highway bill so you can still see this as part of the highway bill. if not, we've got other legislation and other energy packages which we'll be putting forward to get this done. >> senator mccaskill, why do you

think gasoline prices are so high right now and is it connected to keystone and is it connected to our energy policy? >> it's complicated and it's one of those things that where if you try to put in a sound bite and say that a president can make gas $2.50 a glon which is enough to make me almost laugh out loud. this is complicated and it's about speculation and about what's going on in the middle east and it's about refining capacity being shut down by some oil companies and it's about very cheap, natural gas right now, them trying to balance. can we raise the price a little bit, because we're getting killed over here by natural gas. this is hard stuff, and if it was as easy as turning off on the light switch, i guarantee you someone would have hit the light switch in washington a long time ago. >> i hope there's another round and i hope you win this round, but we will see. senator clara mccaskill, thank you very much. senator hoeven, i appreciate your time very much. >> thank you. >> folks, coming up, stocks do

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another up day. saying good-bye to all of tuesday's bigs loes, but before we get started to the panel, here's my two senns on the market and the economy. short term i'm still bullish, jobs, profits and the economy all bumps higher and it's good. the fed will slam down the dollar, and i'm worried about gigantic tax hikes next year. i'm worried about our bad energy policies and if we don't do something about obama care and the budget we might get another credit downgrade before the year is out. so short-term i'm in. long term, i'm just not so sure. now let's talk to ourec perts to do some stock market and fed work. we welcome back john taylor, distinguished stanford university professor, former treasury department undersecretary for international affairs and author of "first principles," it will be a best

searle. we also have chief market strategist of lpl financial. john, i want you to start us off, and i want to ask you about the fed bond buying announcement which helped stocks to rally today. let me get this right. they'll buy bonds and inject money, but then they'll take the money back out so they don't cause inflation. to me, this is tinkering and confusing and cockamamie and hughey and what is it because i think it's nut. >> sounds right to me, larry. the problem is they should be getting off of this kind of thing and trying to find a way to get back to more predictable policies and policies that i think worked in the past and quite frankly, i don't think you can attribute a rally to this kind of thing. sometimes you get an up and sometimes you get a down, but this is not the way to run a monetary policy. some people on wall street want more and more easy money and they think that's great for stocks and they don't care about the future of the dollar and

they don't care about the possibility of more excess being built in the system. it's like an old wall street tune and it's the exact opposite of the tail of discipline. >> absolutely. eventually that will be harmful. you mentioned there's a risk of inflation down the road and pulling this money out can be a risk, plus there are problems of other things like the debt and the fed will be continuing to buy this, but the sooner they get back to something might work pretty well in the '80s and '90s until recently when we had this crisis and the slow recovery. there's good news and long term, we still have these worries and you make a good list. >> all right. let's work your own list. are you bullish short term? do you have confidence in the market and are you worried about economic policies? you know, we got slammed today. no keystone pipeline. that would have been a great effort if that thing passed anda the least symbolically, you

could say america was going in the waive an energy revolution. that didn't happen. >> we're cautious in the near-term, larry. not expecting a big bear market, but a pullback here. you mentioned thatsa a risk. certainly you talked about the massive tax increases with the budget bombshell we're looking nat 2013. we've still got issues overseas, and greece might be out of the picture and they're next in line for a bailout and debt restructuring and weave got economic expectations very high and not just for friday and over the next several months as well and this will be the worst earnings season in years. profits only expected to be flat year over year. you know, the market has been dependent on earnings growth that's finally beginning to slow and with these other headwinds i think we might be good for a pullback. if earnings are flattening out, but profits are the mother's milk of stocks and we both know this rally was built on profits. if you think earnings are going flat, we have productivity

numbers and unit labor cost which is are a key part of earnings are rising 3% and that's twice what they were rising a year ago. should we be worried? maybe my short-term bullishness shouldn't be so bullish. >> i think corporate america will still earn 7% or 8% this year over what they did last year but it will not be a straight line and there will be haves and have notes and the market is not making those distinctions yet this year, and i think they are vulnerable to a bit of a pullback and we can come back to the flat line on the year and it wouldn't be that and it was easy getting here and it only took a month or two to see these gains. two steps ahead and take one step back, but i don't think that the fed is going to be able to stop that with some of their talk here, and i think they're worried about the market, and i think they're focused on the market with some of their talk? >> i mean, that's what -- go ahead, john. the problem with the fed is they're saying they're going to ease, and they'll tighten if things get stronger and that's just fine-tuning, and it causes

uncertainty. we have fundamental problems in the economy and 2.5% growth recovery and it's so small compared to what we have in the '80s and nearly 6%. those are the fundamental things and monetary policy is not going to do that and it's time to get back to the policies that used to work. i think what the fed is telling us here is go buy mortgage-backed securities, right? if things get wacher and softer we'll be in there buying some mbs and is that really where we need investors to be putting their money right now? i'm not sure that's the kind of risk taking we need in this economy right now. >> see, your book about economic freedom, economic liberty and things we talked about, there are obstacles out there. i don't want to predict the politics right now. i'm just saying they make me a little leary about a long-term bull call. >> you got the debt increasing rapidly. the budget just proposed was not doing what the deficit -- you've

got not only the obama care, but you've got the implementation of dodd frank and quite frankly, there are still these questions about the rule of law and the bailout. so these longer term things we'll need to fix and this is a good thing to be discussing this election year to get our hands around it and i'm optimistic i think like you are, but it's not going to happen automatically. you have to do the policy and you have to do the right policies and describing what they are. >> jeff, what about the political season? does it inform your view? is it too early to make a call? romney will be the g on, p candidate and that's easy. we don't know who will win the election in the fall. do you pull back in weight or do you forge ahead? >> that's a big factor and maybe the white house less so than the senate. what we need is political action and that comes out of congress making the legislation dealing with the massive fiscal headwind we'll need in 2015. usually the market is like gridlock. gridlock is good and that's no

longer true. we need to see action and a spirit of dealing with these issues and that means the senate needs to shift into one-party control. that is now looking a little less likely than it did a few weeks ago and that may begin to weigh on the market as well. >> go ahead. last word. >> the white house is important to show leadership. you can't run policy. >> we're going to run about the senate and the next panel and the senate and the house and i think that's great insight. john taylor, thank you. >> coming up on kudlow, within six hours we'll see if greece will have a deal or be in default. what happens in the next few hours could change the course of greek history anyway. we'll go straight to athens next up to give you the update.

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if your bank takes more money than a stranger, you need an ally. ally bank. no nonsense. just people sense. breaking news. another major story we're monitoring right now. it's nail-biting time in greece. we're awaiting official confirmation within the next six hours of the largest sovereign debt restructuring deal in history and whether a credit event will be activated. cnbc's chief international correspondent michelle caruso-cabrera joins us from athens with all of the details. good evening, michelle. >> reporter: good evening, larry. we know now that the greek debt deal will get done, that enough bondholders have told greece they'll forgive this country a lot of its debt. what we don't know is the actual specific number. we'll find that out at 1:00 a.m.

east coast time when the greek government announces it. what's crucial is have enough bondholders tended their bonds so that way the government doesn't trigger credit default swaps? those insurance products that caused a lot of trouble after the collapse of lehman brothers. they were hoping to avoid doing that, but that may not be the case. we'll have to find out late tonight. back to you. >> many thanks to cnbc's michelle caruso-cabrera. there are other stories we're monitoring right now, kntv's scott budman joins us with the latest headlines coming into the cnbc newsroom. good evening, scott. >> good evening, larry. the justice department has reportedly warned apple that it will sue them for price-rigging ebooks for the ipad. the five publishers are simon and shiefrt, hatchet, penguin, mcmillin and harper collins. starbucks is getting into the single cup business and it will sell the varismo machine, shares of green mountain fell on

the news. in a first on cnbc interview bank of america ceos consumer credit has been growing and a positive sign for spending and the economy. take a listen. >> consumers are spending about 6% more on the credit and debit cards february 12 versus february 11, and that's been pretty consistent. people are worried about gas prices and you're seeing them creep up, but overall it's reasonable spending by consumers, spending on discretionary am whys. >> you can see more of brian moynihan tomorrow on "squawk box" beginning at 6:00 a.m. eastern time. coke and pepsi meanwhile are changing the what i they make the caramel coloring used in their signature soft drinks and that's after california threatened to label the soda with the cancer warning. encouraging news with prostate cancer patients and a new pill from j & j to patients who had not been treated with keep on

therapy. shares of medvation on the rise. tonight the cnbc documentary "pill poppers" looks at the benefits of drugs with the unwanted side effects. you mae not be a hendrix, a clapton or a holly, fender guitar has strung an ipo valued at $200 million. here's a fact, fender is the country's largest guitar maker, but it also makes ban jos, mandolins and yuk laicallies and soon, larry, investors will have something new to fret about. >> many thanks, kntv's scott budman. appreciate it. coming up on "kudlow," is it hurting or helping republicans? we're talking about the senate and the house. me? i think it will be a big plus, and i think it will wind up being bullish for stocks in the longer term, but that's just me. we'll ask the experts. we have dick armey, sharon bernstein.

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>> welcome back to "the kudlow report." i'm larry kudlow. so are republican congressional seats really at risk? some say republicans fear losing the house and the senate because of the prolonged gop presidential primary, but i don't buy it.

by the way, neither does veteran republican strategist and former rnc chairman ed gillespie who just last night right here on "the kudlow report" said it's supposed to be this way. take a listen. >> this is going to be a long process and it was designed to be a long process. there was a sense that we should let it stretch out a little bit and give these candidates a chance to show their chops and let some folks come from back in the pack and we've seen that happen repeatedly throughout this contest and this is what it was designed to do. >> i'm making the counter case that the pro business free market gop is, in pacfact, on a roll and i believe the real guy in trouble is obama and democrats and they'll feel the fear because they have their own message and they did it on keystone, a terrible vote, but that's me. joining me with more, jared bernste bernstein, and former chief economist of joe biden. dick armey, co chairman of freedom works and joe betha

koukas. it's the rule that has prolonged this story and not mitt romney. romney is developing a good pro-business message. the house is voting today successfully on their tack-cutting jobs bill for small business, and the republican party stands strong in favor of keystone. that looks like a good message with momentum. >>. >> there's no doubt about it. you and ed gillespie are exactly right. this process is entertaining. there will be a nominee at the end, and at the end of the process, and he will have a sharper message. he will then have better candidates at the house and senate level who will have a sharp focus on economic growth in the private sector, and we stay on that message, and stay focused on it, and we will probably see some assist on the ticket from the bottom up. people always ignore that part

and the coattails don't have to come from the president down. they can be a boost from the bottom and we're going to have sharp candidates that are truly conservative and focused on the economy and the house and senate race will be a big assist to that techet and frankly, obama can't compete with that because he simply doesn't understand growth and he's obsessed with income redistribution. >> income redistribution. jared bernstein, i think the keystone vote will hurt him. i think the cost reestimates that we'll talk about in the next segment, obama care will cost at least $111 billion more and there are more estimates where that came from. i don't see what the democratic party's message is to help business. all these thing, it's not being reported by the mainstream media. >> you're working very, very hard to turn lemons into lemonade, and i understand that, but i'm afraid that pretty much everything you just talked about and with great respect to dick armey, him as well, it's generally lost on most of the people who are really going to make a difference when we get to

the general election which is independent voters. first of all, the only time i really hear the republicans talking about checks at all, by the way, particularly mitt romney is when you interview him and you guys have great interviews, don't get me wrong. >> thank you. >> but what i hear and what everybody else hears on the stump is a bunch of arguments about social issues that mean a lot to the conservative base and are alienating to people in the middle who care a about the economy and despite what you and particularly what congressman armey would say, what people know about the economy is that, in fact, it's getting better and of course, that helps the incumbent. >> dive in on this, because i understand jared's position, but i'm going to argue, any time romney does something good, the mainstream media has something bad to say, and romney wins another rust belt state and he won michigan and ohio, but he should have won it by a bigger

amount, and the media doesn't acknowledge that he's got a message and the media doesn't acknowledge that down the line in the senate and the house, and the republicans in the senate totally unified on keystone, going after obama care and going after small business tax cuts, is the media missing that? did jag bernstein miss that? >> mitt romney who is by far the republican nominee and rick santorum and the gop nominee. mitt romney's been hammering the economic issue. as you said, he has a much crisper economic plan and a much more expansive economic plan that he did a couple of months ago. i think the close race is that of the primary race and i can finish my point. >> and he'll bring out the tax plan and he's a much better kid now than he was two months ago. do you really think that by next september that people will care what happened to february and march. remember, after bin ladenen was

kulled the approval ratings were exactly the same and not february. >> i do think they care, and one other things he was very problematic for the republicans is that the fact that turnout continues to go down. i think that's a very bad sign. >> dick armey, okay. turnout and social issues. >> let me make a point about the social issues, larry. >> yeah, please. >> well, but, the last round of discussions. we had the social issues was directly in response to this administration trying to impose on the catholic religion the federal mandate that they buy something through which they have a theological opposition, and the -- and that, in fact, is president obama once again alienating a large block of people on these issues. quite frankly, if the president wants to stay focused on economic issues you have to quit cramming federal mandates down people's throat.

>> i want to address what jared said about turnout. wen republicans have a much better feel for what the second obama term in terms of taxes, religious liberty, energy, spending. i'm pretty sure you're going to have a very motivated republican electorate come out. if i was here i would not counter a bunch of dispirited republicans staying home. >> i don't want to talk -- here ate thing. i know you disagree, but i'm just saying, say what you will, the gop will probably have in more unified tax cutting limited government, pro business and pro-market message and probably the most they've had in i don't know how long. >> here ate other thing, larry. let me go back to this point in terms of today's vote. the president has acknowledged that he got on the phone and he lobbied democrats against the blue collar pro-energy job-creating key-stone pipeline. when you look at the polls on

keysto keystone, 75% of the country is in favor of keystone. how do you get around that? that's a monumental mistake. >> let me speak to that, but first of all, let me tell you the way this is going to be teed up and the three of you know this is that the mitt romney agenda and i don't care if it's romney and gingrich and the agenda from an economic policy perspective is bringing us back to exactly the supply side trickle down problem that got us here in the first place. we can have a great argument as to whether it works in the first place. in keystone, the -- jimmy, hold on, buzz i'm going to agree with you. you're going to like this. look, the president has to get that off the table just like the senator said earlier, they'll just keep bringing it back. that oil is coming up out of the ground and it will be shipped somewhere and it might as well get piped through here and what he needs to do is accept the keystone pipeline and conditional on coming up with

the plan and transcanada doesn't have a plan. >> dick armey, the '80s and '90s were economic prosperity essentially built on free market supply side principles. not the '90s. >> genning rich -- the gingrich army, clinton, congress put that together. dick, i'll give you the last word because i've got to tell you, i am thinking that this is going to turn out so bullish because of the gop suite and the unified message. you get the last word. >> the first biggest, nobodyizing influence on the conservative republican independent voter in america, that big old swing voter in the middle is their fear of president obama having a second term, and what is even more frightening to them is that he would be able to do that with the majority of democrats in the house and the senate. in so far as they have any fear

of him even possibly being elected it will enhance the turnout at all levels on the race and we're going to win, and the republicans will win. >> ooh certainly not what the polls show. >> by the way, it was the army clinton years and dick armey, you wrote a lot of those policies. io get credit where credit is due. thanks. coming up on "kudlow," get this, oh, my gosh, the gallup poll sees unemployment jumping to 9.1% tomorrow. our own rick santelli joins us to talk about that right after the break.

>> big jobs report due out first thing tomorrow morning. if you thought today's unemployment rate was bad, gallop's top economist forecasts a disastrous 9.1% unemployment rate. that's right. that's off the gallup poll. let's talk. john lonski, and we welcome back my pal, cnbc's rick santelli. so, rick, you think the gallop crowd is right? wall street's optimistic about a

couple hundred thousand new jobs and maybe a steady unemployment rate. do you think the gallop guy's right we'll jump to 9.1? >> in an apples to apples comparison, keep in mind that they're talking about i non-seasonally adjusted rate and if you look back at the mid-month move which moved higher, and you factor in the seasonalities, you're talking about a half a percent lower if you adjust it. the same is true for the government, actually. if you took that 8.3 last month and looked at that time nonseasonally adjusted it would move to 8.8. i think the long and short of it is is i do think the mid-month trend of moving higher is accurate and it goes along with the employment indices and the survey, but for me, the issue is the total amount of employ and the shrinkage that we've seen in the counting of the unemployed. why is jobs important, larry? things like tax revenues and of course, consumption and it's the amount of people working that is the metric that we need to pay the most attention to.

>> go ahead, john lonski because look, jobs create jobs and incomes create growth. >> that's right. let's cut out all of the arcane analysis and the chicago school of economics, but what i want to point out here would be the fact that the unemployment rate's been dropping. we've had jobs growing than a faster than upon anied rate and the ism recent survey of chief financial officers. they all indicate growth in terms of employment opportunities and the latest rise in consumer confidence cob ror rates this trend. >> rick. >> mr. lonski, let me interrupt you, you're interpreting me half correctly. believe me, i don't want any degree from economics anywhere, but what i will tell you is we have a 31-year low on the seasonally adjusted labor force participation rate. last month it was 63.7. so what you're telling me is any

jobs good news? but the total amount of people that are considered working is not growing commensurate with the big drop in unemployment and it's more of a mirage. >> that's right. i'm not going to get into that, but if we just look at the labor market by analyzing the number of jobs employment and divided by the working age population. you can't drop out of the working age population unless you emigrate, unless you're institutionalized or unless you die and rick is right. the ratio of employment to the working age population has hardly risen from its recent low, and that tells us that the drop in the unemployment rate is overstating and any improvement. >> maybe for the right reasons. let me just try this paradoxical point. because you've had some better headline jobs numbers and the last two or three months and people are aware that that's the consumer confidence and another couple hundred thousand. is it possible that the jobs situation in terms of non-farm

payrolls and household small business employment might be better and in fact, more people will come back into the labor force, discouraged workers come back into the labor force. so even while jobs are being created more plentifully, the unemployment rate might go up. >> oh, i agree. what's bad news is good news. i can't wait to see how the administration deals from a media standpoint when we see an up tick in the labor force participation rate.unemployment may go up a bit, but we're actually gaining ground on shrinking the true amount of the humongous amount of unemployed that are out there that i get e-mails from. every first or this case second friday of the month. i've got one today, hey, listen, he said, i've fallen out of the system and they don't count me as unemployed. he was an editor in california and now he has nothing and these are the people we need to reach

and we don't even see them in the data. >> if they come back into the labor force and the jobs numbers may be stronger than we think and the unemployment may go up at the same time. it's always a paradox. gentlemen, i'm sorry. i'm short of time and thank you rick santelli, we appreciate it. >> up next, big surprise and obama care mishaps. will bureaucrats bankrupt this country with obama care? we'll be right back. ♪ our machines help identify early stages of cancer and it's something that we're extremely proud of.

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>> taxpayers beware. if somebody doesn't stop it, boom carry will bankrupt this country and tax it to death. that's my line. there's already dollar 111 billion cost overrun. believe me, there's a lot more coming after that. congress is fighting back and the second house committee agreed today to repeal the death panels. so the question is will obama care bankrupt this country and kill the economy or can it be stopped? here we have dean baker, co director of the center of economic and policy research and the vice president of policy at americans for prosperity. dean let me start with you. this $111 billion overrun that was discovered, i think, is a reestimate by cbo because they know more people will be thrown off because it is so darn expensive and they don't want to pay for the insurance and this is the first of many cost overruns. what's your take, dean? >> first off, let's put that in

context. $100 billion over ten years. i think it's about .02%. people aren't getting thrown off of employer-provided care. what you have is employers voting with their feet saying the obama plan is better than what we can give our workers. they're going sign up their employees for obama care. >> you can. you can. >>. [ indiscernible ] >> grandfather -- >> hang on! >> please. one at a time. phil, go ahead and then dean, i want you to react. go ahead and get your point out, please. >> you're exactly right. the cost of this reestimate was the basic economics here and with all of the new regulations and mandates and the rest of it continued to escalate costs for insurance and employers will

find it much cheaper thoon provide the new regulations and the system was designed that way. they want us in those government-running controlled exchanges. and you can't get any cost containment in this system and they're inflating demand and there aren't going to be more doctors and there aren't going to be more hospitals and prices keep going up and this will keep costing more than they told us it would. >> so, dean, my concern is when you look at the waivers, 1400 waivers given to corporations and unions, there is a reason everybody wanted those waivers and that is it's too darn expensive because they piled on this one size fits all health insurance and they give waivers to everybody, but the catholic church. now cbo is looking at what business is telling them and they realize they've underestimated the cost of these insurance exchanges and i'm saying to you, dean, even though it may only be a small percentage now, you wait and we'll have reports of constant cost overruns.

this thing will be astronomical, and it will be $2 trillion and not $1 trillion. >> larry, they're still assuming cbo, i don't know whether we're treating them as authority or not. a moment ago they were not in authority and they're still projecting that this will cost considerably less than private sector health care plans and a moment ago we were talking about republicans in congress and we're calling death panels and that's a cost control mechanism. do you guys want them to control costs or not? which do you want? they tried to control costs and that's the death panel and the loss is bound, and the government is not picking up the tab. >> we want a functioning marketplace where -- >> and we have that now. >> no, we don't. that's why we have reform so they can get away from this third-party payment disaster and you need a bure be onning tiesed system controlled by the democrats and the politicians and it's government run and there is no way to contain costs

other than rationing of care. that is the obama care model and turn to over to unelects, unaccountable bureaucrats and make them make the decisions. we have to put individuals in charge and let them control it. >> medicare has had much slower growth in cost than the private sector and that's been documented again and again. they forced the costs, and providers and doctors and hospitals can charge more. >> i think, dean, i think you'll disagree with me, and i think this ipad and independent payment advisory board. and it's used for work. i think it's the ultimate exercise in central planning and it allocates patient care and it will allocate drugs and allocate doctors and it will allocate hospitals and it will ration everything. that was the intent of this. these were unelected bureaucrats, dean and this is the key to understanding the central planning nature of obama care. >> larry, you've got a very interesting central plain.

in the soviet union you didn't have rationing that said here's what the government will pay for. in this case, anyone who wanted to -- you don't like it, go and pay for it yourself. you don't are want to get a doctor on your own, go ahead and do it. on the one hand you're out there and yelling it costs too much and here we have a plan to restrict kcosts. if you don't like it, buy it on your own. >> i don't think it will restrict costs. i think it will restrict care and it will restrict individual decisions and it will restrict doctors, it will restrict patients and that's my point, phil. i don't see this, and i have an independent payment advisory board. i don't see this cutting costs at all. i think it will rational and control prices and haven't we learned that price controls will lead to a bad ending? >> of course, it will cause all kinds of shortages and all kinds of problems and you have unelected and congress takes a two-thirds vote to override any

of the spike decisions and this is the debate about medicare and do we want to move into the paul ryan election to give control over their portion of the medicare doctors and do we want to turn to over to bureaucrats and let them make these decisions centrally? we can't afford everything for everyone forever. >> do we have the choice and control or do we want the bureaucrats to have it? >> the congressional budget office, we have the track record and it costs 15% more. if you looked at medicare equivalent policies and looked through the ryan plan it would have 34 trillion. >> the model is part d which is the entitlement in history which is under cost rejections. >> i've got to leave it there. >> the company stopped making new drugs. >> we'll leave it there, gentlemen. i'll just tell you this. i still believe obama care will bankrupt us, but we'll debate more and we'll have you both back and debate more as there's good news in the budget office.

>> phil, thank you very much. >> and i'll just say to put a cap on that. those two guys are great and it was a great panel and to me it was worse than the possible spending of obama care is what we didn't talk about and that is a huge tax burden on investors, businesses and consumers. it will be at least $500 billion, or $600 billion. that's it for tonight's show. there's no free market capitalism in obama care. 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. 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.

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