i am a big gold bug. there's always a bull market somewhere. i'm jim cramer, see you tomorrow. hey, larry, what's happening on tonight's show? >> the new political equation, jimmy. prices rise at the gas tank. but obama ratings tank. good evening, everyone, i'm larry kudlow. this is "the kudlow report." sizzle number one, gas prices sink obama's ratings on the economy. it's a new washington post poll. a gallon of gas goes up to $3.80. and epa gasoline regulations, whatever that energy policy is, his numbers are falling until he changes it. now, sizzle number two is the real inflation rate actually close to 8%? on the eve of the feds meeting tomorrow, we debate whether the rate is 8.1, believe it or not. and with 24 hours to go until two major primaries in the south, is mitt romney about to pull off a big upset?

all right, but, first up, jus as fast as gas prices continue to rise, president obama's ratings continue to sink. cnbc correspondent joins us with all the details. good evening, john. >> reporter: good evening, larry. this washington post abc news poll has some findings. his overall job approval is down. his handling of the economy is down. this is caused the president, today, as he gave a series of interviews to local affiliate who touted his energy policy to defend what he's done so far and his lack of ability to control the situation. here's president obama. >> i think the american people understand that, you know, we don't have a silver bullet when it comes to gas prices. but they're hurting right now. it's like a tax on your paycheck every time you fill up. and so what i've instructed my

team to do, we're looking at every single thing we can do, ultimately, though, the single most important thing we can do is reduce our dependence on foreign oil. >> of course, none of that spares the president. the attacks that he's getting from republicans, mitt romney, newt gingrich who's promising $2.50 gas. it's a significant problem for the president after several months. >> i just want to briefly give you my take. the president is making a huge mistake blocking keystone. the country wants keystone. the president should give it to us. he will debate that and other propositions, we'll welcome brad woodhouse, his communication director at the democratic national committee and his counter part at the republican national committee, sean spicer. brad, let me begin with you. i know you disagree with me. i think symbolically, the president is totally on the wrong side of keystone.

business wants it, labor want it, motorists want it. i think this is a gigantic political mistake that is surfacing in the washington post poll. >> well, look, larry, i do disagree with you. but the republicans are the ones that spike keystone. i remember they axccelerated ths decision in the way the state department cannot possibly make the keystone decision that quickly. >> by the way, i did a search. i didn't see sean or mitt romney or rick santorum attacking president bush when gas prices were $4.12 in the spring of 2008. >> that was then, this is now. but shawn spicer, let me go to you for the reput dal. i want to put my keystone thing

back on the table. i'm going to deposit that the president has made a second mistake. even though i agree with brad, there's no miracle. marking of drill, drill, drill and the whole job creating new developments going on in north dakota and shale and so forth, the mocking of drill, drill, drill as well as the blocking of keystone is a major political problem for the president. shawn spicer, what's your response. >> well, i think you're right. you've got labor, you've got the governors, no matter who it is that you turn to, everybody but the president supports keystone. but it's beyond keystone, larry. you've got this president blocking on shore drilling, offshore drilling in the gulf. he's tacking adding on tons of regulations that are hampering the production of oil, on shore and offshore. he's going after coal, he's not implementing anything to help natural gas. in 2008, when he was running for election, 2008, he said we have to tackle this issue. we have to tackle the energy

issue so that we don't keep dealing with this year after year. and, instead, what he's done is taken us backwards, not forwards. so it's not just keystone. it's a whole host of things, larry, that are causing this. gas prices have gone up over a hundred percent since he's been in office. and that is the most visible thing that people have to deal with every day trying to drive to that job that they probably don't have that they're trying to figure out how to make ends meet. >> brad, i just want to say, i understand the disagreement here. i love the disagreement. but, look, you've got to come to grips with this. despite the fact that job creation is getting better, okay, two-thirds disapprove of the way the president is handling rising pump prices. 59% are now giving him a negative rating on the economy. brad, those are bad numbers. no matter what the precise causes are, what is your explanation and what can change to turn these numbers around? >> real quickly, larry, we're not running this campaign based on one poll.

when you're looking at the stock price, you don't put up one data point. you put up the data points over time. but let me say something. i'm too polite to sit here and say that sean is lying. but he's not telling the truth about the president's record. we've increased pux. it's higher than it was under bush. >> you haven't increased anything. those were the policies that were there before you. you can take as much credit for oil production as i can about the weather. >> go ahead, brad. >> if i could finish? >> and then sean will get a rebuttal. >> sean, you cannot have it both ways. you can't criticize the president on one hand for high gas prices and then say he doesn't get any credit for production. we're at a 16-year high in oil and gas production in this country. we're at an 8-year high in terms of production, a 16-year low in terms of imports. we have commissioned two nuclear plants, none were commissioned under the bush add minnesota strakes. you are not telling the truth. we're exploring the the arctic, we're exploring in the gulf. we've increased on shore and

offshore production and we've increased pipeline, keystone notwithstanding. >> if i'm lying, then you have to talk to every single oil producer out there saying that none of the leased lands -- no new leased lands have been open. you've closed production in this country. >> if you're going to accuse me of lying, let me answer -- >> hang on, brad. let sean react. >> what explains it then? >> i know you want to work. so i'm going to tell you what drives it. >> why are we at a 16-year low in terms of imports from overseas? why did we commission two nuclear power plants and none were commissioned under president bush? >> are you done? >> none were commissioned under president bush. >> the bottom line, since the '70s -- >> i just want to let shawn get his two cents in. >> the reality is offshore

drilling -- the governors of the gulf states are uneh kiev cable that this has stopped the moratorium. the least state in inland states have said that this administration is not allowing new lease land. and this president is taking credit -- >> it's not true. >> this president is taking -- has as much credit for what's going on in terms of production as i do about how the weather is outside. there is nothing -- >> you can't give i him blame for gas prices -- >> nothing. >> you can't give him blame for gas prices -- skbl i can. skbl and then not give him credit for increased production. >> thank you, brad. democratic national committee. sean spicer, gentlemen, thank you for coming on t"the kudlow report". i appreciate it. now, let's turn to what some, including myself, are calling a brand new energy model, all right. we have two leaders.

wilbur ross, w.l. ross and c.e.o. now at the harvard business school. wilbur, let me start with you. this is not my invention. but i'm pushing this. in fact, it's not the price of gasoline or the price of energy that matters. more than the revolution in fraking that's going on, which is exponentially increased our natural gas in our oil. second, more permits and more leases create more revenues to solve the federal budget. and, third, the combination of all of the above creates more jobs and better growth. and that, in turn, throws off rev newts. i'm not hung up on the polls as i am this new energy model. what's your thought? does it make sense? >> well, we're investors in shale gas. so i absolutely agree with you there. and i think what's sad is that there's all of this controversy over fraking that's unwarranted. there have been hundreds of

thousands of wells drilled. very, very few problems. and the few problems have generally come from little independent guy who is cut the corner. not from anybody who has made what's going to what's going to make the light go on when you open the refrigerator door? if you liked electric cars, like the president does, where do they think the electricity is going to come from? >> fossil fuels? is that true? why doesn't the president understand that? he's never made that connection. he wants to subsidize batteries. at some point, he's got to have fossil fuels behind it. >> sure, because electricity doesn't live in the wall. you just need to be liberated. you have to create it. . and you've got to create it by come busting something. >> bill joyce, let me go to you. back to this grand model.

comment on what are you want to comment. but it really isn't the price. i'm a free market guy. what i'm saying is the new model. more leases, more permits, more revenues to solve the budget cap. more leases and more permits and more natural gas and more fraking and more jobs and more growth throws revenues off to solve the budget problem. in other words, energy becomes a fix for our budget disaster, as well as our soft economy. that's where i'm going. i'm not hung up on the price. the price is going to be the price. >> well, larry, it can fix part of the budget problem. but i think you're right. we've had a major change in energy not because of energy policy. we don't have an energy policy in this country. everything is done individually and anecdotely. we desperately need an energy policy.

but technology and finding of natural gas and the hard-to-find natural gas. the oil sands up in canada, these are major breakthroughs. and they really tip the tide. i'm not going all the way to say we're going to be a hundred percent energy dependent and let things flow back and forth between the united states, canada and mexico, and it would go a long way to solving our problem. >> of which, bill, keystone, keystone has been the center. and to some extent, keystone has been a symbol of all that seems to be wrong with these high energy prices. in other words, i know keystone is not going to solve everything. but it's like a symbol. and my points of the two political spokes people, i didn't get very far as this. president obama doesn't seem to respect the fraking revolution. he doesn't seem to respect the permits and the drilling permits and the licenses as wilbur was suggesting. he just seems to always oppose it. is that an issue?

is it a disheartening thing? is it bad for morale? >> no one understands the keystone decision. and i've been on the phone regularly with the head of transcanada, building the pipeline. the last thing in the world is that oil dry up. it's amazing. there's about as much oil up there as there is in the arabian gulf. it's amazing. but we don't want that oil be shed -- that pipeline going to the west to the chinese. we want it to come to north america. that will give us much better control over our own energy resource. i do believe that this is a major breakthrough. the hard-to-find shale gas. it's going to change a lot, the mix between natural gas and coal. natural gas prices are low. >> let me get back to wilbur. just tell me what you, you're involved in this business. what do you want to see?

the billion dollars that got wasted would have been far better spent doing that because you have to get to a scale where they will be recharging centers around the country. and that requires a certain number of vehicles on the road. heavy trucks are a very, very big user of fuel. they probably use more fuel than do regular passenger cars. second thing would be to realize that natural gas, specifically shale, not only can solve budget problems, it can also solve the balance of payments. >> i neglected to say that. yes, i stand corrected. you are exactly right.

the balance of payments would be completely changed if we start producing this stuff here and we're thrown off all of these -- i think the budget issue itself is really underrated. we're talking about trillions of dollars over the next 20 years. >> and the gas price really does hurt people. my estimate is that a dollar a gallon, when you reverberate it through the system with plastics and trucks and everything, totally offsets the whole reduction in withholding tax that got put through. >> and that's what the polls are saying. people are very concerned about it. all right, gentlemen, i'm sorry we don't have anymore time. bill, george, great to see you. next up on kudlow, three years of a great bull market. now, question. is there enough profit power to carry this bull market through a fourth year? is there a buy and hold strategy? and don't forget, free market capitalism is the best bet to prosperity for energy as well as everything else. i'm kudlow. we'll be right back.

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marketis finished mixed on the day. we've had a historic three-year

market run. now, is there a fourth bull year on the horizon? joining me is jim mcdonald and todd harrison. gentlemen, welcome. let me go to you right off the top. is there a fourth year of this great bull market which, by the way, the first three years is one of the greatest bull markets in history. >> well, it is an election year. presumably, it serves the democrats best interest to keep going. but i think a little context is important here. entering the year. we were pretty constructive on the markets. we said they work to around s&p 1360. i'm watching the action in the commodities. it's a little dice psi. i'm taking a step back. it got a little short here for a trade and we'll see how it reacts with very tight risk parameters.

>> jim mcdonned, welcome. le me just ask you one small question. profits have been driving this thing. profits have doubled, stocks have doubled. i think pa profits are more important than the federal reserve and easy money and all the rest of that stuff. but is there enough profit power to get us through 2012? a fourth year of the bull market? all right, from march to march. is there enough profit power? >> we would only look at profits in the u.s. growing in the 5% range. but stocks are trading at about a 3 pe multiple discount to history. so as long as the accommodating central bank policy continues, we think stocks can work. >> what does that mean, 3 p multiple? the forward earnings multiple is what? it's about 13 times. it's not rich, but it's not cheap. >> we tend to look at trailing earnings and in about 14 times trailing and the historical median is about 17.

if you look at emerging market stocks, you're at about a 12 trailing multiple, relative to 14, historically. there's a cushion in evaluations today because investors are still concerned about how dependent we are. >> well, that -- that's actually a great point. i mean, i'll tell you, the point that he makes about the central bank storing a lot of money, they've thrown a lot of money at this market. i think we have to take a step back as well and talk a little bit about the difference between a stock market rally and an economic recovery. i'm seeing the up tick, anecdotely than where we were. if the central bank pulls back overseas and what they're doing in europe, then we have to look at what the market is going to do, you know, on the back of that. the market is always a forward-looking discounting mechanism. >> agreed. but the reality is the central banks are not going to pull back. the feds set its playbook in the last quarter and they've both implemented it. >> what about china, gentlemen? i want to ask two things. china and iran.

there's a lot of things we could add. china and iran. todd, you first. what do you think about that? in other words, can you buy this thing and hang onto it? talk to me about buy and hold and then you've got all of these external shocks out there. turns out the european shock didn't stop the bull market. what about china and iran? >> correct me if i'm wrong, until otherwise proven, they're in a bear market right now and there's a little bit of transparency. so that remains to be seen. i think you touched on a great point here in terms of iran and what's going on in the middle east. the unintended consequences of all of this accommodated medicine is the move in social mood and the deterioration of social mood. and that's coming in three different phases. >> do you like the cyclicals?

the risk on trade or the more defensiv defensive? in recent days, the defensive have actually out performed the cyclicals. real quick, jim, what do you like? >> we do want to have some exposure to risk assets. but we're doing it carefully like u.s. stocks at the expense of international developed and we really like high-yield bonds where you can get a return comparable. >> all right, thank you, gentlemen. appreciate it very much. jim mcdonald and todd harrison. the federal reserve unvails their doomsday stress scenario. managing the world with 13% unemployment and a 50, 50% drop in stocks. can any bank withstand that? standing by, noted bank analyst dick bove. he'll be right back and you're watching "the kudlow report." carfirmation.

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i think i'm goin-... shhh! we find that we don't need to sleep that much. there's an easier way to save. geico. fifteen minutes could save you fifteen percent or more. the the federal reserve released its doomsday scenario. we're going to speak with dick bove to weigh in on what it means. first up, let's get the details on the criteria. cnbc joins us now. good evening, eamon. >> the fed raised the curtain a little bit giving us a date and a time when the final results will be available. that's thursday at 4:30 p.m. east coast time. all results will be made public. the fed also releasing the scenario under which it's going

to be judging all of these banks. take a look at the adverse circumstances they're projecting here in this stress test. unemployment rate of 13%. equity prices dropping 50%. housing prices dropping 21% and they're also suggesting that other major economies would contract significantly in this scenario that they're going to be testing these banks obama. now the question for the banks is are they going to be happy with the level of disclosure that's provided for here in the stress test. there's a lot of information there required to give into the fed. the question is whether they're concerned about any of that information coming out of the other end of this stress test process, larry. >> all right, thanks very much. now that you've heard the doomsday scenario, let's get some reaction to it. joining me is distinguished, noted bank analyst dick bove. dick, as always, great to see you. let me just ask you, first of all, this stress test. is it credible? i mean, will we learn what we need to learn? are they going to tell us about individual boppings? what's your take on this?

>> well, it's definitely credible. i think that the stress -- you know, indicators which were just discussed will show you that the fed has set up a depression scenario for the banks and has said to the banks. show us how you're going to do in this depression scenario. so it's going to be credible. it should be somewhat of a feel-good exercise, also, in the sense that i think that every bank in the united states will pass the stress test and that most banks of the united states will increase their dividends. but inside the stress test, i think is a horror show. and the horror show is if you tell the banks that you've got to develop your capital plans based upon a depression outlook, what you're doing is you're forcing the banks to pull back from the private sector and putting money into the governments. and that is not good. >> dick ricke, let me just ask . depression scenario. does anybody believe banks can survive a depression scenario? seriously, these big banks have

not had a lot of confidence. the reality is a depression scenario would be just like late 2008, early 2009. that required government bail outs. i'm not sure i understand what's the point of a depression scenario. >> well, you're right. i think that there is no doubt about the fact that no bank can survive a depression scenario. and that what will happen -- in other words, a scenario that the fed has laid out for the banks requires them to show that they will lose money in the scenario that they've established. if they're going to show that the banks are going to lose money in that type of environment and that's what's going to be published by the fed on thursday. because, by the way, the banks get this information tomorrow. the public gets it on thursday. if the banks are going to be shown to lose money in this type of scenario, you know, who knows what the reaction is going to be? whether in fact the press is going to jump on it and say that the banks have not come out in trouble, where the people will pull money out of the banks. and it's all based upon a hypothetical set of assumptions

which the fed itself does not believe in. they're supposed to name names. >> they are? >> oh, yeah. >> so we're going to go right down the rating list. oh my gosh. >> according to the document that they published in november, 2011, they're required to show company by company specific indications as to how those individual companies are dealing with the scenario which they've established. >> well, dick, walk me through this. if they name a name and the name fails, then all held is going to break lose. >> well, that's to fear. if they, in fact, and that's what the big battle is between the banks and the fed at the moment. if the banks do not want this information revealed to the public, so the fed can either do it in a very broad, general fashion the way they did in the original stress test, which doesn't tell us a heck of a lot about individual banks. or they can do what they say in this november publication -- november press release they put out and give us very specific information. >> dick, last one. if they name names and everybody passes a depression scenario,

stress test, do you think it's at all credible? i mean, this is a catch 22. it's not yesterdayble. credible. it is simply impossible for banks to make money if we have 12-13% unemployment. forget about all the other things they're talking about. >> let us hope it's not that bad. dick bove, thank you. we want to visit some more on this when this comes out. we appreciate your guidance. we'll have extensive coverage of the bank stress test thursday night right here on "the kudlow report." i hope mr. bove and some others come onto help us out. i'm not sure i really understand this exercise. meanwhile, 24 hours to go until two major primaries in the south. alabama, mississippi. is there a big romney surprise waiting? americans are always ready to work hard for a better future.

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all right, all right, the gop presidential rates heads to the deep south. polls suggest could be a real toss up. mitt romney clings to a one point lead in the state's latest polling average.

in mississippi, gingrich holds a slim two point advantage, but they're both toss ups. still, mitt has been sounding pretty confident in mississippi. take a listen. >> we are very competitive in mississippi. we're doing real well in mississippi. and i believe that we're going to get a lot of delegates. and i think the governor is convinced we're going to win. >> these are critical states for gingrich and santorum. but the question is can romney step in with a big, southern surprise. here's vin webber. ed rogers, vgr group chairman. and from sacramento, california, santorum supporter, tim le fever. he's chairman of the resource institute. tim, let me start with you. you eve never been on the program. we appreciate you coming on very much. do you think mr. santorum can take one of these primaries? >> i think he can. obviously, in mississippi, you have a lot of help from a governor there that's very friendly to one of the other candidates. but i believe that santorum has a chance of doing well.

>> ed rogers, you agree with tim? >> you know, i would have thought so. a couple weeks ago, i would have thought santorum could win both of these states in a pretty good clip. i'm from alabama and i'm an alabama voter. and i voted an alabama primary absentee. i would have thought that santorum would have been much stronger than he has turned out to be. for whatever reason, he's finishing pretty week. i think his voters have known he's somewhat of a disappointment. and i think that was a mistake. >> vin webber, hang on. i know you want to jump in, but i want to get a reaction from tim. ed rogers had some tough stuff. santorum closing poorly. what's your take on that? >> well, he's just wrong on that. he hadn't abandoned the economic message. we do have a storyline going out of the media that says that all he wants to talk about is social issues. and that's just not true. chris matthews talks about contraception more in an hour than most people do in their lifetime?

>> what's a good old northern challenging down south? was it advertising money? did you have big buys? i know you're from romney, is there one particular kernel that mitt romney has put out there? >> all the stuff that you mentioned, larry, of course, matters. first of all, i'm not going to go on the kudlow program without pointing out that since we last talked, mitt romney has articulated a growth-oriented, tack-cutting program which is resonating with conservative voters across the country. i think that's helpful. second of all, we listen to rick santorum today lay out his scenario to become the nominee. he's not ashamed of saying. it means we fight all the way until the convention in august and we don't have a nominee until then. republicans are getting that that's a prescription for helping reelect president obama. >> it's a free country. come on. i mean, if you were rick santorum, you would say the same thing. ultimately, the financial realities are going to close in when they close in.

but you can't blame the guy for wanting to try hard. >> i don't blame him. in fact, i give him credit for being honest with republican voters. but what i'm saying is republican voters in alabama and mississippi and the rest of the country are going to understand that that's not how you beat obama. >> ed rogers -- >> yeah? >> i do want to say this. i think brother webber is onto something. now, i may be biassed. but, look, romney put out his 20% tax cut plan and kind of reset his entitlement reforms and his spending cuts. he comes from behind in michigan and wins. he comes from behind in ohio and wins. and, to some extent, he could come from behind in either or alabama or mississippi. is brother webber onto something? or, more importantly, is mitt romney onto an economic growth message? >> i think so. and i had been a larry kudlow cheer leader in calling for people to advocate a 5% national growth plan. that said, mitt romney, again, i'm from alabama, we've never

had a mormon perceived as the most moderate gop primary in alabama. now, we have never had anybody run, either. but that person starts off as a serious disadvantage. and if he's made it competitive. and if he staggers around here and wins, it will say something about his message. about what people think of his electability and the trajectory of his campaign. we'll have to give him a lot of credit. >> timme lefever, your man, santorum has really gone hog wild for saying things about romney care and individual mandates and suggesting at the national level that he said these things on "meet the press" and other places. but there's a story in the washington post today that says that's just not true. it's democratic national committee propaganda and it's three pinochio noses? does rick santorum deserve three pinochio noses for saying things that are not true? >> absolutely not.

we know that that issue is compared with obama care is a killer issue. we do not want to go up against barack obama with that. mitt romney knows that. he's been dancing around the issue for a long time. that's why he tends to go over to another message where he should get some pinochios. >> i've got to jump out, gentlemen. thank you very much. we will see you back tomorrow night. next up on kudlow, the taliban vows revenge after the incredible masks aqer. will it change the time line of our pulling out of afghan tan? expert colonel jack jacobs joins us next. [ male announcer ] if you believe the mayan calendar,

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in a new, faster-acting formula. zero-to-sixty in less time than a porsche panamera s. the 429 horsepower genesis r-spec. from hyundai. tonight, an unidentified u.s. staff sergeant remains in custody charged with ma sahh kehring women and children. also, this evening, his family has been moved for their own protection and the taliban has vowed revenge. joining us now to talk about the fall out is nbc military and analyst jack jacobs. jack, welcome back to the show. >> thank you, larry.

>> as a big military supporter, i look at this thing horrified like everybody else. how does this sort of thing happen? >> a huge failure in the chain of command to do its job. this staff sergeant worked for a sergeant first class who worked for a lieutenant who worked for a captain. they all lived together. there's no way -- you should never say never or always, but there's no way in my jutment that he couldn't have been ferreted out as somebody who had a problem. >> so somebody should have -- presumably they didn't know, but they should have known? >> they know by the way he acts. you can't live with somebody 24 hours a day and not be able to read body language, read his eyes. there's absolutely no excuse for it. you know, i'm reminded of the case of hasan, the army doctor who killed 12 people at ft. hood texas. his problem was actually committed to paper. they knew and didn't do anything about it, i think, when the investigation is finished, after they finished talking to his

comrades, his sergeant's comrades, checking his e-mails will discover they did know or should have known. >> are you suggesting that this staff sergeant had psychological problems? and they should have known about that? >> well, sure. i mean, there's no excuse for it. and to say that he had psychological problems may be a reason why he acted like he did. but it's absolutely no excuse. >> i'm not defending or prosecuting you. i'm just trying to understand it. he served, what? three tours in iraq? >> yes. >> presumably he served honorably? >> one would think so. >> how would we know this is about to happen, therefore, in afghanist afghanistan? >> my guess is irresponsible bev yore was demonstrated before and overlooked. i've known people who were over there for 11 tours and didn't act this way. and there are people who had extremely bad behavior, who had no tours overseas. >> there's no chance that this sergeant thought somehow that there were taliban in these

homes that he attacked? >> it's possible. he may, in fact, plead that he thought that there were taliban out there and he's trying to save everybody from being attacked. but the facts are not that. i mean, even at this early stage, i guarantee you that the facts are not -- >> just let me ask, how can we be sure there were no taliban there? >> i'll give you a good example. here's a guy in the middle of the night, walks around in the middle of afghanistan in the rural area by himself and nobody attacked him. >> right. and doesn't ask for help. he wouldn't just go on a mission by himself. >> and he can't go on a mission by himself. there's some evidence to indicate he was on guard duty. but even then, he's supposed to be supervised. i think we're going to discover that lots of people knew or should have known and could have prevented this. >> how does this affect the war? are we going to leave afghanistan sooner? is that what's going to happen both because there's demand for it in the u.s.? as well as in afghanistan? >> i think we are. as a matter of fact, i think it's interesting that two republican candidates came out

today, gingrich and santorum, saying hey, look, enough is enough. we ought to leave. and i guarantee you that there are plans on the books already that have been approved by the secretary of defense and the chairman of the joint chiefs of staff to have a more rapid withdraw. and it's probably going to happen just after the eh lekts. >> not until 2014, as the schedule is. >> i think there are plans on the books that start moving out rapidly in 2013. >> all right. colonel jack jacobs. thank you, sir, we appreciate it. >> yes, sir. >> all right, there are other stories making news right now. two states have their voter id laws knocked down, one by a judge, one by the feds. kmtv joins us with details on that and the other headlines come untying the cnbc news room. good evening, scott. >> well, good evening, larry. first, a wisconsin judge showing government-issued photo id is unconstitutional.

and in texas, used its power to block their voter id law saying it may disproportionately harm hispanics. u.s. airways confirms it has multiple domain names suggesting a merger. they say they're protecting itself from cyber squatters. sources confirm to cnbc that in turks l is making the rounds, talking about licensing their content for distribution over the internet. talks are still preliminary. yahoo is suing facebook over 10 patents that include methods and systems for advertising on the web. bayer plans on suing napko for patent infringement after the indian government licensed it to make the drug. napco plans to sell its version for $175 a mobt. month. b bayer's price is $56 a month. a panel ruled that boeing received unfair handouts from the federal government amounting to 5$5.3 billion.

but u.s. trade representative calls it a victory because european countries were shown to have handed out three times as much to air bus. evergreen solar touted by president obama says it cannot find a buyer for its massachusetts plant. and so it will walk away from it. the state gave the company $58 million in grants and tax incentives before it went under last year, putting 800 people out of work. and, finally rickets tonight, apparently, some criminals are making a clean sweep of tide laundry detergent. police coast to coast say it is a hot seller on the black market at $5 to $10 a bottle, half of what it costs you in stores. larry, you can call this one a grime wave. >> scott, thanks very much. up next, the fed holds its policy meeting tomorrow. and the central bank thinks inflation is transitory. but next up, you're going to meet somebody who disagrees. he says the fed is wrong. high inflation already here as

much as 8%. might he be right? we will debate next on kudlow. america is facing some tough challenges right now. two of the most important are energy security and economic growth. north america actually has one of the largest oil reserves in the world. a large part of that is oil sands. this resource has the ability to create hundreds of thousands of jobs. at our kearl project in canada, we'll be able to produce these oil sands with the same emissions as many other oils and that's a huge breakthrough. that's good for our country's energy security and our economy.

so the fed meets tomorrow. so the fed meets tomorrow. one of our next guests says the fed is wrong. high inflation already here. as much as 8.1%. so might he be right? steven cunningham of the american institute for economic research and our pal, brian

westbury. steven, with a cheap dollar and bodeles of money creation at a very high price, i want to believe that inflation is stronger than the fed is telling us. but 8%, that one is a little bit incredulous. what's your take? why is it 8%? glit sounds a bit extreme. we had a lot of people who said exactly what you just said. it doesn't seem right. the inflation i seem to experience every day in the economy when i go to the gas pump, when i go to the grocery store, it seems to be quite a bit more than what the bureau of labor and statistics is telling us. we decided to see if we could validate that experience. we built an everyday price index which is made up of goods and service that is you buy day-to hi day, frequently. and we found that those prices, indeed, do go up. last year, they went up on average, a little over 8%. >> steven --

>> which is about two and a halftimes the average inflation for cpi. >> i was just going to say, let's just say inflation was 8%. i don't agree with that, but let's just say it is. last year, gdp went up about 4.2%. so what you're saying is, then, real gdp, after you adjust for inflation, it was minus 4%. so that doesn't seem to square with the other data because we're creating jobs, durable goods are up, tomorrow we're going to get a really good retail sales number. i mean, how -- you're basically saying that the economy is in one of the worst recessions its ever been in on a real basis. and i don't see that in the other data. >> you know, actually, actually, actually, i agree with you. our index is not a broad base measure of consumer inflation. in fact, if i was going to deflate the gdp numbers, i would do it with a gdp inflater. this index is to try to capture everyday experience.

it does not include a lot of durable goods purchases. it doesn't include a lot of things like refrigerators and automobiles and things that people do buy, but they don't buy them every day. so they get sticker shock when they go to the store and they find out that groceries are a lot more expensive or gasoline is a lot more than expected. >> brian, let me look at this for one second. all right, the everyday price index, interesting concept. groceries, medical care, table tv and telephone. but look it, you know, year-to-year change in energy, 6%. year-to-year change in food, 4.5%. year-to-year change in gasoline, almost 10%. and you know, i don't have to defend 8% every day, but cheap money, excess money created, very high gold price. i mean, steve cunningham could be very futuristic, brian. that's all i'm saying.

>> hey, i'm not saying inflation won't be a bigger problem than the fed thinks in the years ahead. i go back to the 1970s. that said, kept telling us inflation wasn't a problem. it was all transitory back then and it turned out that we had 12, 13% inflation. we could get there. i just don't think we're anywhere near that today. and the fed can still stop us from getting to that point. and so i guess this is great. what i worry about, steve, is that people take that number, 8%, and there's all of these inflationistas out there and people are convinced that we're going to have a collapse of dollar and hyperinflation and they run with that number. that's what bothers me. it's not a real way to measure inflation. >> steve cunningham, brian may be talking about me. he may be talking about me. i mean, i want the dollar to be 20% higher. i want gold to be 20% lower. steve cunningham, last 25 seconds, i'll give you the last word. is inflation going up? that's the key point.

>> we do believe inflation is going up. we think that money creation has been substantial. we have $1.5 trillion in excess reserves sitting in the banks. that's the risk. >> steve cunningham, thank you very much. brian wesburry, thanks for watching, everybody. yeah, i'd like to see a stronger king dollar. choose control. introducing gold choice. the freedom you can only get from hertz to keep the car you reserved or simply choose another. and it's free. ya know, for whoever you are that day. it's just another way you'll be traveling at the speed of hertz.

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