fabulous people who come out here every single night. everyone makes this show possible. i am thrilled and thank you. i always like to say there's a bull market somewhere, i promise to try to find it for you here on "mad money." i'm jim cramer and i'll see you tomorrow! what are you looking at tonight? >> well, jim cramer, happy seventh anniversary for starters. and as for us, rising bond rates, high dollar, and plunging gold, all bullish on the economy and the stock market. there are great signals. good evening, everyone, i'm larry kudlow, this is the "kudlow report." stocks fell to high ground today after the yesterday's huge rally. i think the big story, 20-point basis rise in long-term points, a much higher greenback, king dollar, and plunging gold over $50. i think it's all good signs for the economy and stock market and we're going to dive right into it. sizzle number two. the santorum threat against romney. well, last night's primary showed it. romney's got to make a much better case that romney care in

massachusetts isn't obama care. that's his challenge. and the story everybody's talking about, a goldman sachs executive quits in a very public way writing an op-ed in the "new york times," calling the firm and i quote toxic and destructive. but we ask, is the giant headed for failure? we begin tonight with the markets, the dow up 16, the close at 13, 194. the nasdaq up a point to 3,040, the s&p closing at 1394. now a little micro. rates rising, dollar strong, dollars up by .5% to 80, and gold is falling $51 all the way down to 1,642. ten-year bond rates closing at 2.72%. all right, rick santelli, my take is the economy's getting better, real interest rates are rising, that's boosting the

value of the dollar. and because people like the economy in the stock market they're getting out of gold. what are you thinking? >> well, that there's several areas that are contributing to the increase in rates. and part of that is that the economy has better numbers. but i view you -- i call you to view the chart of the dollar index. virtually we're unchanged on the year. even though it isn't a bad thing, a lot of the cross currents have disappeared temporarily. the bulk of the rise was we said last friday around 202. we're up a clean 25 basis points on the week, highest yield going back 4 1/2 months. so what i see is rates are normalizing in a very abnormal rate environment. is the fed -- isn't the fed going to continue twists? they have a shortage of short-term securities to sell. it's supposed to end in june. i really do think markets always rise before the fed and i think this market senses what you're talking about. burr hey, we're at a 171 yield at september 22nd. we need to get more normalized.

>> because the economy's kind of normalizing. i'm calling it 3%, whatever, 2.5%, 3%. real rates are going up. and higher real rates contribute to a strong dollar. and a strong dollar contributes to weaker gold. why do i have to have gold if the american economy's doing better? why wouldn't i invest in something more productive like stocks? i want to get out of gold and buy stocks, i think that's what's happening. >> no, see we have common ground there. >> oh. >> if the world is going to come to an end, i can understand financially gold is interesting. but if it really gets bad, i'd rather have a bag of beans than a kilo of gold. in the end, i think energy prices are now taking away some of that horsepower from precious metals, but maybe with the same notion. commodities are real, tangible, and they will, at least, suck up some of the quantitative easing and give you a real return. >> but the great bull market in stocks and i'm going to come here with my investors in a minute. the great bull market in stocks

in the '80s and '90s was associated with a collapse of the gold price. and that's not happening yet, but that's why i think every time gold goes down significantly like it is now, it's very bullish for stocks. >> you know, the only problem, larry, it means something economically with gold, i doubt that it does anymore. so i take that away. i strictly look at gold as the trade. if you believe in monetization is a bad thing, they like to go into gold. >> i've got to jump out. they're yelling in my ear. i would talk to you all night and into the morning. you're the best, rick santelli. >> thanks, larry kudlow. >> let's get some men with some skin in the game. we've got the ceo of head iris management. i want to pick up where i left off with my pal rick santelli because i'm going to argue that a strong dollar which is exxon for everybody, helping the stock

market, they're all signs of an improving economy. what's your take? remember, the great bull of the '80s and '90s. gosh i hate to be repetitive, but sometimes you have to be. the great bull of the '80s and '90s was associated with a collapsing gold price. >> yes, you want a strong country and one that's got credibility, starts with the currency. i think you're dead on with that. there's a lot of duration mismatch with what the market's doing today versus a longer term sustainable trend. if you take two steps back, 1983 to 1989, which was reagan and then 1993 to 1999 which is clinton. republican or democrat and still have the tv on listening to me on this. the dollar index traded higher than 90 on average. today it's at 80. so we're starting to get the wheels moving in the right direction. what we need is something that is establishing that credibility both at the fed and at the treasury so you can't be running, you know, record history, world history type deficits and you can't be

debauching over and over again. and if you look at the last 40 years of really economic progression in this country, the last two biggest periods of job adds in the country was 1983 to 1989, 1993 to 1999 and that was strong dollar all the way. >> that's a terrific point. i want to add one more thing to the mix. besides a better economy and we're not in an '80s or '90s economy. and real growth and interest rates are rising and the dollar is rising with it. you know what i think contributes to this. the stress test. i think the stress test if you believe it says the banking system is not armageddon, it's actually healthy or a lot healthier than it was several years ago. you don't have to own gold, which is a kind of end of world trade. you don't have to own treasury bonds, which season kind of an end of world risk-free trade. what do you make of that? because eventually those roads might lead back to stocks. >> i think that's exactly correct. and your point about the stress

test is important only in so much as jpmorgan not only passes the stress test but talks about raising the dividend. the strongest of the strong banks, they're coming back and returning capital to the investor. i think that's important. but i think more important is think about where we are now versus the last time we had a bank stress test. the reason we had it the last time was to get a game plan together to figure out how to keep some of these banks going underneath the waves. that's not the case right now. we're looking at banks that are thriving and multiples on the s&p 500 that look very attractive. we've had this grind up higher market and you'll see gold start pulling back and that's why the yield on the ten-year is going to go much higher than it has when we'll get those investors that have earned fixed income. i think this is the year we see that happen. >> keith, let me follow that train of thought. if the dollar keeps rising and if the economy continues to rise, can you still buy stocks

even though yields are rising? in other words, the bond rate could go -- for all i know -- the treasury could go to 3%, keith. maybe it goes to 3.5%. off the back of a stronger economy and better banking system. in that circumstance, would you buy stocks? people say bond rates are scaring off? is that true? or are they bullish for stocks? >> the long-term investors, all the people who pretend they're long-term investors are just pretending if they don't say what you just said. a sustain bli strong economy is going to be reflected in strong currency and strong bond. the only time it hasn't happened is the last ten years when you had weak bond yields perpetuated by fear-mongering fed. don't forget that stress test was based on a 13% unemployment rate and dow jones level 5,500. i think the country's had it with the guy, i think we're done with fear-mongering. people need confidence, the dollar will reflect confidence and confidence builds market multiples.

>> well said. thank you, gentlemen. appreciate it very much. now we go from bulls and bears to the elephant. last night mitt romney did fail to deliver the knockout punch. after mitt romney's victories in hawaii and american samoa and santorum's victories in alabama and mississippi, here's where the delegate count stands this evening. romney is leading. he's got 419 delegates. santorum, 184. and gingrich 136. so we calculate that romney needs 48% of the delegates to clinch the nomination. santorum on the other hand would need 63% and gingrich 66%. now, let me just give you a quick take for me on last night's results. rick santorum, his victories last night were very important, very significant. he pushed the reset button for his campaign. and i'm calling it a two-man race. romney, santorum. now, that gives the power of competition, and i'm saying competition may lead to the

further education of mitt romney. that's right. follow this. santorum is pounding romney on health care. and mr. romney must -- and i repeat must. he's got to have a better explanation why romney care in massachusetts is truly different from obama care nationwide. that's where santorum is pounding, and just as mitt romney tailors his education with a good tax cut, he's got to tailor it for a much better explanation on romney care versus obama care. it's a must in order to win over conservatives in illinois and the other primary states ahead. that's my take. so let's talk. we have republican strategist terry holt, former senior adviser from the bush/cheney 2000 and '04 campaign, and we welcome back bill hennesy. terry, let me ask you. i want to make this as simple as possible.

i think santorum had a good night last night and reset his campaign and it's a two-man race. feel free to disagree, but what's your thinking? >> no, i agree with that. i think last night was much more about rick santorum versus newt gingrich than it was about romney. we follow romney because he's the front-runner. but any time you're making a bet, you'd rather do the math before you really put your money down. if you do the math on this race, mitt romney's presidential campaign strategy is still very much in place to accumulate delegates toward the nomination. the other guys are all fighting for attention, santorum won that fight, he is the alternative to romney. romney's going to have to do very well in illinois. but i think the real loser last night, frankly, was newt gingrich, the former speaker. >> i couldn't agree more. he's going to have to drop out of the race at some point and suspend his campaign. bill, i want to ask you this, one of the great weaknesses of mr. romney at the moment is his

health care sputtering. and santorum is going right for it. as the tea party conservative, santorum is saying romney care in massachusetts, the precursor to obama care in washington and nationwide. and i want to ask you what you think about my concept that mitt has just got to have a much better message showing us, explaining to everybody why romney care is not obama care. >> well, i agree with you, larry. you know, one of the problems that mitt romney has with a lot of people, especially tea party types is that he comes across as a manager more than a leader. and we've run into this in our work lives and the real world. there's a difference between the two. and when mitt romney wrote the op-ed piece in the usa today urging barack obama to adopt romney care as the model for the nation. he was thinking like a manager. he's got to make the case that, look, i understand the difference between the two, and i am ready to be a leader. he hasn't made that case. he still tries to make the management case and it's not

selling. >> terry holt, what do you think of my theorem that you learn. all these guys get educated. that's what tough competition does. you've got to survive. now, mitt romney changed his tax plan, right? he's got pretty good tax reform plan, supply side 20% tax cut. then didn't have that until the primaries forced him into it. now, question, do you have confidence he'll develop a better romney care versus obama care message? because if he doesn't, i don't think this is a forgone conclusion, this election. >> if you think this presidential campaign is going to be a referendum on president obama and his policies, then you cannot take obama care out of the equation. it is the principal foundational policy of this administration. and the people that are going to be hurt by this haven't been affected yet. 2014, 2015, seniors are going to be denied choice, the irs is going to start getting involved and enforcing health care law. this is going to be a disaster and we need to keep the heat on

the democrats and president obama if we're going to take full advantage of the political opportunity. but i'll tell you what, you know, i've been impressed by mitt romney because in every circumstance where he's had to step up, where he's had to man up, in florida, in michigan, and maybe next week in illinois. >> on tax reform. on tax reform. >> education. >> that's right. he gets an education on this. >> i agree with that. and i think in this case with obama care, it will be crucial to get older voters to stay with the republican party. and in the 2010 election, we won older voters by 10 percentage points, it meant that the house of representatives changed from democrat to republican. we need those voters in this election if we're going to be successful. >> 10 to 12 seconds for you, buddy, can rick santorum get the nomination at this point? >> i think he can. he's going to need help from newt gingrich, this means newt's going to have to drop out, endorse him, he'll have to work

really hard and get a better game plan. >> thank you very much, gentlemen. i appreciate it. coming up this evening, the shocker at goldman sachs. the former vice president bit the hand that fed him today big time. he used the "new york times" as his teeth. that is next up. and, folks, please never forget free market capitalism is the best path to prosperity including health care reform. i'm kudlow. we'll be coming right back. [ artis brown ] 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

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the point is, ladies and gentlemen, that greed for lack of a better word is good. >> all right. that was "wall street's" 1980 icon gordon gekko. the greed wasn't good for one former goldman sachs exec blasting the financial giant with an op-ed in the "new york times." goldman shares falling more than 3% today may be a coincidence, maybe not. the fallout from this story is just getting started. our own mary thompson has all of it for us. >> the executive in question is a man named greg smith, a 12-year veteran and former executive at the firm. in the "times" op-ed page he not only blasted goldman, he resigned.

in the op-ed, he calls the bank's environment toxic and destructive. he lays the blame firmly at the feet of lloyd blankfein and gary coen writing when the history books are written about goldman sachs, they may reflect they lost hold of the firm's culture on their watch. in a memo to employees, blankfein expressing regret over his assertion writing his views do not reflect our culture. what's best for goldman's bottom line, sometimes at the expense of clients. clients referred to as muppets by five of his superiors. me writes while everyone's entitled to an opinion, it's unfortunate that an individual opinion about goldman sachs is amplified in a newspaper. he and his president gary cohn go on to tell employees we're far from perfect, but we've responded to problems seriously and substantively. washington is already taking

note, giving goldman's been harshly criticized over the past two years by lawmakers in the wake of the financial crisis. this afternoon, representative elijah cummings issuing a statement claiming the op-ed is a sign goldman hasn't learned the lessons from the financial breakdown. >> bethany maclaine, a contributing editor with vanity fair. but here's the point, before becoming a journalist, she was an investment banker at goldman sachs. bethany, it's great to see you. it's been way too long. >> hi, larry. >> you know the culture to some extent, you were there, are they toxic? are they destructive? do they hate their clients? is this greg smith right? >> well, first of all, you're giving me way, way too much credit. i was not an investment banker. so let's be clear about that. secondly, what greg smith is alleging is that the culture of the firm has changed. i saw one goldman sachs, the goldman sachs he talks about is a different goldman sachs. and whatever you may say about greg smith, his views are not

unique. this is what people have been saying privately for years, he just said it publicly. i heard it near goldman bankers and clients particularly at hedge funds for years. >> there's a history, public history, the mortgage package they put together, lousy paper, they sold it to clients, what they wound up paying $500 million fine from the s.e.c. and you know, the fact that blankfein had to issue that statement today, tell me that this greg smith drew blood. >> of course he did. this couldn't come at a worse time for goldman sachs not only on the heels of the questions of their practices during the mortgage boom that you mentioned, but right on the heels about criticism of the multiple conflict goals that goldman played in the recent kinder morgan el paso deal. it's opening a wound that doesn't even have a scab on it yet. >> bethany maclaine, just from your reporting or maybe your intuition, do you think that lloyd blankfein is on his way

out? and i want to add that greg smith fingered cohn. are those guys both on their way out? >> look, there's tons and tons of rumors on that. it's a tricky question because if lloyd were to leave and gary were to be next in line, they are part of the culture, the new culture at goldman sachs together. i think there's one thing here people don't focus on, which is that goldman's clients aren't fleeing the firm, at least not yet. if you look at the rankings for m & a, goldman's still number one. if it were true that goldman treated its clients so badly, those clients would be fleeing, right? ive heard a number of explanations as to why that might not be the case, but it's a ranking that's very worth keeping your eye on as we figure out how this affects goldman's fate. >> okay, so the clients are still there and goldman is still prospering, at least to a large extent. is it possible that greg smith had his own ax to grind? maybe he's way off base? maybe it's one guy's opinion?

>> well, you're hearing that already that he was a junior guy, a guy who was just a vice president there after 12 years, there was a little note in the "wall street journal" that he was the manager of himself. he didn't have any other employees. you always hear whistle blowers attack. i don't believe he's one guy because i've heard it from too many other people to dismiss it that easily. nonetheless, you do have to ask, how much does this matter to goldman's clients? and at the end of the day, if it doesn't matter that much to goldman's clients, it doesn't matter to goldman. >> is goldman just a foundering floundering giant? is that going to happen here? >> way too soon to call that one. somebody made an interesting comment to me, which is that investment banks if they don't go bankrupt, of course, that the culture change shows up over five or ten years. we may look back in five or ten years and say this was the beginning of the end. this mortgage mess, this greg smith op-ed, this was the beginning of the end, but you can't call it today. >> thank you ever so much for your insights. now, folks, meredith whitney is back on tv setting her sights on

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that's smarter power today. after yesterday's bullishness on wall street, investors pondering their next move today. dow up 16 points, s&p down slightly, nasdaq up a tad. and late today, another target showed up on citigroup's back. kelly evans has that this evening. good evening, kelly. hilarry, it's been a rough couple of days for citigroup. the news of the nation's third biggest bank failed the stress test. and today, noted bank analyst meredith whitney says she thinks most of the major banks are overvalued, except, that is for citi. she told maria bartiromo that citi has no earnings power and likened to an old victorian house you have to keep fixing up. in other words, a money pit. she's been bearish on citi for a

while now. and the stress test results are the latest black eye for the bank. take a listen. >> citi failing is not a huge deal. it's reflective of the fact that someone gave them really bad advice in terms of what to go to the fed with on this stress test. but i don't think, you know, it doesn't change the game. citi hasn't been investable in four years. >> what would it take for you to invest in citi? >> a new brain. >> a new brain. okay. that plus the headlines of the last couple of days helped push citi shares down about 3% although that's after a pretty strong run, up something like 40% this year. that tells you a lot about what where they ended this year. >> meredith whitney and her credibility. a lot of people are going to say she way, way overstated her bearishness a couple of years ago on banks and she was sort of yelling about these municipal governments collapsing and bankrupting america, didn't really happen. what's her credibility? >> it's dented her credibility

even more the bank call. look, she was right with regard to directionally what was happening with banks then. but now she's saying she's more positive on it. and as you said, maybe going back into her original comfort zone is going to be something that investors pay more attention to, but with regard to that muni call, she will be defending that one until the string of defaults and she'll be defending it to her grave. >> i'm not here to insult, i respect her, but everyone's going to ask about this because her credibility has suffered some. >> well, of course. she had a big platform, there's a lot of focus on this muni default question. and to her defense, look, a default is basically what we're talking about is a lot of municipalities that can't meet their obligations. this is happening in one form or another, it's just not -- there's not a wave of defaults in the headlines she was calling for. >> i'm satisfied. i just had to put it -- >> it's on everyone's mind. >> if i don't, a million people will tweet me about it. probably will anyway. thank you very much. now shares of major banks mixed today even after the new

stress test says most banks strong enough to survive another severe downturn. all right, we welcome back an old friend to the show, former fdic chairman bill isaac is now chairman of bancorp which passed the fed's stress test. great to see you again. just quickly, i got other stuff on bernanke. but just tell me as a former fdic chair. where the stress tests meaningful? and is the banking system in as good as shape as the results might suggest? >> i think the stress tests were meaningful. i hate the way they do them. i think it can be very harmful to the economy. when you run these scenarios that they basically gave them a depression-era scenario with about a 4% chance of probability and they're requiring the banks to capitalize for that. what they're missing here is when you require the banks to capitalize, it's going to be awfully hard to get this economy moving. the banks have two ways to come

into compliance on capital ratios. one is to raise capital which is very difficult and very expensive, the other is to slow their growth or shrink their balance sheets with a lot of banks are doing and doing it in europe. >> they have excess. most people think the banks have excess capital. in other words, the banking system is a lot safer than it was a couple of years back, though. that's what i'm asking. >> oh, absolutely, larry. and majorably better than a couple years ago. >> i'm calling on your experience. ben bernanke's speaking today to the community bankers association, independent community banker association. he said to them, don't fear dodd/frank, the regulatory bill. because it was aimed only at the biggest banks who should not be too big to fail. you community bankers don't fear any regulatory riches with dodd/frank. do you agree with what mr. bernanke said? >> absolutely not. i think that dodd/frank is a terrible piece of financial legislation that didn't address any of the causes of the crisis

that we just went through. it won't prevent the next crisis. volumes and volumes of regulations. the bigger banks can absorb it, the smaller banks can't. i would not be surprised to see half of the community banks in this country go out of business if we don't give some relief from dodd/frank for them. it's a terrible burden on them. >> what i hear all the time is the consumer financial protection agency, whatever it's called the elizabeth warren thing, which has no regulation, it gets us money from the fed. it's interfering already. with lending, paypal, car loan, things of that sort. is any of that stuff true? from your experience? >> absolutely, i think lending has tightened up as people said it would. and let me go back to the capital issue. the reason why banks have a lot of excess capital right now is they don't have anything to do with it. the loan growth has been non-existent for the past three years. they're accumulating capital on top of capital and they really

have tightened their lending standards because of all this regulation and they're not -- you know, it's hurting the people who need the money the most. it's hurting small business. and i think it's impeding economic growth. >> all right. we're going to leave it there. bill isaac, thank you for your candor. we appreciate it. when should newt drop out of the race? howard dean is here with unique insight after the break. and don't forget, folks, watch "squawk box" beginning at 6:00 a.m. i'll be guest hosting the show tomorrow. please join me in the morning. ttd#: 1-800-345-2550 ttd#: 1-800-345-2550 let's talk about the cookie-cutter retirement advice ttd#: 1-800-345-2550 you get at some places. ttd#: 1-800-345-2550 they say you have to do this, have that, invest here ttd#: 1-800-345-2550 ttd#: 1-800-345-2550 you know what? ttd#: 1-800-345-2550 you can't create a retirement plan based on ttd#: 1-800-345-2550 a predetermined script. ttd#: 1-800-345-2550 at charles schwab, we actually take the time to listen - ttd#: 1-800-345-2550 to understand you and your goals... ttd#: 1-800-345-2550 ...so together we can find real-life answers for your ttd#: 1-800-345-2550 real-life retirement. ttd#: 1-800-345-2550 talk to chuck

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welcome back to the "kudlow report," i'm larry kudlow. losing alabama and mississippi may have been newt gingrich's last stand. he's been called the comeback kid of the volatile gop primaries. but when should he bow out? the headline in the daily call today reads, it's time for newt to exit the race. matt lewis wrote the story. he's with us tonight. welcome back, matt. very outspoken column. what's the reason you think he should get out? >> well, because he can't win, and there could be unintended consequences of him staying in. the only reason for him to stay in at this point. if he can't win in alabama and

mississippi, he can't win. so now the only reason to stay in would be to have some sort of bargaining power at the convention. that's not inspirational. that's not the reason you run for president. >> you know, i watched him last night. he looked depressed, he looked low, and he was very sort of sarcastic and, you know, sort of going after mitt romney. is there a vendetta between newt and mitt romney? is that why he wants to stay in the race to keep taking shots at romney? >> he certainly doesn't like mitt romney, i don't blame him, romney had a scorched earth campaign against him in iowa. but having said that, the -- maybe it's the best way to get back at mitt romney would frankly be for newt gingrich to exit the stage right now. but look, he is a resilient character and newt gingrich has been successful in life and in politics by not quitting. so it's hard for him to realize that there does come a time to call it a day. >> matt, anybody echoing your sentiment that newt should pull out? >> i've seen a couple people out there. i've been surprised there hasn't been more calls for him to get out.

as you know, i've been, you know, a fan of newt gingrich. you know, i'm not a hater, you know. so i actually have a lot of respect for the man, but i do think that his time has come. >> matt lewis, we appreciate your outspokenness on that. now, at what point does the pressure mount so much that you just have to get out of the race? let's ask somebody who has been in that position who knows firsthand. our friend governor howard dean, former democratic presidential candidate, current cnbc contributor. governor dean, thank you. i need your insight on this. you were in and then you went out. as you watched the gingrich thing play out, does he have to have party elders? does he have to have more calmness like matt lewis? does he have to withdrawal and suspend his campaign? >> i think everybody's different. it's a deeply personal decision. once you revved everybody up, a lot of people follow you because they deeply believe in you, you've raised a ton of money and before the citizens united it usually came from lots of small

donors and in my case it certainly did. and you've got to make this decision to get out. it's hard to get out, but it's even harder to tell your supporters the game is over. because it's almost harder for the supporters to drop out than for you. this is a deeply personal decision. and i thought matt made a good point, quitting is not in newt gingrich's vocabulary. on the other hand, if he doesn't drop out, probably his worst nightmare, which is mitt romney getting the nomination is what's going to happen. because the only chance that santorum has is a one-on-one against mitt romney. so it's a deep -- it's a tough decision he has to make and very personal one. >> let's go there. let's go there. santorum one-on-one with romney. we referred to it briefly in the show. from your vantage point, you're a democrat and so forth. but what do you make of that? santorum versus romney? santorum's got new momentum. >> i think santorum probably ekes out a win against romney by the time they get to the convention if it's one-on-one. >> really? >> i'll tell you why.

romney's got the organization, he's outspent santorum 5 to 1, but we're still in the same old phase we've been in for eight to ten weeks now, 70% of the republican party does not want to nominate mitt romney. that's what he's getting is 30% of the vote. so you've got to conclude if there were only one conservative opposition person in opposition to mitt romney that they would win the necessary number of delegates left to win the whole thing. >> can santorum win some of these big states coming up? he trips up in michigan and ohio, blew leads that romney won. now he's got illinois coming up, his home state of pennsylvania coming up and down the road you've got california and new york. do you think santorum has the conservative pulling power to win in those primaries and defeat romney? >> well, he's come close and gingrich has been in the race. i think you've got to assume that probably two out of every three gingrich voters ends up in santorum's column. that would have been enough to put santorum over the top in michigan. that probably would have been enough to put santorum over the

top maybe in florida. so you know, again, it's one-on-one, and you know the base is very conservative, more conservative than romney. they're looking for an alternative to romney and santorum sounds like he's it. >> what does romney have to do, howard? he needs a better message on health care. now, i know you're a supporter of obama care. i'm saying from romney's standpoint in the republican primary, so far people are saying romney care's too much like obama care, santorum's killing him on that subject. does romney have to change his whole health care message? >> here's the problem, larry, nobody's going to believe him if he does. look, whatever you think of obama care or romney care, it's the law of the land, 98% of the people in massachusetts have it have health insurance as a result of it. and even if romney said, well, i made a terrible mistake and i promise to veto the whole thing, people don't believe him. that's his problem. romney's problem is not that he's moderate or he's, you know, doesn't say the right thing or

he can't touch people, his problem is people do not believe mitt romney in his heart and soul as a conservative. and the republican primary in this year of the tea party is a very tough position to be in. >> but it's a battle worth winning last 25 or 30 seconds here. i know the economy's getti inti better. gas prices are killing obama, he's on the wrong side of the keystone pipeline drilling. what do you make of that? >> hard to tell. we've only seen that one poll from washington/abc. he piled up a big lead among women because of the birth control controversy, a huge lead 6 to 1 among latinos. he may be slumping, but let's take a look at three or four more polls, not just one poll out of six or eight that show obama beating the republican whoever it is handily. >> let's leave it there. howard dean, thank you, howard, you're terrific. as always. next up on kudlow, a tense moment between president obama and british prime minister david cameron.

they were questioned about austerity. so my country 'tis of thee, why can't we have it here? and god save the queen. you'll see it all in a moment. next up on kudlow. [ male announcer ] if you believe the mayan calendar, on december 21st, polar shifts will reverse the earth's gravitational pull and hurtle us all into space, which would render retirement planning unnecessary. but say the sun rises on december 22nd and you still need to retire,

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austerity, a dirty word in europe, but maybe it's medicine we all need to swallow. i prefer growth myself. austerity was one of the many things on the agenda when president obama met with david cameron in washington today. and eamon javers live in d.c. good evening, eamon. >> it was a beautiful afternoon in the rose garden this afternoon as the two leaders stepped out to two joint podiums to take questions from the press, but they face a potentially awkward question about austerity. the reporter asking whether or not the british approach was, in fact, better for job creation than the american approach,

slightly less approach here in the united states from president obama. take a listen to how they answered it. >> i wonder whether you could explain why you believe your approach will create more jobs than president obama's approach? >> the united states and great britain are two different economies in two different positions. you know, their banking sector was much larger than ours. >> i very much agree with that. there are differences because we're not a reserve currency, so we're -- we have to take a different path. >> so, larry, both men at pain to acknowledge differences in their approach in the uk versus the united states, but both trying to really not make too much out of it. this was an event that called for some diplomacy not disagreement. and that's what we had at the white house today. and, of course, it is not all work and no play for these two gentlemen. tonight even as we speak, there's a state dinner going on over at the white house. and then just put out the guest list a few minutes ago. take a look at who is attending

this evening's dinner starting with sir richard branson, also warren buffett, george clooney, rory mcilroy and harvey weinstein. >> those two were bouncing around on that austerity issue. thank you very much. i've got a few other key headlines tonight. a group of activist investors from the afl/cio labor union trying to force warren buffett to say who he chose as his successor. did cut its outlook from negative to stable. that's the outlook. u.s. trade deficit reaches the biggest balance in three years now sits at $473 billion up 15% in the last three months of 2011 alone. hbo meanwhile has canceled the horse racing show "luck" after a third horse died on the set. reynolds american, the second largest american tobacco

company plans to lay off 10% of the workforce at the end of 2014. and scary moments in japan. the same area hit by last year's quake and tsunami was hit again last night with a series of earthquakes. luckily this time no major damage was reported. a new report says americans are installing solar energy systems at twice the rate of last year. the 20% drop in prices and oversupply of solar panels from china seemed to be fueling the surge. and after 244 years encycloped encyclopedia brittanica will no longer pretty. it will now be available online for a $70 year subscription. much improved pricing. next up on kudlow, an attack on states' rights. the naacp goes to geneva, switzerland, tells the u.n. that photo i.d. voter laws are human

rights abuses. forget syria, forget uganda, we're going to focus on texas? huh? what are they going to do? send dutch peace keeping troops to dallas? by the way, folks, don't forget, watch "squawk box" beginning at 6:00 a.m. i'll be guest hosting the show tomorrow. please join me. blp der. the "i'll sleep when it's done" academic. blap because your moment is now. let nothing stand in your way. learn more at keller.edu. tdd# 1-800-345-2550 there are atm fees. tdd# 1-800-345-2550 account service fees. tdd# 1-800-345-2550 and the most dreaded fees of all, hidden fees.

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in two of the three

primaries yesterday, voters were asked to show photo i.d.s at the polls. part of a growing election reform trend in 31 states to cut down on voter fraud. so far, eight states have passed the strictest laws, but mississippi, south carolina, texas, and wisconsin are waiting on final approval. seven other states ask for photo i.d.s but allow casting a ballot if a voter can provide other forms of identification. now, the naacp going to geneva to tell the u.n. that photo i.d. voter laws are human rights abuses. i don't really get that, but here now to tell us is texas attorney and president of the texas naacp gary bledsoe. i don't know why texas doesn't have the right as a state to see a photo i.d. you can't go anywhere in this country without a photo i.d. these days. and i sure don't understand what the united nations has to do with texas or any american election laws. >> well, larry, you know, it's not as simple as that.

i think it's very clear this law was designed to disenfranchise a large group of voters. that's what the question is. i know the supreme court has said that the state does have a right to have a voter identification law. the question is, what should that law look like? this particular law was drawn up in a way to clearly make it difficult for people to vote to enable people that are election officials to have power over individuals who have a right to vote but who can decide that for a reason are not allowed to vote. there's been not any kind of showing of voter fraud in this state or elsewhere. but the bottom line is that i think we all know what this is about. this is about politics, this is about trying to keep the number of votes -- >> i hear you. let me -- let me get in. in 2008, the supreme court

ratified, okayed in indiana voter i.d. law and a whole bunch of states have these things to prevent fraud, which is part of good citizenship. i don't understand why you believe in the state of texas, we don't want illegals voting, do we? we want legals to vote. and legals have nothing to hide, nothing to fear as long as they have an i.d. card with a picture or something else that will pass for it. i don't understand what's wrong with that. >> this law goes much further than indiana does. indiana's not a covered jurisdiction under the voting rights act. and they don't have the history we do. we still have many, many problems with election officials denying african-americans and latinos the right to vote. we have examples of intimidation at the polling sites when officials don't get involved and allow people to exercise their franchise who permit people to intimidate them. we have other circumstances where individuals have been denied the right to cast

provisional ballots. >> that's against the law. but the point i'm making is, i understand, sir. look, i was a civil rights guy many years ago, but those days are over. i mean, isn't it to some extent to help us prevent illegal immigrants from voting? and i want to come back to this u.n. thing. aren't you making your case worse? the u.n. has all of these crazy countries, syria and uganda and iran and libya. what's the u.n. have to do with texas voter registration? >> well, the united nations can look at matters into any country that is a member. so clearly that really is we're a part of the united states of america. and if there is a problem within the united states of america, where a certain component parts or locations where people are being denied their human rights how they're defined by the united nations. >> but the u.n. -- >> we have a right to go to them and to address this. >> i mean, this is a u.s. situation, it's a federal washington situation, it's a texas situation.

and i think it's an anti-fraud situation, mr. bledsoe. i'll give you the last word, sir. we've got about 20 seconds. >> well, we don't think there's a problem with fraud. we think very clearly the laws we have now is very effective. that there have been people prosecuted, very few. so it's really not a problem. we have to understand why we have this new law. >> thank you, sir. i appreciate your point of view. that's it for tonight's show. i'm larry kudlow. thanks for watching.