away. another tough day. all hope is not lost. some stocks are made for this kind of environment and i've got one coming up next in "the kudlow report." so stay tuned. all right. netflix saying everything wrong after the bell. texas instruments, more importantly, saying everything right. calling it trough and semis, we've been there before, but the stock is inexpensive. don't forget, they are a big supplier to apple, so maybe that is a forerunner. you know i don't want you to trade apple, but you probably can't resist. i want you to own and invest in apple. that's the way to make big money. there's always a bull market somewhere, and i promise to try to find it just for you here on "mad money." i'm jim kracramer. see you tomorrow! larry, what do you have for us? >> why is walmart getting beat up? they added jobs, stores, and shareholder value. who is the victim here. i'm larry kudlow and this is "the kudlow report." we begin tonight with the obama administration unable to contain the ballooning scandals that plague it.

white house press secretary jay carney say no white house personnel were involved in the secret service sex scandal. who conducted the investigation? the white house legal counsel, with apparently, refusing to give any details on it. and at the same time, the gsa scandal continues to fester unresol unresolved. secret service, gsa, solyndra, fast and furious. and breaking news, "the washington post" reports that walmart is now facing a justice department federal criminal investigation on charges that for years it bribed mexican officials to speed up permits to build its dominance in the country. but, look, they added the 2,200 stores, 200,000 jobs, and value to their shaerlds. who is the victim here? and stocks did drop 102 points on reports of europe, spain officially in recession, the dutch government falls, and france could see a socialist president. but we begin tonight with the scandals ballooning at the

white house and republicans are demanding presidential accountability. cnbc's hampton pearson joins us now with the details. good evening, hampton. >> good evening, larry. the scorecard of the secret service prostitution scandal now includes a 12th member of the military, an army soldier who was part of the advance team from the white house communications office, that agency went ahead of president obama's visit to colombia to the summit of americas. the president today withdrawing security clearances of all military personnel who have been implemented. at the same time, the white house ruled out any misconduct by white house staff members. that was the conclusion of an internal investigation led by the white house legal counsel's office. >> the white house counsel's office has conducted a review of the white house advance team and in concluding that review came to the conclusion that there was no indication that any member of

the white house advance team engaged in any improper or conduct or behavior. >> now the controversy moves to capitol hill on wednesday, but homeland security director janet napolitano testifies before a senate judiciary oversight hearing. now, over the weekend, senator joe lieberman was asked about reports that cocaine was found in the room of one of the secret service agents. >> there's a rule that a secret service agent cannot be using what is described as an intoxicate within six hours of when he or she goes on duty. i want to take a look at that. >> the secret service has taken action against 12 agents in what is very much an ongoing investigation. larry? >> all right, many thanks, hampton pearson. we call it a culture of corruption. so just where's the president's leadership and where's the white house accountability? let's bring in david corn, mother jones washington bureau

chief, and cnbc contributor, robert costa of the "national review." robert costa, i can't blame president obama directly for all that sex scandal with the secret service and so forth, but he is can accountable. and bob, i want to ask you. jay carney says we should accept the fact that no white house advance men or other staff were involved in any of these goings-on. if this were a republican white house, the media would be calling for a special prosecutor. carney couldn't even tell us who, why, when, where, and how. what's up with this? >> i'll call for one right now. that was a pretty tepid response from jay carney. this thing is just beginning if we're in the first inning, you have congress, ann grassley working together in the senate. this is a big story and it's only starting. why is it important for obama? he may not to blame for this, but it puts a face of the this on washington. >> david corn, you have the sense that president obama is missing in action when it comes to managing these problems and solving these problems. that's my biggest issue. >> you mean like when he's busy

managing wars and overseeing the economy -- >> you mean he's out there campaigning every single day. >> he's been managing wars, but he can't -- >> hey, do i get -- bob, do i get a chance to talk or not? i'll wait for you guys to stop interrupting me, okay? you say in the intro, larry, that this scandal is ballooning at the white house. it's not ballooning at the white house. there is no allegation credible, no report, of any white house involvement in the secret service scandal. so they did a, you know, a p prefungtry look. talk about whipping up something out of nothing. >> whipping up something out of nothing. according to the white house counsel, there's nothing -- >> but you have nothing. you're making stuff up bob. >> i'm not making stuff up. i'm asking questions as a journalist. >> maybe the department of labor, maybe the cia were involved in this too. we should have investigations of them, just as well. >> i think the american people

would be curious about an investigation. >> david, i didn't mean to interrupt you before. okay, i apologize. but i can say, with i cannot accept your view that obama's out there managing the war. yes, that is part of his job, but really, he is out there campaigning every single day. in no small part, by the way, on the taxpayer dime. that was my interruption and i wanted to make that point. because i think it's a fair on the. and i don't think that he has impressed people with his ceo leadership in problem solving. for example, just having the general counsel say there were no white house staffers involved has got to be insufficient. you, yourself, would acknowledge if george w. bush or a republican had this problem and there was potential and possibilities, you would want something much grander in terms of an investigation. >> will be, if members of congress -- this is where you have congressional oversight. if members of congress want to look into reasonable allegations, they are free to do that. but if nothing happened, there is nothing to investigate. what do you want -- i mean, how

do you prove something that isn't there? how do you prove a negative? they looked -- i mean, no one has suggested. the secret service is investigating, the pentagon is investigating, and there's not been a whiff of any white house aide involvement. so i don't understand what you want -- >> this is also a question of leadership, david. it's a question of leadership. of whether president obama can take expacommand of the situati and really ask for accountability from the secret service, rather than just having the white house council try to brush it away. >> wait a second, 12 people have been fired or let go or done something at the secret service. it sounds like there's accountability. tom coburn, i think a guest later, has said what he thinks the white house and the obama administration is doing is fine. you can ask him. but at this point, you're out there saying that he should be firing more secret service people? what are you -- >> no -- >> -- ask more questions. ask more questions. >> how do you know what questions he hasn't asked? listen, the secret service not only protects him, it protects his family.

i'm sure he's very, very concerned with it and isn't ignoring the matter. >> i've got to let it go. i think this is too important. not the secret service side. i think they're taking care of it. but regarding the possibilities of white house staff involved with intoxicates staying at the hotel in cartagena, i just think you've got to have something more than just jay carney delivering one line. i think you've got to have a deeper investigation to put this to rest. but we'll talk some more. we'll talk some more. david corn, thank you. bob costa, thank you. now, the white house apparently missing in action, at least on this civilian investigation. let's go to the congressional response and the senate, which has taken matters into its own hands by scheduling a vote tomorrow on a measure to crack down on over the top profligate spending. joining us now, distinguished republican senator from oklahoma, tom coburn, who, by the way is a member of the senate judiciary committee. author of the new book, "the debt bomb." glad to have you back. we didn't get to the gsa

scandal, and you've got a bill and some legislation that's going to be voted on tomorrow that might help to put gsa to rest? >> not just gsa, but in 2006, we released studies on conference spending by government that had grown about 200% over six years. we spend about $500 million a year on conferences and we with spend about $15 billion on travel. so this amendment, what we'll do is create transparency, make them publish it, put some limitations on conferences, and have some real oversight, which we tried to get six years ago and couldn't get. >> you know what i don't understand? look, the white house knew about the inspector general's report nearly a year ago, senator. but not until the videos were released did they come forward and did everybody come forward and heads started to roll. why is that? because this is another case where i am very critical of the lack of presidential accountability. they knew a while ago and never

acted on it. >> well, you know, i don't think there's any excuse for that. the president, to his credit, did -- put in his budget a 20% decrease in conference spending. but i'll tell you, with our budget situation where we are, every one of these agencies have video conferencing. our travel should be cut in half. the conferences should be down to a minimum until we get out of the financial hole we're in. and so it's leadership. and it's not just the executive branch. congress is to blame for this happening on gsa, because they're not going the oversight that they should have been doing on conferences, which i was trying to get them to do for the last five or six years. >> senator, will your bill end the spending on conferences? >> no, but it will make it -- first of all, it will make it transparent. it will reduce the amount that they're spending now. first of all, nobody knows how much they're spending. nobody knows. so, first of all, we'll find out and put limits on international conferences. and it will make each agency have to say why they're having a conference, how many of their people are going, and we limit

the number of people that can c go. so there are reasons for government employees to have conferences, but not tune of what we're spending now, $500 million a year. >> well, you say, video conferencing sounds like a great idea. sena senator, just briefly, can i switch gears? i'm sure you know about the walmart/mexican bribery flat. >> very concerning. >> you're on the judiciary committee. i believe you're on the crime committee that actually looks at the foreign covert bribery issues. what do you make of this thing, from what you know right now? >> i think walmart has some real big issues in front of them. the foreign corrupt practices act, it sounds like they didn't report, number one, which is a violation of that. sounds like they knew it was going on and didn't do anything on it. and it also sounds like the very people who were actually committing the acts that would fall urn the foreign corrupt practices acts are now in the main suite at walmart.

so this is going to be a big blow for them, especially if what is alleged in "the new york times" article has any basis of truth. >> but we don't actually know yet, precisely, what the facts are, and we'll figure that out. but let me just ask you. a lot of these countries, they don't play by the rules we play. they have middlemen to get things done. in russia, you have to pay for protection. in china, you have to pay for local districts' approval of things. is it possible we're asking too much of our companies and it's impossible for them to abide by this foreign corruption act? >> it's possible, larry, but every good international company that's based in this country has compliance plans on these issues. and so if, in fact, they had a compliance plan and they were overseeing the compliance plan and they still had somebody do something that was outside of the law, then the company itself can be protected and the individual would be culpable for it. and i don't know whether wall withmart had a compliance plan

and whether or not they were executing it and oversight. >> how does this work? >> first of all, what you're seeing on everything that's going on in washington today is reaction to things that are happening rather than thinking ahead and trying to prevent them. so it's for the political side of it. so they can think we're doing what we're supposed to be doing. but i'd put that in contrast that nobody's addressing the real problems facing our country today, which is our debt and our spending and our lack of reform of entitlement program. i don't know what will happen. we ought to give the s.e.c. and the rest of the federal agencies time to look at this and make some recommendations. >> thank you, sir. senator tom coburn of oklahoma, as always. coming up on kudlow, there's some late-breaking news tonight as the walmart scandal widens. now reports that the justice department is conducting a criminal probe tied to allegations of bribery in mexico. but we'll continue to ask, do we know if walmart has actually

done anything wrong other than grow a business? full details next, because i continue to take the view that free market capitalism is the best path to prosperity, because i'd like to get to the bottom of this, because i'm still not sure who the victims were. i'm kudlow. we'll be back more on the walmart problem. [ mujahid ] there was a little bit of trepidation, not quite knowing what the next phase was going to be, you know, because you been, you know, this is what you had been doing. you know, working, working, working, working, working, working. and now you're talking about, well you know, i won't be, and i get the chance to spend more time with my wife and my kids. it's my world. that's my world. ♪ in here, the landscaping business grows with snow. to keep big winter jobs on track, at&t provided a mobile solution that lets everyone

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all right. we've got some breaking news this evening. walmart facing a federal criminal investigation by the justice department on charges that for years it bribed mexican officials. all that according to the "washington post." let's get the very latest on this fast-moving scandal. cnbc's eamon javers joins us now with the details. >> that report according to the "washington post." and two democratic members of congress are asking tough new questions of walmart. and just today at a conference here in washington, of the world's leading experts on foreign corrupt practices or foreign bribery were here in town. the conference was sponsored by a group called trace international, which is one of the leading nonprofit groups advising american companies on how to stay out of trouble with foreign bribery. one of the experts there was a mexican attorney who told me

that he noticed something was going on with walmart early in 2004, when walmart was able to get special access to local zoning requirements and actually build a walmart store right near a pyramid. take a listen. >> it was very notorious that walmart chose a difficult site to put one of their stores. very close to the pyramids. and they got the permits at that time and the store got built. there was a lot of opposition from the community and artists and people from around there. >> larry, interestingly enough, this story obviously was all the buzz at this conference today, but one of the points that folks at the trace international event today made was that companies that are worried about foreign corrupt practices act exposure can do themselves a lot of service by having an aggressive compliance program in place. that way, if you as a company go to the department of justice after there's been an incident and say, look, we did everything we could to prevent this from happening in the first place,

the department of justice might look a little bit more favorably on your case as a result of that effort. larry? >> eamonn, thanks very much. now let's bring in our guests for some more on the story. we have former securities fraud prosecutor, tom curran. and we have alexandria ragi. alexandria, i know that "new york times" story reads real bad for walmart and it's a heck of a piece of investigative reporting. but what i want to ask you is this, given these middlemen, who's the victim? if there is a bribery crime, who is the victim? that's the part i don't get. >> well, and i understand that, but the issue here is about free trade. you mentioned that yourself. and free trade says the best product at the best price. it's not about buying government officials. if walmart bought government officials to shoulder out the competition, then walmart's sure not the victim. >> but tom curran, do we know that? we really don't know anything

yet, with it seems to me. we don't know whether walmart is guilty or not guilty. let's come back to the victim thing. if that's the tradition in mexico, that you have to have these middlemen to deal with -- you know, they can get your driver's license, they can get you a passport, and oh, by the way, they can get you a building permit, like in russia, where you have to have a little grease, a little consulting service for protection, why is this necessarily a crime? why are american companies held to that kind of standard that really can't be met? >> well, it's difficult. i mean, the american companies are being held to crimes, and these practices may be crimes, actually, in these individual companies -- countries, rather. but the american companies are being held to a standard that is is a crime here. to advance, a larger agenda. and senator clinton in the administration's resistance to secretary clinton and the administration's resistance has said that they're not going to lower any of the standards when all the chamber of congress has

asked for is guidance. and about some of these companies, you know, the united states government hasn't had very much luck in raising the local standards. i don't know why we're putting it on businesses and much less criminalizing the failure of business to raise the standards of entire countries. >> see, that's the thing. criminalizing the failure of business. and an awful lot of people on the left just hate walmart alexandra, you know that as well as i do. and i'm just trying to figure out, unfortunately, in the real world, other countries don't live up to our standards. but do we criminalize business, do we penalize our businesses because of that cultural fact? >> no, i really think this is the wrong angle on this, all together. lawlessness is not good for corporations. when a corporation wants to operate in a country and have their contracts enforced and their shoplifters apprehended and their debt collectible, they need the law on their side. and if they have been in country and violating those laws, that's going to work against them in the end. the u.s. has taken a leadership role in this area and there's

progress everywhere and backing away from that now is the wrong idea. >> i don't think that there's been any progress. this has been going on since 1977 and we see this over and over again. there's been an explosion of criminalizing american businesses since this administration took over. i don't see where it's advancing at all. i think we need to step back and say, you know what, maybe all of our businesses aren't criminal enterprises. maybe we should relax the rules. i'm not saying getting rid of foreign corrupt practices act at all. i am saying, if we are winding up criminalizing a lot of our countries, maybe there's something wrong with the law. >> i'm not saying it's easy, i'm just saying we do not want to back away from this. we could make life much easier for company ifs we relaxed labor laws and environmental laws. that's not the leadership role we want for -- >> that's different than criminalizing an american company for conduct that is common place in the host country. >> common place does not make it good. >> -- for the compliance. i mean, compliance is part of it. but if you go to the justice

department with a problem, it presumes a failure of the compliance policies that you're touting. so you're behind the eight ball. and don't even get me started on the conversation you're going to have to have with the s.e.c.. >> corruption is not some fabulous white collar crime that we can just brush away. buildings collapse, children die, terrorists move products from day to day -- >> but you're not comparing that to walmart in mexico, though. walmart's good in mexico. it's the largest private employer. >> once a government official is for sale, there's no end -- >> i've got to leave it, though. i just come back to this fact, with all due respect to alexandra, and i appreciate your point of view, these guys created 2,000 stores, a couple hundred thousand jobs, shareholder value, they're increasing the value of mexico. and i'm sure if walmart could reform mexico's political culture, they would. unfortunately, they can't. i don't know, we will visit this and revisit this. this is just the beginning of the cycle. alexandra wrage, tom curran,

thank you. next up on kudlow, facebook getting closer to putting its stocks on the market. and new documents out tonight have some surprising income and subscriber numbers. we're going to have them when we check the headlines right after the break. how can you just stand there? what do you mean? your grass, man. it's famished!

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their very first word was... [ to the tune of "lullaby and good night" ] ♪ af-lac ♪ aflac [ male announcer ] find out more at... [ duck ] aflac! [ male announcer ] ...forbusiness.com. [ yawning sound ] facebook has come out with some surprising numbers, just as it's about to go public. brian shactman joins us from the cnbc newsroom with that and all the other breaking headlines. good evening, brian. >> good evening, larry.

in its latest filing with the s.e.c. ahead of its ipo, facebook says first quarter profit fell 12%, but revenue was up 45% to just over $1 billion. how does that happen? expenses nearly doubled. the company also announced it bought the majority of a patent portfolio from microsoft for $500 million. netflix posts a first quarter loss, which was actually less than expected. the movie rental icon lost 8 cents a share, but shares tanking now, down 16% on after-hours trading. employees at american airlines protesting outside the the bankruptcy court where the airline made its case to cancel labor contracts. 13,000 jobs will be scrapped as it tries to reorganize. and there's a late-breaking report from the "wall street journal" that boeing is nearing a deal to sell over 100 planes to united continental. these planets would replace their aging 737 fleet. and finally tonight, cuban officials says they will move almost half of the state's

economic activity to the nonstate sector. it is the latest signal that the island nation is heading towards a mixed economy. larry, not quite a free market, but we're getting there. >> excellent progress. excellent progress. thank you for that, brian shactman. we appreciate it. coming up on "kudlow," europe scares the market. the dutch government falls. france could elect a socialist president. whoa! we're going to go live to paris to talk to socialist candidate francewa olanz senior economic adviser. it's interesting. i'm kudlow. we'll be right back. great shot. how did the nba become the hottest league on the planet? by building on the cisco intelligent network they're able to serve up live video, and instant replays, creating fans from berlin to beijing.

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welcome back to "the kudlow report." i'm larry kudlow. in this half hour, the dow closes down 102 points on all kinds of fears. i don't think the correction's going to end, though, until new jobs numbers start beating expectations and end this spring stall. you know what, hollande, olan, spain, i think all that stuff is an excuse to sell off. plus, obama's $8 billion slush fund preys on 3 million senior citizens by fooling them into voting for him before he takes their medicare advantage away. that's right. and then home depot founder bernie marcus says even brain-dead economists understand that when you raise taxes, you cost jobs. he says if president obama is re-elected, it is going to call

despair. that's bernie marcus' own words. but first up, the dow closed 102 points lower, the nasdaq down 12, the s&p down 30. two big fears, holland and hollande seemed to drive fears today. joining us with a map of the markets, we bring in phil orlando, chief exist strategist at federated investors and zack cara bell. phil, i know everyone was blaming europe and spain and holland and hollande today. i want to take a counter view. i think it was the lousy jobs report at the beginning of this month that started this correction, including the rise in jobless claims, including all the so-called spring data, and until those economic numbers get better, i think the correction coues. >> don't disagree with that, larry. >> oh, okay! >> we've certainly got the

weather-related or the easter-related issues with the jobs report to concern ourselves with. europe, i think, was a big deal. and then in asia with the slowing chinese growth is a concern as well. so i think you had sort of those three hickeys that were sort of combining in the market today. >> but zack, with i'm not going to give up. i know it's fashionable, spain and hollande and holland and all this other stuff, european pmi manufacturing. i don't believe any of it. in fact, the best part of the story is our profits continue to beat. but i still think that market investors don't like the slope of the economic news in the last month. >> yeah, i'm going to -- i am going to disagree with that one, larry. i don't have quite as pungent a metaphor as the hickey one, butly in fact say that you had this huge sell-off that began in the morning in europe, which was more dramatic than we've seen in months. the european markets are off 2 to 2.5%. that triggered a lot of future selling, that kind of set the market up. yes, there has been this sort of spring correction, you know, the

opposite of the spring fling, but as you said, profits have been stronger than expected and i think they're going to continue to be stronger than expected for a very, very long time. and i don't see in the economic data, other than, yes, a lack of unbelievably robust job creation, which has never been the case in the prior months, so i do think this is kind of a november redux. we're going to have these moments where financial markets globally get spooked by the civility of the european system. it triggers an unnecessary and an unwarranted sell-off in the u.s. and in some degree to asian equities you have to ride that out. >> okay, ride it out. phil, are you bull or a bear right now? i'm going to stick to my guns. you saw the market decouple today, right? it was down a couple hundred points, allegedly, in europe. it came back, it finished well off the lows. i kind of liked that action, but i don't think it goes any place until our economy shows that the spring stall is over. and we're not going to get any new information from the federal

reserve tomorrow. not going to happen. they're not going to change their view. >> nothing going on at the fed. we are absolutely on board with you in terms of the bullish outlook. we are looking at the third consecutive spring soft patch here in the united states. we had that 12% move to start the year. we felt that we'd have a 5% to 10% pullback in the market. we're about halfway through that. we still think that the market is going to be at 1450 or better by the end of the year, so we're using this weakness as an stunt. >> zack, would you buy in china right now? >> yeah, you know, look, you know my views on china. i will articulate them again, which is until there is evidence from the companies that are doing business there, here at caterpillar reporting, and that's followed by nike and it's followed by another dozen companies, then i think i'll start to go, okay, maybe there's something there in these concerns about the overall picture. this is not to say china is a story without blemishes anymore than the united states is an economic story without blemishes.

>> i think china looks good. actually, i think china's coming in great. i happen to think china's more important that europe. i think it's way more important that europe. i think the ecb bails out all the european stuff. holland's going to come back, they'll have a new government. we'll see who wins in france. i'm not sure there's a big difference, we've got the mist from france coming on in a moment. >> the market has to start believing what you just said. as long as the international financial system to some degree goes through europe, and it doesn't really go through china, because china's currency keeps that wall, with you know, you're going to have european panics that have more effect on equities and bonds than china strength. and that's just, i think, a reality that we're living in. the china strength is going to have much more effect on corporate earnings. >> i agree. i've got to get here. phil orlando, i'll give you the last word. what if jobs do poorly again in april, reported in, what, two weeks, and early may? >> they're going to. it's going to be a sub-200k number based upon the fact that the survey week last week had a very poor claims number. again, the distortion -- >> i know, the claims numbers

keep going up. i'm just worried that the correction is going to go on a little longer than i initially thought. >> the market will start to look through that. i think the jobs will come back in the may/june time frame, but march and april are certainly going to be below that 200k level. >> all right, gentleman, thank you. now, could france soon have a socialist president that might even raise tax rates to 75%? oh, my goodness. french president nicolas sarkozy will face socialist francois hollande in a runoff election next month. joining us now, live late tonight from paris, where it is 1:30 a.m., we have hollande economic adviser, phillip agion. first of all, phillip, i want to personally thank you for staying up to help us understand monsieur hollande, and i appreciate your participation and i want to ask you right at the top, do you want to go to a 75% marginal tax rate?

is that what's going to happen if your man wins? >> that was not truly my own advice. it's a 75% marginal tax rate for incomes above 1 million euros per year. it's not an average tax rate, it's a marginal tax rate for the very upper incomes that concerns 5,000, you know, individuals in france. i was not personally so much in favor of this, with it might even be temporary. so i think that was a kind of way to show, you know, i am on the left. it was important for hollande to gather voters from the left in the first round. and i think this measure was just a way to say, look, i am, i represent the left. >> that's an interesting point. let me ask you, philippe, following on that. okay, so he needed to attract

left socialist support in the first round. there's a lot of fears that a president hollande will break up the eu, with german, france fiscal pact. what can you tell us about that? will your man keep the fiscal pact in place? >> yeah. so, in fact, i think there is a lot of semantic. when holland mentioned renegotiating the treaty, he meant completing the treaty. so, in fact, there is a whole part which is on budgetary discipline, and holland will follow the budgetary discipline path. but he would like to compete it with the growth plan, to revive growth in europe. and various things that can be done, using structural forms to push for structural reforms like product and labor market liberalization. there are what we call project bones to push for new industrial projects, in green and energy or

in infrastructure. and also the idea of euro bills, which are short-term lure owe bonds to allure banks to be more independent from the sovereign states. so there are various things that can be put on the table and to discuss to have a growth plan in europe in the same time you commit yourself to budgetary discipline. in fact, variously, there are people asking for a growth plan. and even in germany, the spd is asking for a growth plan. i think that will become part of an overall deal. >> all right, we appreciate you staying up. thank you, appreciate it. coming up on kudlow, is there an $8 billion election trick? is there a slush fund designed by the obama administration that will fool millions of seniors into voting for it? this is a nasty story. details coming up next.

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well, if we don't find an audience, all we'll ever do is rehearse. maybe you should try every door direct mail. just select the zip codes where you want your message to be seen, print it yourself, or we'll help you find a local partner and you find the customers that matter most. brilliant. clifton, show us overjoyed. no, too much. jennessa. ah! a round of applause. [ applause ] [ male announcer ] go online to reach every home, every address, every time with every door direct mail. 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. my next guest is raising the red flag on an $8 billion slush fund designed by the obama administration to scare millions of seniors into voting for him. it's a nasty story.

the fund reportedly set up by the health and human services department. joining me now is a former hhs assistant secretary, benjamin sass, currently president of d midland university. let me get this right. obama is going to put medicare advantage, the private choice system, 12 million people, put that out of business. it could have started this year before the election, so they've come up with $8 billion to phony this up and buy votes? >> yeah. it's an incredibly disturbing, larry. we've got about a quarter of seniors in america ron a private insurance plan that they opt into as opposed to the traditional public plan. the president and the administration are opposed to these private insurance plans, and so one of the ways they came up with money to pay for obama care is by cutting these plans. but they decided they don't want the american people and grandma in more to know about it until after the election. >> because, if i understand this, you'd have to start

switching plans this year before the election, and obama doesn't want to do that on the eve of election, right? he want is no plan switching until next year. it's kind of a ruse. it's a bait and switch. >> right. so there's an open enrollment period every year where seniors can choose a different prescription drug plan or they can opt in or out of one of the private plans in medicare or the one government option. but that open enrollment picture this year in an election year happens to run from october 15th until december 31. because the government's reimbursement rate to these private plans for senior citizens would be cut dramatically in 2013, seniors would learn about it on october 15th, about three weeks before the election under current law. >> wow, okay. three weeks before the election. now, next question is, where's this $8 billion slush fund coming from? >> this is what's most disturbing about the talk we hear coming out of washington from democrats and republicans, when they're not serious about the entitlement problems we face. all of us remember from kind of

fifth grade civics lessons that we think that congress passes laws and the executive branch executes them. the congress decides how we spend our money. but discretionary spending, as you well know and talk about a lot on this program, is really a minor portion of the long-term deficit and debt problems of the country. entitlement spending is the real issue we have to deal with. under the entitlement laws, under the way medicare was written in 1965, the executive branch has a little bit of freedom to experiment. this is made to sort of take out of politics, experimentation about new medical procedures. so the executive branch can make someisions on its own about how to fund experiments. this isn't any kind of experiment. the administration is just pretending it is. >> yeah, it is. it's a political speerexperimen ben, that's what it is. it's a political experiment. you've laid it out beautifully. this is to con people into thinking that they're okay with their medicare advantage when, in fact, they are going to lose it next year. >> correct. i mean, honestly, it isn't too much to say, if the executive

branch can make these kind of spending decisions unilaterally that don't have any sort of expertise function, but it's just a political move, why do you need a congress at all? why couldn't the executive branch make every decision about funding based on this kind of logic, if they could use experiment funds for something this political. >> benjamin sasse, thank you so much for blowing the whistle on this whole scam. coming up next on kudlow, is president obama bad for jobs and business? well, home depot co-founder bernie marcus sounds off against former labor secretary robert reich. it's very important to understand how math and science kind of makes the world work. in high school, i had a physics teacher by the name of mr. davies.

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welcome back to "the kudlow report." re-electing president obama would create despair, not my words, not exactly. but those are my next guests, home depot founder bernie marcus. he also says the president has never met a payroll and does not understand the problems that businessmen face. by the way, a new rasmussen poll out today shows that 69% think the free enterprise system made america great. only 27% think that government investment made us great. so we bring back cnbc contributor robert reich. he's a former labor secretary.

author of the new ebook, "beyond outrage," and bernie marcus, cofounder of home depot. mr. marcus, great to see you. >> good to see you again. >> if obama wins, bernie, why despair? tell me why. >> well, you know, i think about the small businesspeople. look, i'm retired now, but you know that at home depot, we created, i don't know, millions of jobs over the years. i understand how the business community works. and i think that this administration is not friendly to business. i don't mean that they're not friendly. they just don't understand what makes business work. and i don't think they don't understand that throwing money at a situation doesn't solve a situation. the entrepreneurs who built the free enterprise system, who built the middle market in the united states, without government help, basically don't want government help. they want to be left alone, cut out the regulations, let them understand what the tax situation is going to be. let them understand what with

obama care is going to cost them, and let them go on and create jobs and hire the people that are unemployed. you know, we saw the statistic that 50% of college graduates with with mbas are unemployed or are working at jobs that they don't want. this is not a great economy. this president has not created jobs and you could spur it all you want, it just hasn't happened. >> thank you. robert reich, i'm going to reckon that you agree with everything that bernie marcus just said? >> well, i agree with some of it. it's not a great economy. but i don't know exactly what bernie marcus is complaining about. from a business perspective, this economy has turned way profits and earnings and share prices. i mean, if i were a -- you know, the head of a business, i'd be pretty happy with obama. the people who are unhappy, and i think have a right to be unhappy about the economy, are a lot of working people who have seen their wages go down, not because of obama, but because a lot of the ways in which big businesses have created more profits is by cutting payrolls.

and the obama administration can't do anything and shouldn't do anything about that. but the real challenge ahead, bernie marcus and also larry kudlow, the real challenge ahead is aggregate demand. there's just not enough of it. you've got europe, you've got china shrinking in terms of slowing down, and you also have at the same time american consumers dipping into their savings, going deeper into debt. i worry, frankly, about a slowdown before election day. >> bernie marcus, what good would it do to -- >> let me -- let me go back to the earnings thing. yeah, you know what happened in 2008 when the economy tanked, most companies pulled in. they learned how to live with less people, they became more efficient. they're or noting more efficiently. now, what's happened is that they have not invested in the future. i know that as a businessman, when you're making money, you're producing profits, you generally put it back into business, you grow, you acquire companies.

that's not happening. and what's happening today is the only growth is overseas. they're not doing it over here, and they have lots of money and they are producing great profits, but they are not hiring people and they will not hire people because of the instability of the economy that they're looking at. >> well, bernie marcus, let me ask you. i mean, every poll i've seen, every group of business leaders i've talked, and i've talked with quite a few, tell me that the real problem in the future in terms of business investment is a fear that there are not enough consumers out there. i ask people, is it government regulation you fear the most? no, they tell me they're worried a about the market and consumers not having enough money to turn around and buy the goods and services that they have. >> well, right now they're struggling with something that i think is going to continue. and that's the price of fuel. you know, that's driving a lot of the price increases, and there is a price increase. you know, we leave food and we

leave energy out of the equation for the market of the cost of the consumer. the truth of the matter is that every product you buy today, you go through a grocery store, larry, and pick up a box of corn flakes, buy a bottle of milk. if you go three years ago, the price is anywhere from 10 to 25 to 30 fact higher than it was three years ago. >> bernie marcus, let me ask you, do you blame the rising cost of living, particularly on energy, food, and fuel, do you blame that on president obama? >> no. hey, listen, things happen. i can't blame everything that happened on him. i mean, he inherited something in 2008, but, my god, he's been in the job for three years ago. he hasn't made a dent in it, and the policies that he's pursuing now don't look good for the future. i mean, somewhere along the line, you have to feel good about what's happening. look, today we learned about nlrb is coming out with new rules and regulations. the new rules are almost making

it simple for union to organize any business. so here you have the market, you have all these companies who are in the -- >> hang on a second. let me get a response from robert reich on that. crazy new nlrb rules, bob reich. just doesn't make any sense in this kind of an economy. >> i don't think they're crazy rules. i mean, we've had about 30 years after the second world war when unions got up to about roughly 34% of the total workforce and everybody grew. and everybody did well. and we grew on average faster than we've grown since. i mean, one of the problems is consumers don't have money in their pockets. they don't have money in their pockets because day don't have bargaining leverage. they don't have bargaining leverage partly because they don't have unions or anybody else sticking up for them. so why assume that unions are zero sum game and bad for business. that's not been the history of america. you know that. >> i just have 15 seconds, i'm sorry. >> 15 seconds, let me tell you.

bob reich, you're a great teacher of economics. the truth is, i've lived economics for the last 55 years and you're wrong in this area. sorry. >> i've got to leave it there. gentleman, thanks very much. that's it for tonight's show. as always, thanks for watching. we need more jobs and more investment and lower tax rates, thank you very much. we'll see you tomorrow night. mine was earned off vietnam in 1968. over the south pacific in 1943. i got mine in iraq, 2003. usaa auto insurance is often handed down from generation to generation. because it offers a superior level of protection, and because usaa's commitment to serve the military, veterans and their families is without equal. begin your legacy, get an auto insurance quote. usaa. we know what it means to serve. laces? really? slip-on's the way to go. more people do that, security would be like -- there's no charge for the bag.

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