reelected. but obama's ad suggested romney wouldn't have made the call to kale bin laden. that's a disgusting cheap shot slur on romney's judgment. you will see the ad in question. we're "the kudlow report" and moments away. it is a tough call when a stock is flying high in a given session. you don't want to chase but don't want to miss the boat. i drill down on three of them, let you know which ones are buys on "the kudlow report." stick around, it is coming up after this! i like to say there's a market summary, i promise to find it on "mad money." jim cramer. see you monday. larry, what do you have for us? profits matter more than gdp. it is another big week for stocks. this is "the kudlow report." moments ago, president obama ended another campaign event, labeled as a campaign event. for republicans to attack obama for doing what presidents do in re-election years is silliness.

campaigning is what they do. why is this a shocker? it is a complete distraction for the gop. it puts them off message. the issue should be the stall speed economy, tax cuts, obama care, free enterprise. of course, obama is campaigning. in fact, george bush campaigned more. the whole thing is a red herring and the gop is being goofy. and if you want proof of the stalled economy that republicans should be talking about, gdp came in worse than expected. 2.2%. 3% last quarter. this only solidifies it's the worst recovery since world war ii. stocks had a good week because profits matter more than gdp. dow ended up. nasdaq up 2% for the week. was fine. s&p 500 above 1400 the first time since april 3rd. later, team obama out, questions whether mitt romney has the chops to kill osama bin laden.

it is a romney slur, impugning his patriotism. question is whether team obama spent millions in carpet bombing romney on that and other ads like it. my guest, former mississippi governor, haley barbour weighs in on the carpet bombing. first, president obama on the campaign trail, officially this time. he is just doing what presidents do. cnbc's john harwood has the details. good evening, john. i am shocked, shocked he is campaigning. >> larry, you're right, he is doing what presidents do. but we really got a revealing look this week of what the rest of 2012 is going to be like, where the line between campaigning and governance is blurred. president obama was out touring the country, going to college campuses, pushing for a cut in student loan rates, which are scheduled to go up with no action by congress. language was nonpartisan, but it was clear from this rally in colorado he was talking about

republicans. >> i want everybody to understand this. interest rates on those loans will double overnight. starting on july 1st, if congress does not act. and for each year that congress does not act, the average student with these loans is going to rack up an additional thousand dollars in debt. >> but congress did act, prompted by mitt romney, saying he wanted student loan rates low. congress acted today on a near party line vote to pass their version of a student rate cut, and house speaker john boehner attacked the president. said the president's tour across the country was politics, not governance. >> this week the president traveled across the country on taxpayers' dime at a cost of $179,000 an hour, insisting congress fix a problem that we were already working on. frankly, i think this is beneath

the dignity of the white house. >> larry, that exchange also showed the nature of political disagreement and where the parties will move to the center this summer. both decided they wanted to support the cut in student loan rates, but differed how to pay for it. democrats said take it from oil and gas companies. republicans said take it from obama care. this is going to be negotiated out. it will be settled eventually. it is a preview of what we'll see the next several months until election day, larry. >> no question. why do you think speaker boehner emerged as mitt romney's biggest capitol hill defender? boehner didn't endorse him until recently. why do you think boehner is out there almost on a daily basis trashing obama and supporting romney? >> i think john boehner is 100% in synch, in tune with mitt romney. i think that's who the speaker privately wanted to be the nominee. now he has that nominee. he wasn't as a leader of the party going to take a position until it was settled. but now that it is, he believes

he has the guy on the ticket who will be most beneficial to the house republicans running. will do anything he can to help him. >> great stuff. john harwood from the white house this evening. we appreciate it. joining me to weigh in on this, former republican national committee chairman, michael steele. welcome back. >> good to see you, man. >> to me, this whole thing is a red herring. of course, obama is campaigning. of course he mixes politics with government. i don't know why the republicans are hung up on that, and they're not talking about the stalled economy, they're not talking about tax hikes, they're not talking about obama care, they're not talking about all of the key issues. the country knows presidents campaign. bush did it more than obama! >> yeah. i think you're dead on right. >> what's this about? >> this is a red herring, this is the politics of it. this election more than any other is about your message. it is about how you galvanize people around core ideas and a principled view of the future, the vision you have for growing

the economy, creating the jobs so the students that are graduating in just a month from now will have something they can walk into in terms of unemployment. so it is a goofy argument to make. the president is doing what presidents in the past have always done. they govern, campaign, campaign, govern. they blur the lines. that's what the white house affords you to do. it is the role of the opposition to call it out or call it foul. it is at this time, a more honed message is the thing. >> i happen to think you're right. glad you're on the same page, you're a former republican national committee chairman. i am just a little cnbc host. >> i didn't conform to the rules so nicely. >> 2010 was a great year. i want to ask you another thing. this bothers me a lot. the idea that mitt romney won't pull the plug on bin laden. that's disgusting, michael steele, utterly disgusting, over

the line. again, i guess john mccain said something about it today, jennifer reuben tells me, but where's the romney response? has he responded to this disgusting ad? >> not that i know of. it caused a stir. it is offensive. it draws uncharacteristic ideas about mitt romney and his patriotism into question, and i think it does cross that line. look, i get the idea you want to paint the picture as this noble warrior that made the hard decision no one else would make. that's the politics. i get it. but mitt romney has in his own right the stature to speak on this, and he will and he has. and i think trying to draw some of the conclusions as this ad tries to do is just across the line. and i'm sure the campaign will respond in kind at some point. >> romney had a great speech tuesday night. >> he did. >> but i haven't heard from him

since then. "the wall street journal," my buddies on the editorial board said romney has to show people how to grow the economy, got the 2.2 gdp lousy number. where is romney now. obama with the college kids is out doing what he should be doing, filing cheap shots. where is the quick response from romney? >> the reset is as a result of santorum stepping out, gingrich stepping out tuesday. still have ron paul in the rafters, that's not a relevant part of what the campaign will be doing the next few weeks. i think they'll be rolling out into the month of may a series of themes that touch on the economy, core themes you talk about on this show every day, to drive home the point that that's really where people are concerned, and what they're most interested in knowing how you're going to handle. i see that coming to bear the next few weeks. >> all right. hope they start sooner rather than later. michael steele. appreciate it. >> you got it, friend.

bring in our panel, keith boykin, jennifer reuben, author of "the washington post" right turn blog, and talk show host and my buddy from radio. jennifer, i don't know if you agree with me. i don't think the issue is obama campaigning in front of college kids. the issue is what he's saying and why mitt romney disagrees with on the economy or foreign policy. what's up with this boehner, oh, my god, campaigning, i'm shocked, shocked they're out there campaigning. >> two things. >> spending gasoline from airplanes. who cares. >> two things. first of all, mitt romney and his cam paper can walk and chew gum at the same time. they can have boehner throwing spit balls. romney gave a great free market uplifting speech tuesday, has been campaigning and will continue to around the country. the real issue with obama his presidency has been one big campaign.

the guy hasn't governed. we have these enormous problems, 2.2% growth, first quarter, still 8%, runs around doing campaign like events. i don't begrudge him that, but he is not governing. >> i don't want him governing. >> he's governed too much and look what we got. >> that's romney's point. >> your guy is smart. a smart guy. for example, you have kim strossel writing about the enemy list, romney donors, saying they're bad, haven't done anything. that's a distraction. gone to north carolina university. that's a distraction. student loans. how easy is that. you guys are smart. send the ants in different directions, the republicans chase it and don't get the message out. i give awe freebie. >> this is a campaign with a thousand issues to attack. i don't think there's anything wrong with republicans attacking obama for being out there campaigning, that's what we did

as democrats. >> but it is ineffectual. >> every campaign does it. larry, what you're asking about, i don't see anything wrong with the ad using mitt romney. >> come on. that's absurd. >> his own words, said i would not move heaven and earth to track down osama bin laden. nothing wrong with saying that. mitt romney said it himself, the ad says that, it is justifiable and they should not back down on that at all. >> i have plenty to say. the guy doing the ad, bill clip ton had a shot at bin laden, turned it down, his decision was no, don't take it. you could argue it was before 9/11. that's the point, might have stopped 9/11 from happening. also, one guy designed, created, commanded and controlled that raid, admiral william mccrave en. why does obama never give him credit. internal memos show he took no control at any point. >> why doesn't obama, i don't want to confuse it with bin

laden, why doesn't obama give george w. bush credit who bush set up all the intelligence gathering and security apparatus to pull the trigger. >> he put together a number of taskforces to hunt and kill bin laden. the decision was actually made by george w. bush. >> part of the reason he doesn't do it, larry, he would have to acknowledge that the dreaded enhanced interrogation links turned up leads and led us to bin laden. the reason the ad is offensive and john mccain put out a statement, it was the obama team that put out the stachlt, they responded through mccain. >> what did he say? >> he said it was pathetic, disgusting, went chapter and verse through the times when the president, excuse me. >> a direct quote from mitt romney. there's nothing wrong with using your candidate's own words. >> what is it. that's what we're talking about. >> offensive you think there's anything wrong with using that -- >> talk about mccain, he went chapter and verse through the decisions on national security, showing once and again over and over again, this president put

politics above national security. >> no, no. >> and has dropped the ball after. >> politics are part of the economy and national security. where is romney today to stand up and rebut -- >> because he is not taking on the ex-president of the united states. he is going to talk to obama and let everyone else respond to the other little -- >> there's romney with a major press conference today, taking on -- >> he doesn't want to respond to each of these attacks. >> there's no leadership. >> where is -- mitt had a good night tuesday night, terrific night. i haven't seen him since, all right? absence does not make the heart grow fond erin the heat of election campaign which is heating up faster than anybody thought. >> you're right. he should follow president obama city to city, speaking after him. >> he is, that's exactly what he is doing. that's what he has been doing. >> the problem is mitt romney will say or do anything to be

elected president. this is reflection of that. >> what candidate wouldn't? >> a lot of candidates wouldn't. people won't take two different sides. >> never seen a candidate wouldn't do that. >> that's what john kerry did -- >> john kerry, how about john edwards. >> john kerry took two sides of the issue and lost. that's what mitt romney is doing. >> we are all cranky. keith boykin, jennifer rubin. i gave you a layup on that. you ought to say something nice. up next on kudlow. lackluster economic growth slows in the first three months, raises fears of a spring stall. but you know what, profits for the stock market are more important than gdp. and ahead, former mississippi governor haley barbour. he says obama is carpet bombing romney with money. i'm going to ask how mitt romney should fight back. i think this is another snare in the delusion. all i ask, free market capitalism is the best path to

prosperity to get the economy growing at 6%, which is what reagan had in the first 11 quarters, not this lousy 2.4%. i'm kudlow. we'll be right back. we'll be ri. 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. what can we help you build? nice shot kid. the nba around the world built by the only company that could. cisco. (female announcer) most life insurance companies look at you and just see a policy.

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let's see some stock market work. you may have seen the headlines about gdp coming in worse than expected, 2.2%, blah blah blah. let me say this. importantly, i think profits matter much more than gdp as in the stock market knows that as it went up a little today. had a great week. stephanie week, cnbc contributor with the street, thestreet.com? >> called the street, you can call it that. >> whatever. and sain brown, lord abbott, fixed income strategist. profits more important than gdp, do i have it right? it was a good week. had you a couple of good weeks. >> i think profits are -- >> or stalled economy. >> profits are important and listening to what the companies say. 71% of companies have beaten. guidance has been conservative, appropriately so. but companies are saying we're kind of muddling along, it is an uneven economy, but they're able

to outproduce, improving balance sheets, and able to -- >> are you a bull? >> i am bullish, given the beginning of the year. >> great run, up six, year to date, 12%. bonds had a good week. ten year bond rates are low. you capital both be right, not for long. if bonds are good, stocks should be bad or the economy should be bad, but bonds have been strong. weigh in at 2%. >> that's the 10 year treasury talking about close to 190. a lot of it is residual fears from europe. you talked about profits driving the stock market. ford and procter & gamble are great examples of what we're talking about where they had great profitability in the u.s., compared to europe and south america, those operations stocks traded -- >> stocks traded down for procter & gamble. >> because of less profits, but it is elsewhere that's influencing those profits adversely. >> you think, this is

interesting, the european story deteriorating is bullish for u.s. treasury bonds because it is a safe haven, and probably better than stocks or not? >> i don't think they're better than stocks. the temporary flight to equality is a reflection of spain and disarray that's likely to continue in europe through the rest of the year. >> apple and amazon, good numbers, phenomenal week, driving the tech sector. is that an openly en, do you like tech? >> i like tech. i think it is one of the best groups in the first quarter. risk reward was tough. you see some sell in the news. i am encouraged that something like ibm which initially sold off a lot, is back to where it was. emc, back to where it was. the bullish data point of the week i thought was 52 companies raised dividends. getting back to stocks or bonds, look at stocks growing, nice 4,

5%. >> help the dividend tax doesn't go to 45%. i warn you, stephanie, if that nonsense goes through, the dividend holders will be very angry, and companies will quit raising dividends because nobody wants them. i want your quick take, inside the gdp report, i know it is boring. the inflation rate, consumer price deflator, 2.5%, up in annual rate. not massive, but not nothing either. do you have any inflation worries whatsoever? my theory is inflation is good for stocks. it is bad for bonds, but i think inflation is good for stocks. >> not that much in the way of inflation worries. 2.5% is a little concern. that's going to adversely impact treasury securities. there are other high yield bonds, lower quality corporates that will act immune to the inflationary pressure. there might be better value in high yield than stocks we talked about. >> you're not near as bullish as you have recently been in recent

past. >> i look at the facts. honestly, march scared me a bit. saw a deceleration in manufacturing, certainly in jobs. housing is the openly thing -- >> a week from tonight, lousy jobs number. >> putting it to work on weakness. >> appreciate it. coming up, political hot potato. republicans ignore the president's veto threat and pass the student loan bill. white house cries foul against women. republicans call it a slush fund. speaker john boehner has enough. take a listen. >> they expect us to come here and be honest with each other, to work out these issues, and pick this big political fight where there is no fight is just silly. give me a break. >> yeah, i'll give him a break. the student loan thing is a big thing in the budget.

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through the controversial student loan bill today. i'm not shocked, but amon joins us. >> good evening. only in washington could they take a rare moment of bipartisan agreement and turn it into a partisan spitting match. that's what happened today on this bill to reduce interest rates on federal student loans. take a look at some of the particulars here. the bill did pass, 215-195. what it would do is continue a 3.4 interest rate on a key federal student loan for one more year, prevent it rising this summer as it is slated to do. they pay for the cost of it $6 billion from obama healthcare programs. as you can imagine, democrats didn't think that was a good idea and had some ideas of their own. take a listen. >> the way to pay for this assistance for students is not to shut down health for the

women of this country. the way to pay for it is to shut down the give away of taxpayer dollars to the oil industry of this country. >> so larry, even though mitt romney and president barack obama agree on the underlying specifics in terms of keeping interest rates low going into the summer, republicans and democrats are fighting about it here on capitol hill. the next move is the bill goes to the senate and they'll come up with probably an entirely different arrangement for paying for all of this cost of $6 billion, larry. >> you know, i get you, i hear you, i know your forecast will be right and go through. no one talks about interest rate risk and credit risk to american taxpayers of $1 trillion of student loans. that is a gigantic ticking time bomb. nobody wants to address that. it is all about $6 billion paying for it. i tell you, it is one of those things, big entitlements, nobody seems to care anyway. thank you for your report. you have a great weekend.

appreciate it, buddy. next up, haley barbour says obama can't run on his record. so barbour predicts the president begins to carpet bomb mitt romney. i think he already started. question is, what's the strategy. how should romney fight back? later in the show, why our economic growth is lackluster at best. i call it the stall. three top ceos sound off on his lack of leadership, how about obama care. "the kudlow report" will be right back.

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welcome back to "the kudlow report." i'm larry kudlow. first up, mitt romney had a great speech tuesday, laying out key themes in his battle with obama. but we haven't heard from him since. team obama is quote, sitting on a stack of money so tall that a show dog country jump over it. a line from former rnc chair, haley barbour, former governor of mississippi. how will romney fight back. is the ving stall a result of tax and obama care policies from washington? i ask three powerhouse ceos, one

from obama, the other supports romney, the other down the middle. you don't want to miss that. moments ago, the secret service announced new rules. men that would take a bullet for the president are told they can't go to places of ill repute. really? you need to spell that out in rules? i guess so. we're going to have that story for you. first up, call it the battle of the campaign war chest. at the end of march, president obama's campaign had ten times more cash on hand than romney. republican super pacs are raising a done and leveling the field. if only they had run more serious ads with premarket pro-growth tilt instead of this one. check it out. >> obama, obama, obama. >> oh, yeah. >> president of the united states. >> i! so in love with you. >> oh, yeah. >> nice. >> he is a jack ass.

he's a jack ass. >> obama, obama. >> obama, obama, obama, obama! >> oh, yeah. >> watching that ad for about the fifth time, i swear that ad is a democratic ad, that's not a republican ad, that's boosting obama. i got just about the smartest political thinker of our political generation coming on, former national committee chairman, former mississippi governor, haley barbour. he raised money for a super pac that produced that ad. haley, that's a terrible ad. obama celebrity? there's no substance, no growth stall, no taxes, obama care, how could this happen ? >> as you know, that's not been

run on television, but on youtube, but it makes an important point. the american people want a president who's serious about solving the problems of the country, not about being cool or being a celebrity or trying to do things that they're pleasing to the public in entertainment. they want somebody that's serious about the problems that face this country. most of the ads we do and will do, and frankly that i think the romney campaign will do will be about public policy. if this election is about obama's policies and the results of those policies, we'll have a new president in november. if the election is about anything else and the obama people will try to make it about anything else, because they know he can't run op his record, then that's not good for the republicans. but the point of that deal, a lot of tv ad shown as commercials, we need a president who's serious. >> i think you need your money back on that one, governor

barbour. >> we didn't pay for it to run on tv. thank you for run tg for free. >> i did run it, i think it helps obama. i want to ask you, i think republicans are too distracted. they have deficit attention disorder. of course, obama is out campaigning, why is that a big shocking thing. of course, he goes to university of north carolina, but i want to go deeper. do you really believe the gsa scandal that the secret service sex problem, do you think that stuff has anything election meaning at all? i haven't seen one poll that suggests it's hurting obama. governorance, yeah. legislative oversite, yeah. everybody is obsessing about it, i don't think the gsa or secret service has warmup bad thing on obama, not his fault and not his political problem. >> well, the fact of the matter,

larry, is what i said earlier. the best thing for republicans is this campaign is about public policy, about what obama's policies have been and failed results of those policies. as you know, if we think about his tax policy, it makes it harder to create jobs. if we think about his healthcare policy, it drives up the cost of healthcare and makes it harder to create jobs. his energy policy is to drive up the cost of energy so people useless of it. that's one of the few policies that succeeded since he has been president, price of gas leap more than doubled. keystone xl pipeline, moratorium in the gulf, impossibility of getting coal mining permits, all of these things are about real issues that effect people's lives, and if that's what this campaign is about and if mitt romney does as he can very well, show what his alternatives would be to those policies, that is the best campaign for republicans. >> i agree. i totally agree.

it is substance. haley, you're a substantive guy, always were. you are right. now you're cooking. to me, obama out there campaigning is not substance. to me, gsa, that's a good congressional oversite issue, but not president's -- tax policy, energy policy. what do you think, by the way, the epa crucify oil and gas? that one is loaded with meaning and loaded with value, and it's got keystone tucked into it. there's something that all of you super pacs ought to be harping on. >> the very powerful thing about that, it simply confirms what everybody knows, that this administration starting with the president is anti-energy, they are against producing the energy that we are blessed with. for them to talk about to crucify oil and goes companies like the romans crucified villagers in the mediterranean

sea, even i, and i have been around a long time, larry, even i was floored by that. but the importance of it is it affirms what people already knew. this is an anti-energy administration. >> right. >> and the idea of all of the above for them means take the taxpayers' money and spend it on their buddies, solyndra and things like fisker. >> seems to me, i give free advice, feel free to reject it, but the super pacs, you, carl, and the others, look, tax reform, spending cuts, deficits, debt reduction, these are the issues. this other stuff, not energy, energy is a big issue, keystone, but all your money, you have a lot of money, you'll have just as much as obama, this is where the pounding should come from. >> well, let me say, you're ignoring the fact that the labor unions are going to put hundreds of millions of dollars behind

obama. they did in 2008. that was before the nlrb, before boeing, that was before card check. so that's the main thing that we can do. i'm convinced that mitt and the republican national committee can compete with the obama campaign and democratic national committee, even though they start out behind because romney had to spend a lot to win the nomination. what we have to do, keep him from being carpet bombed, disqualified, made to look unacceptable by hundreds of millions of union money. >> and stay on message. good economic growth, governor haley barbour which you helped put together during the reagan years, newt gingrich years, got to do it one more time. haley barbour. thanks for coming on. we hope you'll return. >> thanks. the secret service issue, new guidelines to the agents,

being treated a bit like school children? an update next. guys. come here, come here. [ telephone ringing ] i'm calling my old dealership. [ man ] may ford. hi, yeah. do you guys have any crossovers that offer better highway fuel economy than the chevy equinox? no, sorry, sir. we don't. oh, well, that's too bad. [ man ] kyle, is that you? [ laughs ] [ man ] still here, kyle. [ male announcer ] visit your local chevy dealer today. right now, very well qualified lessees can get a 2012 equinox ls for around $229 a month. let's see what you got. rv -- covered. why would you pay for a hotel? i never do. motorcycles -- check. atv. i ride those.

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"look, we've got this little hot dog cart, and it's on a really good corner. let's see if we can buy the property." and the branch manager said, "all right, i will take a chance with the two of you." and we've been loyal to bank of america for the last 71 years. today's modest market rise was powered by amazon, expedia,

and cerner. jim cramer says it may be a buying opportunity. good evening, jimmy. what you got. >> larry, can you buy stocks with big advances in a given session? we had three today. let's drill down on them. amazon, expedia, cerner. amazon and expedia were short going into the quarter. jeff beez owes made it clear he was going to spin to win. congratulations he was able to recoup spending almost immediately in the form of better gross margins an excellent earnings. the stock is up huge. better moment will come to buy it. i am caught up in the expensive nature of the company. if it dropped to the low 200s, would be tempting. expedia. terrific company. talked about it on "mad money." others didn't. short sellers scramble to bring the shorts in, it is up too much. if i want travel, starwood. that brings me to cerner.

they had a terrific quarter. even better, all scripps. these two electronic record keepers for doctors and hospitals have been duke tg for years. terrific buy. pick up some of that, sell expedia, wait for amazon to come down before doing any buying. back to you, lawrence. >> many thanks, jim cramer. moments ago, secret service announced new rules for agents. agents take ago bullet for the president. they have to be given rules like school children. the rules could be ridiculous. brian shactman joins us with more on that and more headlines coming into the newsroom. is this ridiculous, school children stuff? >> it is, i'll tick it off, let people know what they're talking about. new guidelines are going to all the agents. here they are. no more patronizing nonreputable establishments. no more bringing foreign

nationals to your room. no word on americans, though. no drinking within ten hours of being on the job, and this comes amid a probe and possible secret service impropriety going back to clinton years. from a bit of national embarrassment to source of pride, everyone in new york from kids to adults like myself at cnbc global headquarters had people on the roof, pausing to watch the shuttle "enterprise" before settling on the aircraft carrier the intrepid. the program stopped flying a year ago, shuttles are now pieces of history. what will replace the shuttle? maybe spacex. spoke with them about the upcoming rocket launch and he discussed the challenges his new venture faces. >> we first have to convince customers that they want to fly on a spacecraft that's been retrieved. but i think over time we'll be able to do that. >> you have to be a used space

capsule salesman to make it work. >> yes. >> and that guy is genius. free health insurance for life? library board members got insist row, illinois. spouse and kids are covered as well and inherit that if a member dies. they did that for newly elected members. you saw it first on cnbc, this made a debut on power lunch. the scream is expected to get up words of $80 million. highest on a painting ever. after a shocking video, republican members of energy and commerce committee launch an investigation. larry, you discussed this possibility last night with senator james inhofe who uncovered that which has been taken down by the poster. have an awesome weekend. back to you. >> thank you, appreciate everything. up next on kudlow, who's to

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welcome gak back to "the kudlow report." the president went on a campaign stop, doing what presidents seeking re-election always do. is he to blame for the spring stalled economy? we ask three powerhouse ceos. first up, the president today.

>> division for america that everybody that works hard has the chance to get ahead. everybody has a fair shot, everybody is doing their fair share, and everybody plays by the same set of rules. >> joining us now for a kudlow ceo round table on the stalled speedy economic recovery, ceo of u.s. news and world report. john faraci, and don peebls, ceo of peebles and acquaintance of president obama. welcome. start with you. 2.2 gdp report, stalled speed, been stall speed for 11 quarters of so-called recovery. mark, what is wrong, where is the problem? >> well, clearly you should have had a gdp growth now of between 6 and 8% with the degree of

monetary and fiscal stimulus. the question is what is wrong. first place, there were a couple of conditions that were at the beginning of this recession that were unique. one of course was the huge overhang through the economic system, in the process of deleveraging, and collapse of that financial market didn't really help. secondly, had collapse of housing market which is still on-going and wiped out a lot of wealth, the average american family, total american family wealth down by $10 trillion. the third part was frankly the inadequate and shall we say badly structured stimulus program that came from this administration. >> hang on a second. john faraci, welcome to the show. >> nice to be here. >> your earnings beat today. i read your notes, you're not all that optimistic. i want to pose the same question with one wrinkle. i notice in the gdp report today, john, business investment which is such a vital part of

the economy slowed down again. this is the second straight quarter. now, you all are very profitable, and i want to know why you're not investing, is it a washington problem, internal economic problem? can you help me? you're a practitioner, as the ceo of international paper. >> not an economist or policy maker. i think mort has it right with his second point. it is all about consumer spending and demand. the problem we have is inadequate demand to create jobs. we know how to respond when there's demand to hire people, trained people, don't need help doing that. 70% of our economy is consumer spending driven. the investment side of consumers feels better, but housing side hasn't recovered. until it does, i don't think we will see the consumer spending we would expect coming out of recovery. >> john, can i follow up on this. the strongest component of gdp

was 2.2%. seems to me, i ask it again. businesses are profitable. they have tons of cash and pristine balance sheets. are they investing overseas? why don't we see more because that's the ultimate job creator. by the way, jobs look like they're slowing. consumers did fine. >> productivity has obviously been good. we are creating more capacity with less resources. but at the end of the day, this is really about respond to go demand, automobiles, packaging products for a variety of industries and users, and really we're not going out to invest without demand. we're investing in india, russia, brazil, not to ship products here, but because demand exists in those markets. >> is it fair to blame president obama's leadership as many are blaming? you heard mort say they were poorly designed programs. is it fair to blame obama? >> no, it's not. the housing industry is a reason

why we still find ourselves where we are today in the sluggish economy. housing market and housing economy carried the economy in the boom. what's happening now, the housing market is not able to carry the economy. americans' wealth is decimated as a result of loss of value in their homes. that cheap money was available to allow americans to tap into their value of their homes and use that to spend. >> say something here. there's a serious issue in terms of where job creation, two-thirds of job creation in america comes from small and medium sized companies. and what is their problem? if you see studies put out by university of california, university of chicago and heritage foundation, what they call regulatory or political uncertainty. >> right. >> has lost two to two and a half million jobs, and that comes primarily from health care exposure.

almost 50% of jobs created are part-time jobs, low wage jobs. reason is companies don't want to take on health care costs, never mind retirement costs, so you have a much less willingness to hire people. >> incentive obama care. isn't that an issue? mort, in front of obama care, don, you disagree? >> of course. of three of us on the panel, i am the only one running a small business. i can tell you yes, uncertainty and high cost of health care is a cost factor. every year it goes up 25, 30% a year which is significant. the uncertainty of taxes is also somewhat of an issue for us. but the number one issue of growing a small real estate business which mort knows a lot about is access to capital. banks and financial institutions aren't investing in small business. >> we have the highest corporate tax rate in the world now. that can't be good for american

business, can't be good for incentives. >> it's not. let me come back to what we were talking about before. we do business with a lot of small companies, they're suppliers and sell to small companies. we have big customers, we have many small customers. and for sure, we would all like certainty. i don't think certainty is what's holding back the economy, i really don't. i think it is all about demand. >> it may not all be about washington, may not all be about mr. obama. gentlemen, i have to tell you, we're not running a pro-business economy now. you know that, mort. i'll give you the last word. >> you look at sentiment in the business community, there's a sense this administration has been hostile to business, that's something visible the last two or three years. i participated in attempts to deal with it. it is difficult to deal with when you have a president that goes around the country talking about the rich, quote, unquote, and developing hostility between

one group and another. doesn't certificate the business. >> i appreciate it, gentlemen. thank you. you're terrific: >> mort had it at the end. we need more economic freedom across the board. don't stifle business and don't stifle entrepreneurs and don't stifle me. that's all for tonight's show. i'm larry kudlow. thanks for watching. we'll be back with more nonstifling on monday.

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