seconds away on "the kudlow report," humpty-dumpty economy. all the president's horses and all the president's men can't get the economy moving past 2%. also, chris christie throws his hat into the vip states ring, and i'll automatic for it. everybody is talking about $200 million for a painting? it's a scream. "the kudlow report" is just moments away. i like to say there is always a bull market somewhere, and i promise to try to find it just for you right here on "mad money." i'm jim cramer. see you tomorrow. lawrence, huge show tonight. what do you have? >> all right, jimmy, try as i might, i can't get this economy growing past 2%. it really is a shame. good evening, everyone. i'm larry kudlow. this is "the kudlow report." our top story tonight, the humpty dumpty economy. all the president's horses and all the president's men cannot get us past a 2% growth rate,

stimulus, printing money, nothing, tax the rich. poor numbers today on the adp jobs. poor numbers on factory orders falling. it's all going the wrong way, and middle class incomes, they're also falling. why? because presidential policies undermine free market capitalism at every step. we're going to get into it in just a moment. also this evening, just as president obama lands back in washington from afghanistan, immediately heads to two high dollar fundraisers. chris christie has essentially declared his candidacy for vice president. we are going to show you the take. personally, i think christie would make a hell of a good vip. we will debate whether he is just the hammer that mitt romney needs to whack obama and biden. and a new congressional study out on obamacare shows businesses are going to drop employee health care plans left and right because obamacare is just too expensive. proof again that if upheld,

obamacare will bring the u.s. closer to bankruptcy because of this misbegotten entitlement. first up, who is to blame for the humpty dumpty economy? economic growth sputtering around 2%. the middle class has stalled. team obama has thrown everything at this economy, including the kitchen sink, but everything they do runs counter to free market capitalism. let's review. we've seen gigantic spending stimulus, temporary home buyers tax credits, temporary payroll tax cuts, cash for clunkers, tax the rich, massive fed money correction, and zero interest rates. you know, folks, if all this big government keynesian stuff was going to work, it would have already worked. but all the king's horses and all the king's men could not put humpty dumpty back together again. again, my opposition comes from this simple notion. keynesian big government policies undermine free market capitalism at every turn.

and that is why the economy is stuck at 2% at the bottom of the range. so let's talk with two distinguished guests, dean maker is co-director for the center of economic and policy research. art laffer, the chairman of laffer investments and former reagan adviser. first up the adp jobs number going the wrong way. jobless claims are rising. factory orders are falling. business investment is slowing. sounds pretty good at 55, but it ought to be good at 65. we're growing at 2%, art laffer. i want to ask you why you think that is the case. why can't we break out to 3%? and why aren't we at 6% or 7%, where we ought to be? >> well, because the obama and george w. bush, if i may add, both of them are really terrible sets of policies. obama and w. were exactly the same. and they've changed policies not a single aye ota. and when you look at what is going to happen, larry, on january 1st, 2013, we hit a tax

cliff that is just going to be phenomenal. i'm very concerned that 2% may be the very highest growth rate we see for the next couple of years unless there is a big change coming in washington. >> i mean, dean we have no rules, we have no certainlity. we have unbelievable government fine tuning and interventionism. we have all the tax, all the spending. >> you're so sensitive here is my point. >> trivial. everything these guys yell about. even the obamacare, almost nothing has happened on obamacare. you're telling me all the employers are so doctor -- >> people anticipate it. >> people worried about the things in the future as you claim they are we have a real problem. we have business people who have no backbone. my god, every day of the week there must be something more serious that happens in my life than a year from now, two years from now that you're going to have these restrictions on obamacare. this is a joke. >> stocks all depend upon the future. dean, it's really serious. >> i know. but these are really minor things. >> they are not. they're huge. >> companies already meet the

conditions required under obamacare. >> we're talking about the tax increase unearned income. >> like what we had in the clinton years. >> one at a time. dean, let art make his point, and then you can rebut it. >> we've got huge tax increases coming on january 1st. not only are they the offsetting of the bush tax cuts, but you're going to have all the taxes on obamacare as well. it's just huge. i don't see how you can avoid that unless -- god, i wouldn't make the arguments you make unless i really wanted to please someone there. and it just makes no sense whatsoever, dean. >> i don't work for obama. they wouldn't have me, i assure you. the you can is in a recession. they've been going the market route. spain 24%. they've been going the free market route. greece. >> i just want to ask this. we're going to bring in pollster scott rasmussen in just a minute. here is my basic point. if it were going to work, it would have already worked. and the fact that the growth

rate -- >> it's not big enough, larry. i said that then. i say it now. >> if it's going to work, it would have worked. and it hasn't worked. and therefore, dean, it is highly, highly suspect. we've tried these -- >> not big enough, larry. >> all right. so you want more of the same. all right. respond to that. >> if you make it big enough, i think we can decline at 10% per annum. all we have is the w. people of geithner and bernanke still in there doing the same rotten policies done in the last two years of bush and it's had the same rotten results. not good enough doing the same thing over and over again, dean, and expecting a different result is crazy. >> inflating the bubble is very different. >> hang on. hold on. ace pollster scott rasmussen of rasmussen reports. scott, welcome back to the show. it's a great pleasure to see you. >> great to be with you, larry. >> according to the latest consumer polling data, this to me is staggering. you're saying 62% of consumers actually think the u.s. is still in recession. can you tell us about that?

>> first of all, we asked this question every night when we measure consumer confidence. and every single night for the last four years, for even longer, a majority of americans have said we're in a recession. they're a little bit less pessimistic now than they were a year or two ago. but they're more pessimistic than they were a couple of months ago. lots of thing are driving the concern. one i think was highlighted by the adp report today, the number of people who have jobs who are worried about losing them has grown to the highest level in six months. >> and scott, you write also that the housing market is depressing america. and lord knows team obama has thrown all these temporary quick fix things at housing. none of it seems to work. you're saying housing is depressing america. what does your polling data tell? what is underneath that? >> four years ago, 80% of homeowners thought their home was worth more than they paid for it. that's down to 49% today. and people don't think we've hit bottom yet.

25% expect the value of their own home to keep going down this next year. only 21% expect to see an increase. and even if you look out the long-term, larry, look over a five-year period, fewer than half of all homeowner thinks their home will go up in value. this is something that people are experiencing as somebody who changed the rules on us. they were taught to invest in a home, pay the mortgage and watch the equity grow. and instead their equity disappeared. >> and last one, scott, we have had a stock market rally from the low, low lows of several years ago. but you're saying that investor confidence in the stock market peaked january 2004, all the way back to there. wow. >> that's right. and what we're seeing right now is the same thing we see in the last couple of years there was a little bit of a resurgence heading into the new year. confidence was up to the highest we've seen actually in a couple of years. but it's beginning to ease as the months go on. the jobs number obviously one of the very big ones we'll be

watching. right now 23% of workers say their firms are hiring. 23% say they're laying off that too is weaker than at the beginning of this year. >> all right. scott marasmussen, we appreciat it. art laffer, dean baker, i know we disagree. but once again, if all this fine-tuning and intervention and short fixes was going to work, it would have worked. it isn't even clear to me that this country believe there's is a recovery going on. that according to scott rasmussen's data. he is not alone. other polls have shown 80% believe we're still in a recession. dean baker, there is something badly wrong with what is going on here. >> larry, the times are bad. i'm a big believer in arithmetic. my mother taught it to me when i was very young and i stand by it. i wrote this in january of 2009. i said the lost demand because of the housing bubble, the collapse of the bubble. you can't blame obama for that. he wasn't even around. $1.4 trillion in annual demand. the stimulus, you boil it down to what it was in annual demand,

about $300 billion. $300 billion is an awful lot less than $1.4 trillion. it was not large enough. i sid that at the time. others said that at the time. it created around two to three million jobs. that's the estimates of many independent analysts. the problem is we needed 12 million. >> or arthur, or arthur, my position is that we are undermining free market principles. we are undermining incentives. we have all this fine-tuning and government intervening, which has clogged the wheels of commerce. hang on a second, dean. it's clogged the wheels of commerce. it's clogged the wheels of certainty. it's taken all the rules out of the system so, art, there is no future planning. this is a debate. i think pure and simple about the free market versus the government market. tell me i'm wrong. what is missing here? >> it's not that you're wrong, but i've never heard of a poor

person spending himself into prosperity. this is the most ridiculous argument i've heard. we have tried this spending mod toll bring back prosperity, larry, and it just doesn't work. it never has worked, and it's failing once again. and all they want to do is double down and see what happens. why don't we go back to what worked in reagan's era of tax rate reductions, fast growth? why don't we go back to kennedy's era or bill clinton's era or harding and coolidge. we have lots of examples what can really bring you out of a recession, but none of these are what these people want to do. they want to double down on this takeover of america, and it's killing america. i don't know why they won't change their answer when they see it's wrong time and time again. >> dean baker, let me ask you this question. it's a serious question. i posit that if we had done nothing, that is government action had stopped, if we had just let free markets adjust regarding stocks, regarding mortgages, regarding automobiles across the board, no policies,

no intervention, i think we'd be in better shape today if we had just let the hiekian free market republican paul's idea of austrian economics, just let the marketplace solve the problem. this has damaged us. >> the evidence doesn't support you. we were losing 600,000 jobs a month when president obama came in to office. the stimulus began to kick in april and may of 2009. well stopped losing jobs very quickly. it fit very well with the traditional keynesian theory. you guys are too young. you don't remember the depression of world war ii. spending got us out of that. the uk and the eurozone, those countries are going into recession. it fits the keynesian story to a t. >> dean, can i make one point here? we had all the spending of president george w. bush. we had it there with tarp. we had wit the takeover of aig. we had wit the 600 dollars per capita tax rebate. the agricultural bill. all that was under bush, geithner, bernanke, and paulsen

and all these guys did it then and then continued it with barack obama. it's not changed, deign dean. and the results are the same time and time again. when will you change your answer? >> most of that wasn't spending. >> i got to leave it there, gentlemen. i appreciate the disagreement. i appreciate the debate very much. what really bothers me is a lot of the numbers are moving in the wrong direction all of the sudden. >> they are. >> that troubles me. but the debate will go on. dean baker, thank you, my friend. i appreciate it. >> thanks for having me on. >> art laffer, as always. >> thank you. >> up next, well-known economist robert shiller. he famously predicted two big bubbles in tech stocks and housing. he has a surprising take on stocks. and ahead, a new survey shows obamacare is going the force america's biggest companies to drop health care coverage for their own employees. and later, the vip stakes. governor chris christie seems to be offering himself up to mitt romney. we will hear from christie. is he in the race for vice president? and might he be exactly the ham

they're mitt romney needs? and once again, i say to this with a straight face, folks. free market capitalism is the best path to prosperity. i believe regarding this so-called recovery, we would have done better if we had just done nothing from the government standpoint and let markets make the correct adjustments, we would have better growth and employment and incomes. let the free market decide, not a bunch of government planners and fine-tuners. i'm larry kudlow, and we will be right back. this is the first car that i've been totally in love with in every way, shape, and form. it's my dream vehicle. on a day to day basis, i am not using gas. my round trip is approximately 40 miles to work. head on home, stop at the grocery store,

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qe i think is not as prominent a polyas the austerity that we're in. so this is a new age of austerity. it's like the late, great depression. >> all right. that was well-known economist robert shiller of the case-shiller index. that was on cnbc europe earlier this week. so is the global economy really in the midst of a late, great depression? well, i sat down with professional schiller, who by the way famously predicted two big bubbles in tech stocks and housing prices. also, he does have a new book out called "finance and the good society." here is what he had to say. please take a listen.

>> let me just ask you. you are now famously quoted, okay. you're famously quoted as saying we are in a state of late, great depression. i don't know what that means. it sounds very scary. what are you trying to tell me? >> did i say that? >> yes. you were quoted in reuters and others. >> i think there are a lot of analogies to what we've been going through to that of the great depression. but i don't think we're really in a depression. so i must have said it slightly wrong. but certainly we have, for example, the lowest interest rates ever. long-term and short-term are at depression levels. so there is other examples as well. the persistence of high unemployment is a problem. >> all right. let's go there. the persistence of high unemployment and record low interest rates. you're really talking pretty much globally, certainly europe and the united states. does that mean we are not really

in an economic recovery? is that what you're trying to say? >> it depends on how you define these things. in some ways we are not in a recovery. look at the employment population ratio. it's stuck at 58.5%. that's kind of close to the lowest it's been in this whole debacle. so we haven't recovered jobs. >> you're calling this the age of austerity. i'm going to assume you mean too much government spending cuts. and you know, milton freedman used to teach us that government spending as a share of gdp when it came down, that was a tax cut. i take it you don't agree with friedman on this? >> i've been advocating raising taxes and expenditures as a temporary measure to get us out of the weak economy. so that's the balanced budget multiplier. >> what happens to all those obama multipliers? we were supposed to have a 6% unemployment rate today or less.

it's over 8. it didn't really seem like that samuelson model worked. >> well, that wasn't the balanced budget expenditure. but yeah, we've had a worse recession than anybody expected. i don't think it proves that the principle is wrong. i think we need to do that. we can't give up on this economy. we have to do something. i don't have any better solution than to temporarily -- i don't know that there is -- temporarily raise taxes and expenditures. and there is no impact on the national debt. >> maybe we ought to let free market forces work out the rest of the corrections, robert. think of that. maybe no more government fine-tuning, no more government intervention. let's have some strict rules and let the market operate. >> my book "finance and the good society" is all about that. i believe in markets. they do wonderful things. they create our wealth ultimately. and i would like to see them, our financial markets expanded.

you got me off on the wrong foot on this by bringing out the keynesian element of my thigs. but it's beyond that. >> you said the great depression. i know you better than that. but you're the guy who said that. so i got to ask you. >> i mean, i don't want to be have have some false consistency. i tell you what i believe. i believe in keynesian stimulus. but i also believe in markets, and i believe we should expand our markets, make the financial sector even more pervasive, as long as we democratize and humanize it. make it work for everyone. that's the course we've been on. let's continue on that. >> i don't believe in government stimulus, but that's subject for another talk. last question. your friend, my friend, your colleague jeremy siegle, he is very optimistic. i know you don't always agree with him. he says stocks are going to 17,000. can i get your quick take on that? >> well, i think he is -- he has been optimistic for a long time. i respect him a lot. by the way, when he says

something, i often edge my little stock portfolio up a little bit more. but personally, i think stocks, i agree with him, that stocks are a good investment now. as long as you don't go overboard on it. and i would advise having some stocks in one's portfolio. >> all right. >> i'm just not as gung-ho as jeremy is. >> all right. i'm taking away an optimistic message. robert shiller says it's okay to buy stocks. i like that. coming from london, thank you very much. it's great to see you, bob, as always. all right. coming up next, edvard monk's the scream. could it fetch as high as $200 million? oh my god. we're going live to sotheby's to check it out.

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evidence american citizens were victimized. and at sotheby's tonight, an auction of major paintings from the late ted forceman's collection. but the lead work is the scream. bertha that coombs is waiting for the hammer to fall. what is the latest buzz? >> probably going to happen within the next 15 minutes or so, the scream. this is one of four versions secreted by edvard munch. it dates back to 1895, the last one in private hands. a number of art aficionados expected. this one could well set a record. the sculpture holds the record for an art piece at over $104 million. a hammer price above $90 million once you add in that commission would get us there back. we'll be back once the hammer comes down. >> thanks, bertha. i wish i had an extra 90 million or so to spare. all the bank ceos met in new york with fed president to talk

the banks' concerns about dodd/frank may impact international competitiveness. the bank statement says fed officials did not reply. the point of the meeting was to get the bankers' kmerts. back to you. >> courtney reagan, thank you very much. up next, obamacare will actually force america's biggest businesses to drop health coverage for their employees. that's you. later on, mitt romney vip stakes. governor chris christie. for all intents and purposes has thrown his hat into the ring. you listen to what he has to say. and i think it's a hell of a good idea. i think he is the hammer that mitt romney needs. you won't want to miss the chris christie riff.

welcome back to "the kudlow report." i'm larry kudlow. in this half hour, chris christie basically puts his hat into the ring for vice president. is he is the ham they're mitt romney needs to slam down obama and biden? plus, you could be losing your health care. that's right. a new congressional study says companies will drop health insurance plans left and right and pay the fine instead. and president obama back from afghanistan. he talked of nation building,

marshall plan if you will. but who is going to pay for it? former nato allied supreme commander wes clark joins me as my special guest. federal and agencies around the country busting down doors, bust mortgage than 100 people. all of them facing charges of bilking nearly half a billion dollars in medicare fraud. investigations inc. has been on this case for months. senior correspondent scott cohn is here with the details. good evening, scott. >> reporter: good evening, larry. it is the largest medicare fraud takedown in history, they say. raids carried out this morning in seven cities there was one in tampa we'll show you where a pharmacist was charged with illegal diversion of controlled substances. as we reported, medicare part d, the prescription drug benefit is proving particularly tough to police because it is so complex. elsewhere, 59 people charged in miami accused in a $137 million scheme. everything from home health care to hiv therapy.

professionals at two clinics in baton rouge allegedly recruited patients from homeless shelters and used them to rip off medicare to the tune of $225 million. >> today's historic takedown is really just the latest milestone in the obama administration's coordinated campaign to stamp out fraud in our health care system. >> well, we reported on that crackdown just last month. here on the "kudlow report" and in our investigations inc. documentary health care hustle, a record $4 billion recovered last year alone which seems impressive, until you consider the total fraud could be as much as $160 billion a year. of course, you can read more about health care fraud. tell us your story about waste, fraud and abuse in health care or anything else we should be investing. just follow the link at investigations inc..cnbc. a big bust but a drop in the bucket. >> scott, it seems like there is no toned the stories. why is that? is it government control run

amok? they can't keep track of the huge dollars or what? >> it's a huge pool of money. they are making strides in keeping track of it because so much more is electronic. so they can do sort of data analysis and algorithms to try to pick up on patterns. but it's $800 billion in health care entitlements, and everybody wants their little piece of it. and a lot of people just get into this because they see a way to rip off the taxpayers. >> i see it as big government culture of corruption. obama promised americans they will not lose their health care coverage. remember? well, it's wrong. a new congressional study shows the high cost of obamacare mandates will virtually guarantee that large companies will drop all health care coverage. and they would rather pay the fines. and that means you the employee will be pushed into the government-run one-size-fits all socialized health care program. for the companies, it will save $422 billion over the first ten years. that is huge.

for you the employee, it is enormously troublesome. so let's talk. we have cnbc contributor former vermont governor howard dean. he is the author of howard dean's prescription for homeowner. and we bring back dr. nan hayworth, republican congressman from new york, west chester, actually. nan hayworth, this is something we have all known. the firms would rather pay the fines because the rising costs of mandated health is going to be so great. but what it means, as i understand it, is you, the employee is going to be pushed off into the great unknown. is that true? is that the fact? >> yes. absolutely. starting in 2014, clearly, these were fortune 100 companies that were surveyed. 71 companies responded. 30% of them are planning on dropping their health care coverage and simply paying the fine because it is far less costly for them, to the tune of approximately $5,000 per employee per year. >> governor, former governor

howard dean, welcome back. this echoes this study which comes out of the ways and means committee, echoes a mckinsey study, which echoes pugh studies, that this is all going to happen. what is your response to it? >> well, i'm sure you'll pardon me if i'll be slightly cynical about a very partisan committee in congress that happens to be run by the opposite party in an election year coming out with a study like this. i think the general direction of the study is right. i question the numbers. what i have found in the discussions i've had with major ceos is probably the big companies won't do this. but the small companies will do this. i think it's a good thing. because i think employer-based health care is a bad idea, and it has been, and it makes our small business uncompetitive. so what is going to happen is they'll pay something into a pool. their employees will get their health insurance through the exchanges and they'll get some help from the government which they ordinarily wouldn't have gotten. i think we may disagree about how many of these companies, and i don't think the big ones will. i think a lot of small business also do this.

i think it's good for the small business communities. >> but congresswoman nan hayworth, it was the fortune 100 studies. >> right. >> and we saw, we saw the waivers drama where the large companies that didn't want to pay the mandates, particularly retailers and service companies. >> various unions as well. >> unions. they got waivers. but now comes the moment of truth. hanging in the balance is the ordinary person's health care insurance which the president said they would not lose. that's the biggest thing that troubles me. thinking plan, this massive law -- but governor, they will. and this massive law was sold to the american public on the premises that if they like their health care, if they like their health insurance, they would not lose it. it would not change. and that is clearly false. and there were so many voices that predicted this from the get-go. and there will be more, larry. this is a massive government takeover of our health care. >> this is nonsense. wait a minute. let me explain to people --

>> and total bureaucracy. >> let me if i could for a moment explain to people what really happens. let's suppose i'm working for a small business with six employees. a small business doesn't think they can afford this anymore. they say sorry, howard, you got to get your insurance some place else. i go online to an exchange, and i choose from four or five or six private insurance companies. this is really more like paul ryan's approach to medicare than it is some government takeover. i just pick an insurance company, and the government helps me buy the insurance if my income is low enough. that's exactly how this works. fewer people are going to be uninsured. and the private sector is just as much a part of this as it ever was. >> these are heavily subsidized exchanges. >> at low income levels they are. >> a trillion dollars bureaucracy. >> that's it. we have not budgeted for this. you have already seen, the cost of obamacare has gone up from about $800 billion to about $1.6 trillion. $1.7 trillion. we have not seen the peak in

those estimates. >> right. >> those estimates are double the original estimates. and besides the fact that a lot of people are going to lose their insurance and have to switch, where are we going to pay for this? this is another bankrupting entitlement. >> well, larry, that's the problem. and actually, you can look at the anticipated savings that those fortune 100 companies are saying they're going to have, about $5,000 per employee per year going up to about $10,000 in 2023. and you can anticipate that those costs will only rise as the federal government takes over the program. because look at what we just saw with medicare part d, with the waste and fraud and abuse that take place because the government simply does not have the same ability to follow these things as do insurers that depend on the marketplace and have to compete and have to be effective with the dollars they get. >> go ahead, howard. how do you respond to that? this goes to the heart of the question. you're going the lose your insurance. you're going to go to inferior

plans in most cases, and -- >> this is ludicrous. will you guys stop this? [ overlapping dialog ] >> knock it off. these are the -- >> these are one-size-fits all plans. >> do i get -- shout propaganda at me. give me a chance. >> i did listen to you. you're making stuff up. >> i'm making stuff up. this is what everyone is saying. >> larry, you're being silly. come on. do i get to explain this thing or not? >> go ahead. you're going to get the last word. how is this wrong? >> what she said is not entirely untrue. people will lose their small business insurance, or let's just say some of the fortune 100 or whatever, and they will go buy insurance the way paul ryan suggested medicare recipients do on an exchange. and the government will help them if they have low income. medicare part d may this and may be that. that was republican program that was passed by republicans. let's stop this stuff. this is a serious problem. you want to know how to pay for this? first of all, the congress has

got to have the guts both republicans and democrats to pay all doctors and hospitals a flat fee for every medicare recipient, instead of paying them by what they do to them. that's what the real savings is going to be. nothing in this health care program. >> i just want to say for the record, howard dean, you know i love you, but you agree with me. a minute ago you said it's propaganda. now you said it's not entirely untrue. >> you keep using the words that people are going to lose their insurance and it's an inferior product. it's the same you have right now. >> it will not be. and larry, let's not forget that that 2010 plan also shifts, as you know, governor dean, it shifts half a trillion dollars falsely. they're using false accounting, using an accounting trick out of medicare into that plan. we can't afford to do this. >> i got to get out. i don't think we can afford any of it. i never thought it was a good idea. but at least howard dean said i was somewhat right. that's a concession. governor dean, thank you, sir. >> thank you, all.

>> thank you very much. coming up on "kudlow," what is the greatest threat to our national security? is it al qaeda or is it our debt? we're going to ask distinguished general wesley clark. he is a former nato supreme allied commander of europe. he nos a things or two about both suggesbjects. he'll be right here after the break. break. choose control. introducing gold choice. the freedom you can only get from hertz to keep the car you reserved or simply choose another. and it's free. ya know, for whoever you are that day. it's just another way you'll be traveling at the speed of hertz.

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president obama lands back in washington after his prime time speech from kabul last night. i'd like to know what kind of financial resources do we have here at home to help national -- nation building in afghanistan. listen to what senator tom coburn thinks. >> i think most americans want us nation building here. and there is not going to be a marshall plan for afghanistan. we have to wait and see what is involved in this. but the real question is what is the greatest threat to our national security. it is al qaeda or is it our debt? and i would proffer that it's our debt. in terms of the thing that will take this country down is not al qaeda. it is spending money we don't have on things we don't need and creating a debt that will totally shackle our children. >> all right. that was senator tom coburn on "the kudlow report" last night after the president's speech.

here now we have general wes clark, former nato supreme allied commander of europe. former democratic presidential candidate, currently ceo of wes k. clark and associates. what do you think of what tom coburn said? he said really our debt and our financial collapse is more important to our security than nation building in afghanistan. >> i think the first thing is we need to finish the job against al qaeda and stay and finish the plan in afghanistan. i think the second thing is we've got to create jobs and start this economy growing. and then in the midterm, we'll have the resources to adequately address the debt problem. >> so, wait, let me get this straight. you're saying what? in the next two years we should do what here at home to produce revenues to finance -- what do we do? >> let's do energy. we're spending $300 billion a year importing oil. >> right. >> we've got all the resources we need in america to do that on

our own. >> isn't the epa clogging it up? outer continental shelf, alaska. >> i think it's a combination of things. i think it's a combination of regulation, business reticence, i think it's ceos, i think it's funds who look abroad. everybody abroad would much rather invest in the safety and the security of the american market if they could do it. we need leadership at every element of our society to turn the focus back on investing america. and energy is the area to do it. >> so the energy miracle. by the way, i completely agree. i think it's a really important point. and i wish we could let a thousand flowers bloom. unfortunately, you know the craziness. the epa says they're going to come out and crucify oil and gas companies. the president wans to tax them. under these circumstances, can you honestly back president obama, given what you have just said, about the importance of total freedom for the energy sector? >> well, first of all, it's not about a total freedom. it's balanced growth for the united states of america. it's fixing a 40-year,

seven-administration policy failure that has left us so dependent on imported oil when we have all the resources and technology we need. >> we have the fracking revolution. >> we have the fracking revolution. we have a biofuel revolution. ethanol is there. we have new plants like casava-based and be exporting it to asia, where they need it. many things. >> i love this. this is the gigantic job creator. >> absolutely. >> but, sir, if you could, would you still invest whatever, a new marshall plan for nation building in afghanistan? it was that part of the president's speech which draw a lot of skepticism. >> i think you have to separate a little bit the marshall plan idea from germany from what we're doing in afghanistan. what the president has done is very -- in a very deliberate way, crafted a transition plan for afghanistan that fulfills our commitments, lets us get our troops back, as most americans want without leaving a big

security vacuum and having the country collapse. but the marshall plan for afghanistan really is about natural resources in afghanistan. that's a country that is loaded. and the only people that are really doing the extraction right now are the chinese with protection from the united states. >> so let's let them help themselves. we could provide private sector corporate help for afghanistan's natural resources. >> shouldn't we be doing that? >> i love that idea. but we don't have to dish out country to country foreign aid. >> no, what we have to do is help organize the countries. the defense department tried to do this a few years ago. u.s. companies are understandab understandably reticent to get over there. >> if they'll let us in. >> nobody has confidence in karzai. >> we need organizations like opic that or xm bank that help support u.s. exports. but how about some organizations that help support u.s. companies that can help in afghanistan. >> right. >> we could do that.

>> i love that. i think you're spot on. general clark, thank you so much. extremely sensible. up next on "kudlow," sure looks like chris christie is getting into the vip stakes. you're going to hear the tape where he basically says pick me to mitt romney. and by the way, if it comes to pass, i think a christie vip is a hell of an idea. but the question then becomes is he the best hammer mitt romney needs to pound the obama campaign? by the way, general wes clark gets ten stars for his private sector solutions to u.s. energy and afghanistan. i just love that i'm larry kudlow. that's free market capitalism. we'll be right back.

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welcome back to "the kudlow report." so, of all the names being bandied about for the spot as mitt romney's running mate, new jersey governor chris christie grabbed the spotlight this week, leaving the door open for an invitation. please take a listen. >> i really have no interest in being vice president. but if governor romney called and asked me to sit down and talk with him about it, i'd listen, because i think you owe the nominee of your party that level of respect. and who knows what he is going to say. and he might be able to convince me. he is a convincing guy. >> that was the key part. he might be able to convince me. he is a convincing guy. to me, that is almost tantamount throwing his hat into the ring. i've never heard him say that before. so in our question is, is chris christie the ham they're governor romney needs to bring

home his presidential bid? we're going to bring in the senior political writer for salon.com, and cnbc contributor robert costa of the national review. steve, i'll go to you first. welcome to "the kudlow report." i interviewed chris christie a little over a year ago. i just thought the world of him. i watched his reagan library speech. i thought it was unbelievable. just the last week or two, i heard him speak. i was there at the new york historical society, at the george bush conference. unbelievable, steve. how can you not want chris christie on your ticket if you're myth knit? mitt romney? >> i think you made a very strong and convincing case why chris christie belongs on the ticket as the presidential candidate. but when you're talking about the number two slot, you're talking about different criteria. i think there is reason for the romney people to be very hesitant about putting a guy like christie on the ticket. the two things that come to mind are one he's got such a strong personality, he is so charismatic, he could overshadow romney who has a reputation of

being a bit dull, a bit wooden, a bit stiff. another is the part of the charisma is he is very unpredictable. he is kind of erratic. the romney people have already had some experience with this. when you think back to january whether mitt romney should put his tax returns out. chris christie went on the "today" show as a romney surrogate and said he should do this. >> but christie was right. i love that about him. >> you can't have your vp doing that. >> a lot of people on that side of the aisle, they think mitt romney has to have a robot. i don't think he has to have a robot. i think christie, who is brilliant and analytical on entitlements and taking the unions on and supply side tax reform, who better to hammer joe biden in a debate or who better to take on obama's class warfare than chris christie? >> that's right. i respect steve's points. but you have to have a bulldog in there. you have to bring your best players on to the team, not

worrying about the overshadow problem there is a historical precedent for presidential candidates picking someone a little different in personality. look at 1968 when richard nixon taps spiro agnew. and brought a lot of negativity, slamming the left. i think chris christie could play that similar role for romney. different characteristics, different personalities, but together a strong ticket. you got to be looking for strength when you go up against barack obama. >> steve, just as a thought, look at bill clinton and al gore. they were really a ticket of equals, and it worked beautifully. and i think the division of labor is what you're missing. let me ask you this. do you have a substantive problem with chris christie? something he might have said, some position he might have taken that is not going to work for romney? >> no, no. on policy wise, he would almost be a boilerplate pick for the republicans. he would meet all of their litmus tests there might be a little trouble with the republican base when you talking about immigration. he might be a little away from where the republican base wants to be on that question. but otherwise, no.

he would be what the republican base is looking for. let me throw another thing out there. one reason why i think christie, and i'm a little surprised to see christie being so publicly interested in this. christie's standing in new jersey is good right now, but it's not great. and new jersey is a blue state. and chris christie spent ten years of his life positioning himself to be elected governor. >> he is so hard for him to reelection in 2013. that's why he is interested in this. >> i've got to get this point. robert costa, at the bush institute speech here at the historical society in new york, christie made a point about saying you have to make deals in politics. christie made a deal with the democratic legislature, and christie said, deals are part of leadership, and you don't have to give up your principles to make a deal. isn't that going to be a key theme for mitt romney, that he, romney, can make a deal to fix the economy and the whole budget mess, and the tax mess without giving up his principles.

isn't that what christie is really saying? 20 seconds. >> we all know chris christie is a tough guy. if you look at his record, he is bipartisan and even support of a bowles simpson. he wants to broker a deal to get rid of this deficit. >> i tell you, that is a leading indicator of the deal making. thank you, gentlemen. great stuff. that's it for tonight's show. thanks for watching, everybody. i'm larry kudlow, and i believe in free market capitalist deal making to fix this country. we'll see you tomorrow night.

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