nincompoop wants to ban extra large sodas. oh, wait a minute, it's nanny state new york mayor bloomberg. the "kudlow report" is moments away. when people freak out tomorrow because not enough jobs created and interest rates go still lower, i want you to be thinking about companies like verizon, like walmart. they get thrown out and then they get reinvented as terrific alternatives to fixed income securities. and that's why we like them so much. "mad money." i always like to say there's a bull market somewhere, i promise to try to find it for you here on "mad money." i'm jim cramer, i'll see you tomorrow. hey, larry, what do you have for us? >> all right, jimmy, question. would a third straight e neanem jobs report hint at the front edge of a recession? good evening, everyone, this is the "kudlow report." our top story this evening, team obama heads to mitt romney's home territory to attack his

massachusetts success. but team romney one ups by going to bankrupt solyndra, the home of obama crony capitalism handing over $500 million in taxpayer bundlers. it's going to get ugly. also this evening, awful moments between president bush and president obama at the unveiling of bush's white house portrait. almost every day president obama says he inherited a mess from bush. when will obama quit blaming his predecessor? plus, if team obama has been publicly down playing the importance of tuesday's wisconsin recall election, why are they now dispatching their only star bill clinton to the front lines? scott walker is going to win going away. markets at the end of the day, basically flat, investors on hooks over europe. let's do a experiment tonight, take away greece, spain, the whole eurozone threat. would you be a bull or a bear on

u.s. stocks? all right. we begin tonight with mitt romney's sneak attack at solyndra. cnbc's chief washington correspondent john harwood with the details. good evening, john. >> reporter: good evening, larry. lots of action in the presidential race today. and it started early this morning with the release of new nbc marist polls showing several battleground states in a dead heat. let's start with iowa where you see the president and mitt romney tied. then you go to the state of colorado another target that president obama carried last time. he's up by just one point. then you go to nevada, another state which is highly contested, also with a large hispanic population, hard hit by foreclosures, president obama's only up 2 points there. mitt romney tried to move the needle by traveling to california to visit the bankrupt solyndra that got federal aid from the stimulus and attacked the president for crony capitalism. >> you realize if the business had done spectacularly well, the shareholders, his friends, wow

done very, very well. but the taxpayers would've just gotten their money back. on the other hand, of course, as the business failed, as it did, it's the taxpayers that get stuck with losing $500 million. >> now, team obama had its own road trip news conference. david axelrod went to the massachusetts state house and highlighted what he said were flaws in governor romney's record when he was serving there. president obama, for his part, got to take the high road, play the statesman at the white house with the unveiling of portraits for president george w. bush and laura bush. and he used the occasion to invoke his own successes on national security. >> and last year when we delivered justice to osama bin laden, i made it clear that our success was due to many people in many organizations working together over many years. across two administrations. that's why my first call once american forces were safely out

of harm's way was to president bush. because protecting our country is neither the work of one person nor the task of one period of time. >> now, of course, president obama tried to keep it as light as possible, minimized that awkwardness you mentioned, larry. he joked that he -- among the other things that he was thanking george w. bush for was that he left him a very nice sports video package on the television system at the white house and he says i use it, larry. >> okay. many thanks to john harwood. now, let me talk just a moment about this whole massachusetts business of the attacks on romney's record. here's my take. instead of worrying about massachusetts economy ten years ago, then despite the brutal bursting of the tech bubble that decimated the whole boston area, mitt romney comes out of it with a 4.7% unemployment rate, a balanced budget with no tax hikes. that was his record. obama should be so lucky.

instead, president needs to be worried about today's 1.9% anemic gdp. and a high potential for a third straight poor jobs number and the fact that the u.s. could conceivably be on the front edge of another recession. now, that is obama's job, not ten years ago in massachusetts. this is the part i just don't get. maybe my panel can help me. we have former clinton white house aid keith boykin, wabc talk show host march simone, and conservative attorney and blog founder john hinderracker. thank you very much. it's great to have you back while i'm here. what is -- what is this all about? you know, the idea, romney comes out with a 4.7% unemployment rate, a balanced budget, no tax hikes, obama should be so lucky to even remotely have a 4.7% unemployment rate. i don't understand his policies because this country's not doing

well and he won't face up to it. what is this all about? >> exactly right, larry. obama can't even dream about a 4.7% unemployment rate. what's going on here, larry, is the fundamental problem is that obama can't talk about his own record. and that's why we see all these attacks on mitt romney, whether it's his time at bain, his term as governor of massachusetts, putting the dog on the roof of the car, you know -- obama can talk about anything other than his own record. that's what we're seeing over and over. >> i mean, keith boykin, we got a spate of more lousy numbers today. okay? gdp, jobless claims, chicago manufacturing index, we had lousy consumer sentiment yesterday. i don't think we're definitely on the road to recession, but i'll tell you this, keith, we could be on the front end. if you're running less that 2% economic growth, any little jigger could get us back into recession. that's what obama should be thinking about. that is what he should be talking about, not what happened

in massachusetts ten years ago. >> obama does work on this every day -- as president of the united states, but you know really, larry, this is a presidential election, and elections are about choices. this is a choice between mitt romney's america and barack obama's america. there are two different visions. and when mitt romney was governor of massachusetts, his state ranked 47th out of 50 states in job creation. so he has his record at bain capital where he basically was willing to fire people at will if necessary to make a profit for his company -- >> keith, did you -- and then he goes to massachusetts. >> you seem to have forgotten the 4.7% unemployment rate -- >> no, i -- >> this -- this 47th ranking is a highly suspect number, and remember -- >> those are federal numbers. this is not a suspect -- i didn't just make that up. he wouldn't even deny his state ranked 47th out of 50 states in job creation when he was the governor -- >> come on, come on -- that's an obama talking point. >> you can't judge him on his

record at bain, you can't judge him on his record as massachusetts governor, how the heck are we supposed to judge this guy? because he's a good-looking guy -- >> when romney was governor of massachusetts, they added tens of thousands of jobs in massachusetts. during obama's term as president, we've lost -- >> we've added 4.2 million new jobs in the past 25 months. we've had 25 consecutive months of private sector job growth. >> we've lost over 500,000 jobs. >> happened in the first year of the administration because of the recession that president obama inherited. you keep forgetting about history. he inherited the worst economic crisis since the great depression. >> yes. yes. >> we've now had -- now had economic growth, the stock market is doing well. >> mark simone, four years later -- >> what are you complaining about? >> four years later, mark simone -- >> yeah. >> when do you reckon obama will take possession of this economy? and i want to say one thing again today. the gdp report at 1.9% and for the last year, it's 2.0%.

these are very poor numbers, mark. tomorrow we get a new jobs report that could well be the third straight anemic jobs report. now, seems to me the president should be telling folks what he's going to do about this, not what happened in massachusetts in his imagination ten years ago. >> if i were him, i would stick to distractions. let me explain, clear up that misleading 47th in the nation in job creation. by the end of romney's term in his fourth year, they were at full employment according to the definition by the u.s. government. 4.7% is full employment. and that's why they were lower in job creation. there were no more jobs to create, everybody was employed. that's why they were 4.7% -- >> that's phoney -- his job creation was no better than any of the other states -- >> i'm not a mathematician -- >> even as what he said just last week, he said he would lower the unemployment rate to 6% at the end of his four years

as the president of the united states. >> well, you know, when he started in massachusetts -- in massachusetts, it was up at 5%, near 6%, got it down to 4.7%. >> obama's dropped it from 10% to 8%. all mitt romney's going to do is drop it down -- >> that's not true. obama inherited about 8% and it's about 8% now. >> i'm not a mathematician, but i think 4.7% is lower -- >> the only problem, keith, the only problem with your argument is about 25% of the workforce has vanished. just vanished. and if they were in the workforce, you'd have about 10.5% unemployment rate. i want to change subjects. john, what about this solyndra? now, rochmney surprises people going and visiting solyndra. this is one of the cardinal failures of the obama administration. president obama does not believe in profits, he does believe in crony capitalism, giving $500

million loan guarantees to failed green energy enterprises. now, john, which do you think is more important in the grand scheme of things? the failure of solyndra or what happened in massachusetts ten years ago? >> well, i don't think there's any doubt that when the voters go to the polls, they're going to be evaluating president obama's record. and his record is material. terrible. added $5 trillion in debt and wasted the money on boondoggles like solyndra and other green energy failures. solyndra is part of a long line as you know, larry, it's not the only one. there are many of these failures that have cost the taxpayers billions and gone repeatedly to people with close political connections to barack obama. that's not just a failure, that's a scandal. >> that's not true. you know, people have been saying this stuff about this money's been going to family and people who were connected to family and friends. there's no evidence in that. nobody's ever proved that. that's all speculation from gop talking points. solyndra is just one example -- >> that's the inspector general, keith.

>> out of 200 -- the inspector general never said that. it's a false statement and it's been proven false. but you have 200,000 contracts awarded in the stimulus and you have one or two contracts where that company actually goes bankrupt or loses money, that's called capitalism, folks. i thought you believed in capitalism. >> you see, mark simone, the problem is that the obamacons will not give that kind of slack to mitt romney. romney's the guy who has said in venture capital and private equity, you have some losers, you have many more winners. unfortunately, with president obama giving assistance to his political bundlers for failed green energy projects, they're all losers. mr. obama's never experienced a winner. i think that's his problem, that's why he doesn't understand capitalism. he thinks everything he touches loses. which it does. >> it was president obama who said your record as a venture capitalist is something we should look at. romney is considered the best in the world.

if you're going to blame romney for the job losses on bain's watch, why wouldn't you give him credit for the job games on bain's watch, which are hundreds of thousands of jobs. >> sure, but he starts counting those jobs even after he left bain, though? >> well, you're counting the job losses after he left bain. also if you look at president obama's record as a venture capitalist, it's one of inexperience, incompetence, and bad results, same as with the presidency -- >> oh, let's make another very basic point -- >> weren't failures, right? >> we've got a free enterprise economy. when private enterprises make investments, they take risks, succeed or fail. that's not what we're talking about with crony capitalism like we have in the obama administration -- >> then let's -- >> obama's putting the taxpayers at risk on behalf of his political allies. >> keith, i love you -- >> the ethanol subsidies. stop giving money to your rich fat cat friends, then. >> that's what paul ryan wants, that's what i want.

get rid of these darn subsidies, stop trying to pick winners. but i want to say this, keith. if your man, president obama, out of 4.7% unemployment rate, which is how romney ended his term in massachusetts, if you had 4.7% unemployment rate, i would vote for obama. but attacking romney -- attacking romney for his success after he inherited the bursting of the tech bubble and got the jobless rate down to 4.7%, that is an extraordinary success. and i think it's really wrong for team obama to personally attack him for that. >> only three states were worse than mitt romney's state as governor in job creation, that's 47th out of 50. those are indisputable -- >> you can't grow jobs when you're at full employment. >> i've got to get out. the producers are screaming at me. we've had a great low-key conversation today. keith boykin, mark simone, john hinderaker.

another attack on our personal freedom. this time we're looking at a ban on big-sized sugary drinks. really, michael bloomberg? what do you have against slurpees? free market capitalism still the best path to prosperity. i'm opposed to all forms of cronyisms or subsidies. they never work.

all right, folks. here's an outrage story. a soda ban in the big apple? seriously? new york city mayor michael nanny state bloomberg wants a city wide ban on all sugar drinks that measure larger than 16 ounces. seems like just yesterday when bloomberg was banning transfats, french fries, smoking, lightb b lightbul lightbulbs, now large sodas? really? where will the madness end? here's the mayor trying to explain himself. take a listen. >> everybody's wringing their hands saying, we've got to do something. well, here's a concrete thing. you can still buy large bottles in stores, but in a restaurant, 16 ounces is the maximum that they would be able to serve in

one cup. if you want to order two cups at the same time, that's fine, it's your choice. we're not taking away anybody's right to do things. >> all right. i just want to put this up before we finish the narrative. all right, this here is 16 ounces. this is what bloomberg's talking about. this is okay. now, if i have this right, this is 21 ounces. i happen to like -- i happen to like vente cappuccinos at starbucks, that would be banned because it's 20 ounces. here's a bottle of soda that would not pass the test. there's distinctions. and you just heard the mayor say, well, gee, if you want to get up in a movie theater and buy two 16-ounce sugary sodas, then you can. now, how stupid is that? you can't have one, it's 21 ounces, but you can buy two? if you think it's not healthy, ban it altogether. the whole thing smacks of a loss of personal freedom. and let's bring in our expert rick berman, the executive

director at the center for consumer freedom. rick, i hadn't actually heard this. i read the story in the "new york times" this morning. bloomberg -- i think he just said on that tape that we ran, if you're in a theater, i think he said this, and you want to go back and get a second one, i guess a second one of these, go right ahead. but this will not stop you from getting fat. i mean, if he's worried about sugar and fat, why doesn't he ban all of it and let's have it out once and for all? >> well, because it's politically dangerous for him to get too far out there. in the movie theater, there's only one cup holder, so you'll have to hold one instead of putting it in the cup holder. it is really ridiculous. if this segment is called outrageous, i think on this one you ought to say it's moronic. i cannot believe they're going down this path. and what's more troublesome to me, in this area they usually go for taxes to try and somehow depress consumer behavior to buy things, now they're going for the size of products. and so you can ask yourself what comes next after they legitimatize this whole concept of size?

because then pizza slices could conceivably smaller than they are today by law, and then the -- what's the size of a hamburger? how many chips can be in a bag of potato chips. there's no end to this concept. >> how is he going to enforce this? seriously? >> it's -- >> are we going to have police -- >> yes. >> patrolling movie theaters, patrolling starbucks, patrolling retail stores. seriously, we have these police who are so -- i hate to say this, i love the real police force, but these parking attendants always giving you tickets for double parking by the meter. are we going to have that kind of policing of this? >> what you've got here are the health inspectors allowed to go into restaurants. you mentioned slurpees in this segment, they wouldn't be covered because they're in seven-eleven and they aren't covered by this. they're off limits. but movie theater cup sizes, restaurant, fast food places, cup sizes, those would all be policed by the health inspectors who come in -- >> what about economic freedom?

let's do this thing one last second. last thought. why leave seven-eleven alone? i have nothing against seven-eleven, but why leave them alone? >> because he doesn't have the authority. >> why not penalize everybody? or why not penalize nobody? and whatever happened to the notion of personal freedom and consumer choice. to me, rick, that's what this is about. michael bloomberg, nobody should be able to tell us what to eat. that's the deal. >> and you ask yourself if this is the role of a mayor of a city the size of new york to be figuring out cup sizes in a restaurant. >> all right. we've got budget deficits here, we've got unfunded pensions and health care benefits, we've got tax rates that are vastly too high, uncompetitive, new york city's golden corporate days have been over, and this guy's worried about slurpees, great. >> it's outrageous. >> appreciate it. up next on "kudlow," the pivot point for organized labor,

wisconsin unions are folding. you're not going to believe the numbers coming up. democrats are shaken and breaking out their big gun, i guess, bill clinton. he used to campaign against governor scott walker. this race could be the end of big labor in wisconsin. scott walker's going to win pulling away, the "kudlow report's" coming back with staggering numbers on the shrinkage of labor on wisconsin.

i'm jane wells in los angeles with a news update. facebook finally had a good day as investors began to buy at about 2:00 p.m. eastern driving the stock up 10% from its intraday low. still, it's down 22% from its ipo price. space x's "dragon" capsule landed in the ocean right on schedule this morning looking like a large scorched cork. the successful mission giving a big boost to space x and the future of spacecraft. former senator john edwards after the hook after a jury found him not guilty on one count and deadlocked on the rest. the judge then declared a mistrial and ended his campaign fraud case. he was accused of diverting campaign distributions to support his mistress and child. he told reporters he did an awful lot that was wrong but did not break the law. and the house of representatives voted down a republican bill that would've made it a federal crime to perform -- let me say that again. perform or coerce a woman into a

gender-based abortion. when larry returns, on wisconsin, the recall election against governor walker heads into its final weekend. the "kudlow report" will be right back.

welcome back to the "kudlow report." i'm larry kudlow. in this half hour, after another batch of anoemic statistics today, i have to ask this question, is it possible that we have entered the front end of another recession? is it possible? and why doesn't president obama get that threat? plus the dow is off 6%, nasdaq down 7%, commodities dropped 11%, all in the month of may. not good. we're going to do some stock market work later on. but first up, it's absolutely panic time for democrats, panic. team obama sending in the bill clinton cavalry to wisconsin for the tuesday election. it's not going to work. scott walker's going to win pulling away and get this factoid, government unions in wisconsin, government unions in

wisconsin have lost 50% of their membership in just the past year that scott walker has initiated his union fiscal reforms. so let's talk about this. joining us now, democratic strategist jillian epstein, and matt lewis at the daily caller. jillian, i want to start with you -- i know you're not going to agree with me, but this number is absolutely staggering. the principal government union in wisconsin, the state and local municipalities, the membership has gone down from 63,000 to 28,000 and the teachers union membership has gone down from 17,000 to 6,000 not because of layoffs, but because of walker's reform says no dues, you don't have to pay dues, only voluntarily and those folks don't want to pay it and they've left the union. i think that's extraordinary.

>> well, some of it is due to people not paying dues and some of it is due, though, to job loss. it's due to both of those factors. and, you know, i think as far as the election goes in wisconsin right now, some of the polls have walker ahead, some of them have him in a dead heat. i think at the end of the day, however, it will not be a referendum on how democrats are going to do in november for a whole bunch of reasons. and it's not necessarily even a referendum about public employee fights in other states, as well. because there's so many factors at play here. >> well, all right. matt lewis, the average polling gives walker now a seven-point lead. here's one that's also very interesting. even in union households, 39% support scott walker. and i want to come back to this point. the implosion of the public union government union membership after scott walker said you don't have to pay union dues if you don't want to. isn't that one of the most important reforms we have had in our lifetime? >> it's huge.

i think, you know, the republican chairman said that this, you know, courage is on the ballot in wisconsin. and i think that if scott walker is survives this recall as it appears he will, this, larry, will send -- i'm not so concerned about november. but think the big message this sends. you can be sort of a thatcher, you can do things like chris christie and scott walker. and since he's been in, they've added about 30,000 jobs in the state of wisconsin. you can do big things and be rewarded for them. that is huge. >> and -- >> let me tell you why i wouldn't read all that into this election. first of all, on the walker recount, they have outspent the barrett campaign by about 7 to 1, $21 million to $3 million. secondly, there's a huge amount of fatigue that occurs after 15 months of a battle.

third, the national democratic party has stayed out of this fight. in fact, yao got spokesmen from the obama campaign and the dnc saying this is not our fight. very different from what the rnc has done. and fourth, there is a sense amongst wisconsin voters that a recall is like an impeachment and they don't necessarily want to decapitate even if they disagree. i think it's very dangerous to start extrapolating the results into anything else. >> let me challenge you on this. >> okay. >> originally, this was a cause celeb. big labor being the key constituent or one of them of the democratic party. i think what's happened is, first of all the labor candidate lost in the democratic primary. and second of all, they see the handwriting on the wall. the public unions are highly unpopular, their power went way too far, and scott walker curbed collective bargaining, stopped the tax increases. in other words, i don't think the democrats just walked away from this.

i think they see uttou utter de and don't want to be part of it. >> i'm not sure about that. i think there is some fatigue after 15 months, a huge money disadvantage for the public employees and the democratic candidate on this. no question about that. and, you know, it is true the democrats started walking away from this a long time ago. at least the national democratic party. and that said, there's still some polls. a poll shows this tied. the fat lady has not sung yet. i think it's a real danger to look at a poll now. and even if walker retains his office to begin saying that teaches us a lesson about other public union fights, or what's going to happen in november. i don't think it extrapolates. >> jillian's asking some key political questions. what are your political answers? if scott walker wins, that's a big, what does it mean? what does it mean to the unions? what does it mean to the election in november? does it put wisconsin in play? that's a state that people didn't think would be in play. >> well, i think nationally it does imply that there is --

remember in 2010 there was a tea party movement and obviously energy from conservatives. clearly that is not happening now on the left. progressives are as he mentioned tired and played out. there isn't this passion. but i will say there is an interesting cross current at play here. i predict that president obama in five months will be bragging about the jobs just like scott walker is today. they've added 30,000 jobs in wisconsin, property taxes have gone down for the first time in a dozen years. i predict that scott walker's success could actually help barack obama and that obama will be bragging about the jobs in wisconsin. >> look at what obama's polling numbers are, he's up by about 7 or 8 points in wisconsin right now. how do you make sense of that? since particularly at least nominally he's been aligned. that's why i think it's hazardous to begin saying -- >> i think you're right. >> i still think the big lesson

isn't november. it is that governors like chris christie and scott walker can do really big things. it used to be if you went after the labor unions, you were dead. i mean maybe literally, but i mean that figuratively. nowadays i think this sends a signal it will embolden governors around the country you can take on the unions and survive politically. >> on that point with all of these people leaving the labor unions because they do not want to donate anything to the labor union's political fund and the fact that 39% of union households support scott walker that, is a sea change, whether there's national implications or not. i don't know, gentlemen, i see this as a real watershed election come tuesday. thank you very much for helping tonight and matt lewis too. we appreciate it. now we've got another big labor story. for all this bashing of private equity by big labor, that's the private equity bashing by big labor, it turns out big labor is a big customer, wouldn't you

know it? cnbc did a little digging and homework from eamon aftjavers w has the whole story. >> private equity as you well know has been front and center during this political debate. and if you've been following it at all, you might be under the impression that obama allies hate private equity. after all, take a listen to what teamsters president james hoffa had to say on may 7th. saying mitt romney represents everything that is wrong with our financial system. he made his money by destroying u.s. businesses, sending good-paying american jobs overseas, and filling his pockets with millions while putting workers out on the street. but, larry, it turns out that the teamsters don't actually hate private equity. they only hate a certain kind of private equity. and, in fact, teamsters pension funds around the country have a lot of money invested nems in private equity funds.

in fact, more than $1 billion invested in private equity according to teamsters officials i talked to. i spoke with the western conference teamsters pension trust head who oversees investments there. he says i cringe sometimes when i hear them beating up on private equity for the sake of beating up on private equity. you can do so-called social investing and make just as much money as these others. so what are the teamsters talking about here? on the one hand criticizing bain capital, on the other hand investing about $1.3 billion in private equity. they say they're investing in worker friendly private equity funds, those funds that are not destroying jobs, growing businesses. and they see no contradiction in the rhetoric about romney and bain capital and their own investment decisions, larry. back to you. >> thank you, eamon. at least we've got teamsters in the union movement who understand how capitalism works unlike some folks in the white house. now, we have this just into

cnbc. nancy reagan has come out to endorse mitt romney. just a few moments ago mrs. reagan telling cnbc in a statement that she had mitt and ann romney over for milk and cookies. here's what i love about nancy. she said, ronnie would've liked governor romney's business background and strong principles. and i have to say, i do too. to go on, i believe mitt romney has the experience and leadership skills that our country so desperately needs and i look forward to seeing him elected president in november. how about that? great stuff. thank you, mrs. reagan. coming up on "kudlow," one of the worst months for u.s. stocks in years. the dow down over 6%, may treasury bond yields, commodities all collapsing. what if you never heard about europe? what if? that's my question. still ahead tonight, we could be on the verge of another recession. many signals are pointing down. and get ready to say adios to

president obama if that happens. i'm not calling a recession, i'm just saying it looks like we are getting closer and closer. you'll want to hear this discussion.

all right. let's do some stock market work now. we close the month of may with mayhem for the markets. let's look at the month. the dow off 6%, nasdaq down 7%, oil tumbled 17%, other commodities dropped 11%. the greenback dollar up 5.5%, and the euro tumbling. let's talk, here's jim lacamp, and steven weiss, and the author of "the big win," the new book? >> yes. >> all right. gentlemen, here's what i don't want to do, rehash the combinations of europe and greece. assume we don't know anything about greece, we never heard about spain in spanish banks, we don't care about the eurozone, it's in the hospital on your consciousness. in that event, would you be bullish or bearish on u.s. stocks excludeing all of europe? >> i'd be bullish.

>> why? >> well, i think we can get a very strong number tomorrow. gave me the numbers the last two months, they were correct downward, they're looking for possibly 200,000 jobs. and they're at the forefront of the data. if you had that good of a jobs number, you have an economy that wouldn't be 2% without what you don't want to mention, you'd be closer to 3%. you've got the consumer feeling much better. they've got money in their pocket from utility costs lower, gas at the pump lower, that immediately translates into spending consumer based -- >> good optimistic vision. i want you to go through the same thought experiment. you are not permitted to talk about greece, spain, italy, or europe. that's gone. in that event, they do not exist, would you be a bull or bear in stocks? >> well, if he's right about the jobs numbers, maybe i'm bullish, but i don't think he is right about the jobs number. all the data, you look at the adp numbers, they point to a soft jobs figure. granted consumers may have a little more money in their pockets from lower gas prices,

but gasoline and food prices are still higher than they were a year ago. and if we look at consumer spending, which is stagnating, consumer incomes, which have stagna stagnated, and we see consumers are dipping into savings, this can't last, we have to -- >> so you're a bear on this story? excludeing the eurozone you would be a bear, is that fair? >> not really. because excludeing europe if we can do that, then stocks are still more attractive than other asset classes. but i wouldn't be buying them tomorrow. i'd wait for this correction to play out and buy them in the fall. >> you'd wait. what about this -- i see two sides to this. you've got like the chicago fed report today was lousy. a lot of these local fed reports have been lousy on manufacturing. okay. but, you've also got a 1.5% ten-year treasury. whatever it finished today, 155, does that not at some point boost the value and the valuations of the stock market. profits relative to incredibly low interest rates. how does that figure into your calculation? >> well, bonds are in a bubble.

and right now it's in the hyper phase of the bubble. so, you know, it's how every other bubble forms. how we start with housing, the internet, bonds no different. europe is there, however, that's what keeps me bearish. and i was net short, now i'm basically flat because i think you're due for a bounce. what you have to do is take a look at the asset allocation that will go from bonds to equities at some point. it's not there. >> can't you just -- this is an important point. with super low, record low 1950-style long-term and short-term interest rates, profits up, whatever you want, 5%, 6%, 7%. that ain't bad. does that not make the stock market particularly cheap? and you're not allowed to talk europe. just on the basis of blinders for america, this great country of ours. this wealth creating capitalist society if certain people would leave it be. would you buy with low interest rates and rising profits? >> bear in mind that you're tethering stocks to a benchmark

that's being held at artificially high prices. so your anchor there is not really something you can count on. the other thing about bonds is, one of the reasons they're rallying is because of fears of deflation. >> that is correct. >> and maybe recession. this is where i want to go. what are the threats of the deflationary recession in the united states? >> look at commodity prices. >> right. important things. >> we should be rallying if oil prices are tanking, but we're not because they're tanking because of fears of deflation. we've still got iran and israel issues, yet oil prices are -- >> all right. you snuck that in. i'm not going to let you. you have a fairly rosy scenario, but he's making good points about deflating commodities along with deflating interest rates and that could deflate a lot more in the economy. what is the risk of that? and might the stock markets plunge from whatever mid to late april? >> commodities are going to go lower. china's being the biggest consumer of commodities and they're switching away from

infrastructure, and i think that's going to be a positive. but i'm not going to mention what you don't want me to mention -- >> cannot mention them. >> without that, though, that's a positive because profit margins will increase with u.s. companies and i'm still a dollar bull. you and i were the first dollar bulls out on the street. >> i just don't want it to get too great too fast. >> if you look at the measures of china that can't be manipulated, electricity usage, things like that, suggests that the chinese market and the economy is really that lot softer than the government -- >> we're going to leave it there. we have a bull and a bear excludeing europe, eurozone, spain, italy, greece, whatever. just to have some fun, folks. that was merely a thought experiment. jim lacamp and steve weiss and did it awfully well. next up on "kudlow," could be on the verge of another recession. i'm going to stay with this theme. many signals are pointing lower. get ready to say adios president obama if that's the case. we're going to debate out whether we should be worrying about the recession when the

"kudlow report" returns.

the last thing we can afford is a return to the policies that got us here in the first place. not now. not with so much at stake. they want to give banks and insurance companies even more power to do as they please. but that's not new. that was tried, remember?

the last guy did all this. some have said i blame too many problems on my predecessor, but let's not forget that's a practice that was initiated by george w. bush. >> all right. so much for ecumenism and the portrait. that was our president bad-mouthing president bush for the sad state of the economy. it was awkward moments for the two of them today at the white house and as we explored in the last segment, i want to ask this, are we headed for another recession? numbers are pointing down. now we got two ace cnbc people to talk about this. jared bernstein, jimmy pethokoukis. i'm looking more at the science of this than the politics. you've got a 1.9% gdp report today. the last four quarters the gdp has averaged 2%. many economists and i don't care whether they're democrats or

republicans would argue if you are hovering around 2%, any little small shock could throw us back into recession. so i ask, could it be that we are on the front edge of yet a new recession? >> no, i don't think so, larry. i mean, the probability is never zero at that kind of thing. and you're absolutely right. when you're growing at trend, which is what i would call 2%, you're more vulnerable to a shock than if you're growing faster, and let's face it, there's a bunch of shocks out there and you know them well. you p went over them with your earlier panel. think of it this way, i think we have to distinguish between what's really a clear deceleration, a slowing of some key indicators including jobs and that's not a good thing, but it's very different than crossing zero and going into recession -- >> yeah, but -- >> one little thought -- >> let me bring jimmy -- >> sure. >> jimmy, when you're at 2%, i don't know what a slowing means. there ain't much room between 2% and zero or minus 1%.

besides the gdp report, your jobless claims went up today. you've got collapsing interest rates, treasury bond rates are collapsing, commodities are deflating all over the place. people are worried about tomorrow's jobs report, jimmy p. serious question, why aren't we thinking about contingencies? or what the heck to do if we slip back into a recession? >> listen, if we just stay where we're at, i think it's horrible. i'm astonished that jared bernstein would call 2% growth trend. he's completely downgraded the u.s. economy and our growth potential, 2% growth trend. listen, our trend is more like 2.83%. >> oh, no, no, no -- >> that's issue number one. issue number two is -- we should be in a panic -- we should be thinking about what to do. i don't way to be in another situation where our best idea is just a bunch of temporary tax cuts and sending more money to states and local governments. we should be talking now about,

a, extending those bush tax cuts permanently, immediately, immediately cutting the corporate tax rate to at least 25%. just for starters. >> so -- >> this is not a political tactic -- >> no, let me get out of politics for a second -- >> i'm saying when you get down to the 2% trend line for gdp, you have no margin of error. that's the problem. >> that's the red zone. that's the red zone. >> i tried to make that point in my first comments, you've got less margin for error. but, jimmy, look, the underlying growth rate of productivity right now is around 1.5% and the labor force is growing very slowly. and the proof that 2% gdp is about trend is because we're at 2% and unemployment rate has been stable. >> listen -- >> no, no, jimmy hold on -- >> the past 50 years -- >> there you go, if you've got to trend gdp growth based on rules, that is about trend. it's not fast enough growth. you and i are on exactly the same page.

and i very much agree with the kudlow point that we need some cushion. >> what do you want? another $800 billion stimulus like we just had? is that your solution? >> i definitely think we need more job creation. >> yes, it's your solution -- >> thank you, good idea. >> another anemic jobs report tomorrow will be a very bad signal. i'm not predicting recession, i'm just saying we could be on the front end of something nobody wants. thank you, jared bernstein, thank you jimmy pethokoukis. that's it for tonight. we'll see you tomorrow.