president obama could lose because his message is not working. well, what's he going to do about it? and fed head ben bernanke cited a lot of risks and problems but he did not pull the qe trigger. that's why gold fell $44. the kudlow report just moments away. okay. so china's good, europe still not so good. china, i still believe, would not act unless something's in the works, but spain felt very emboldened. the problem is i'm talking about spain and china when i'm talking about so many companies doing well in this country. but you saw from the clothes, sometimes it just doesn't matter. i promise to find it just for you right here on "mad money." i'm jim cramer. see you tomorrow. larry huge guest tonight, speaker boehner. >> that's right. i flew down here to washington for a sitdown with house speaker john boehner. he told me no fiscal solution until after the election. that is not good.

good evening, everybody. i'm larry kudlow. this is "the kudlow report." our top story tonight is my exclusive sitdown with the house speaker john boehner. he told me house republicans will pass a full tax cut extension in the next month. but he, boehner, does not believe president obama is even going to pick up the phone to talk until after the election. and that means markets and business could be in for a rough summer of uncertainty. and i ask the speaker this. take a listen. do you think president obama is an amateur when it comes to compromising, to leadership, to making that deal? is he an amateur? all right. you'll see the interview in its entirety. that is moments away. plus the president tonight on his way back from his record 153rd fund-raiser hobnobbing with hollywood. now democrats are running scared that president obama could lose the election over the economy. the clinton pro-business wing

may be deserts the party. blue collar reagan democrats in swing states like wisconsin deserting the party. even "time" magazine reports veteran democratic strategists are now wondering if the obama re-election crew is working with the right message. also thank you, an exclusive interview with erskine bowles of bowles/simpson fame. why wouldn't obama embrace it and afoid financial armageddon. the last thing you want to do in the u.s. is do what they're doing in greece where politicos have turned ugly live on tv. check this out. oh, my god. well, we haven't reached that point yet. hopefully we won't. this evening on kudlow, ben bernanke on capitol hill being grilled. we talked about a lot of risks but we didn't talk about action and he did not pull the qe trigger. my favorite fed indicator gold is the barometer.

it dropped $46. and that to me says no qe-3. first up, governor romney back out on the trail today. so is president obama whose tally now stands at 153 2012 campaign fund-raisers to date. now, that's a lot of fund-raising. cnbc's own john harwood joins us with the details. good evening, john. >> good evening, larry. as you know, mitt romney has been getting help from prominent democrats like bill clinton in making the argument that president obama doesn't understand free enterprise. so he pressed that argument today by going to missouri and making the case that president obama simply doesn't understand the market and he, mitt romney, does. here's mitt romney. >> from the stimulus bill that brought us solyndra but left us with record high unemployment, to the job crushing regulations of the epa and other regulators, to the smothering economic effects of obama-care, this president's misguided policies have seemed muddled, confused

and simply ineffective. it's painfully obvious that this inexperienced president with no experience as a leader was simply not up to the task of solving a great economic crisis. >> now, mitt romney clearly understands the free market and campaign donations because look at these figures from may. mitt romney and the republican national committee outraised president obama $76 million in may to $60 million. the obama team pointed out that john kerry outraised george w. bush at a similar point in 2004 so it's not that significant, but president obama was again on the defensive as he was traveling his official event amid campaign fund-raisers blaming congress for not taking up his jobs agenda. >> some of these folks in congress are a little stubborn. so i need your help. you got to tell congress don't double my rate. i know sometimes it seems like washington isn't listening and,

frankly, congress sometimes isn't, but we're talking about issues that have a real impact on your lives. >> but of course, larry, as speaker boehner indicated to you, that stubbornness is on both sides and almost certainly ensures that there's not going to be major action on the economy between now and november and everybody's got to get used to that. >> john harwood, you have said that to me several times. not until after the election. you are right. i got to give you full credit. because that's what speaker boehner told me. you were dead right. i regret that because i think that markets and business would rather see some certainty, but you called it. boehner doesn't even think -- he doesn't even think the phone's going to ring. thank you for your update. i appreciate it. now, when i spoke with house speaker john boehner told i ask him exactly when he and the president will sit down and work out a deal on taxes, on spending, on entitlements, anything, you'll see the entire interview in a few moments, but this is what he told me.

take a listen. >> there's nothing in the works, nothing. the president's been campaigning full-time. he's not around to sit down and have a conversation with, a serious conversation. and they've shown no inkling of attempting to address this before the election. >> nothing in the works. really? is the president too busy campaigning or can it be the president simply doesn't know what to do? it is any wonder democrats are now worried obama is going to lose in november? so let's talk about this. we welcome back atlanta mayor kasim reed, jennifer reuben, author of the washington post's right term blog. mayor, thank you for coming on. >> glad to be here, larry. >> to me, sir, it's not hard. the president should get home, he should be calling boehner. they should be sitting down to deal with the fiscal cliff which is going to upset the economy and throw it into recession. that's what he should do. he ought to do it right now because i don't think america

believes mr. obama is worried about the economy as problem number one, mayor. tell me what's your take on this because i think the president's in a heap of trouble. >> first, it would be good for people to remember that the president is the one that rescued us from the fiscal cliff first time. he engaged with leader boehner in a very constructive way. they couldn't get a deal done. you know that leader boehner could not sell the deal when they were trying to get a grand bargain and he couldn't get it done. but the president has to make sure that he is re-elected to continue the leadership that he has for the last 3 1/2 years. and this is a president that has proven that he can do multiple things at one time. that's what you have to do when you're president, as you well know. >> well, i do know -- >> he's not going to get amnesia, larry. >> he's not building confidence. look, in december 2010, there was an agreement, okay, after the tea party election -- i want to go to gdp on this just to refresh everybody's memory. regarding extension of the tax

cuts, jimmy p., they got that done in december 2010. and for the life of me, i don't see why they can't deal with this whole fiscal cliff. they don't have to do entitlements. they don't have to do everything under the sun. just do the essential things that the cbo says if you don't do them, we're going into recession. in other words, obama should be trying to defeat a recession right now instead of out in hollywood with another fund-raiser. >> well, listen, if the president was not the amateur -- if it was the pro, if it was bill clinton, he'd be triangulating all over the place an rejoin it in 2013. i think the mayor was on to something. i think we know what the president's economic program is. it's his re-election. he believes the best thing we can do for the economy is get re-elect re-elected but he doesn't want to win re-election that requires him to sign off on the bush tax cuts.

he'd wish to barely win than win handily and sign off on those bush tax cuts. >> let me tell you -- >> hang on, mayor, i want to get jennifer reuben in. i got another beef. we saw in wisconsin that blue collar democrats, we used to call them reagan democrats, 30% of the union households voted for republican scott walker. we've seen other polls and other indications that pro business democrats, i'm going to call them bill clinton democrats, may be walking away from obama. jennifer, politically, he's surrounded, he, president obama, with a bunch of left-wing advisers. he's surrounded by them. he needs to get rid of his left-wing advisers. valerie jarrett has given him bad advice, david axle rod has given him some bad advice. he needs to bring some bill clinton people in there so he can change his tune. >> i'm a compassionate conservative. so i made a suggestion to the president and that was to dump david axelrod rod. he didn't take me up on that. the problem is not with the

advisers, it's with the president. he does not want to extend the bush tax cuts. what he's risking is a further downturn in the economy which won't help his election prospects. i go back to the mayor, he has a different recollection than mine. the grand parghen as "the new york times" and the "washington post" both reported were ditched by the president not by john boehner. so had the president done that h the president adopted simpson/bowles, had he put forth his own tax reform bill, we would not be in this problem as a country and he wouldn't be in this problem in toefrms re-election. >> atlanta mayor kasim reed, would you explain to me why president obama has not embraced and pushed simpson/bowles, i got erskine bowles to come on and talk about it. this would have been a perfect thing for him to do. >> larry, you know there are a number of elements -- i think that the folks who are on are having one of these campaigns of amnesia. it was the republican party and the leadership in congress that took our country to the verge of

a fiscal cliff and caused our bond rating to be downgraded for the first time in the history of the country. the president was working tirelessly. vice president joe biden worked tirelessly to get a deal done. john boehner couldn't sell it. and everybody knows it. that's where we were. >> that's just incorrect. >> the question about simpson/bowles. i can answer that question. simpson/bowles is a plan, it rais raises, enshrines obama-care, but that was not enough for the president because it also lowered tax rates for wealthy people for everybody for businessmen and this president is committed to raising tax rates to levels we have not seen since the 1970s, so he killed it. >> that's why he's cut taxes 18 times. >> he took it to levels we've not seen since the 1970s. >> you know, jennifer rubin, in the interview, which is going to come up later with speaker boehner, we talked about this, why didn't that deal get done last summer?

and he said, because at the last minute president obama put in another $400 billion in taxes. >> correct. >> there was already $800 billion in tax. >> then why don't they -- >> excuse me, mayor, that's exactly right. >> right now. >> mayor, i don't know how you run atlanta, i'm sure you do a great job. >> balance the budgets, no tax increases. >> but raising taxes right now with a 1.9% gdp economy, there can't be anything worse. that's why bill clinton is trying to telegraph good advice to sign the whole tax extension and mr. obama won't listen to clinton. clinton has the story right. >> let's go back to -- >> two things, excuse me, now that -- >> let's do it now. >> listen, if he wants to put the 800 of the original deal on the table, i think mr. boehner might take that. >> let's get a deal. >> well, the president wanted to go back to the original deal? is the president willing to go back to the original deal? he wasn't. he pulled the rug out from

speaker boehner. that's been reported in reputable newspapers, very liberal newspapers. >> and the opposite is being reported as well. >> no, it is not, it's just factually wrong. >> that's the buffett rule. >> we're not going to sell this tonight. it's not personal, but i believe that president obama really needs some new advisers who are not ultra-left and ought to go to the clinton camp to get them, but that's another subject for another debate. mr. kasim reed, mayor reed, thank you very much, jennifer rubin and jimmy pethokoukis. back when president obama was able to bring both sides to the table for a budget deal. i'll ask his former chief of staff erskine bowles why president obama won't do it now by embracing simpson/bowles. ben bernanke warns congress we're hurtling towards a fiscal cliff, but bernanke did not pull the qe trigger. why didn't he? we'll debate.

free market capitalism is the best path to prosperity. to the obama advisers know this?

all right. with this fiscal cliff quickly

approaching, why is team obama unable to get anything accomplished with congress? why can't they make a deal on extending the bush tax cuts? president clinton was able to work out the deal. he balanced the budget he had tax cuts in that. president obama was a no-show even for his own fiscal commission called simpson/bowles. we have erskine bowles, chief of staff of president clinton and co-chair of president obama's own financial commission. i'm like one of your biggest supporters. >> thank you. >> you've got pockets of support everywhere in the senate and they're trying to cook up something again. but seems to me you can't put torque behind your program until the president fully embraces it, and i do not for the life of me understand why he hasn't. what do you think? >> oh, larry, i think he didn't embrace it because he felt if he used it as a framework for his discussions with speaker

boehner, he'd have a better chance for success. i disagreed with him. i wish he had embraced it. i think he'd be in a better position today if he had. >> but the big story today posted up on drudge and going to be through "time" magazine, democratic consults, senior guys in the party, are now really worried that obama's going to lose. it appears that with the deteriorating economy and a lack of business confidence, he's not doing anything about it. and again, i come back to simpson/bowles because you've got all these components on spending reform, entitlement reform, tax reform. you got what, $4 trillion plus in deficit reduction. exactly the weaknesses that the president has. why? how? what's going on here? >> you know, we got this thing done in 1996 because we spent months and months locked up together negotiating this balanced budget agreement. we got the majority of the republicans, the majority of the

democrats in the fiscal commission that al and i headed up, we got that done because we established trust and mutual respect. we've got to get these guys together. the first thing we've got to do is we've got to take this tax code, we've got to quit talking about these bush tax cuts and talk about reforming the tax code. we've got to simplify the code, we've got to get rid of this back door spending in the tax code. and we got to use about 90% of the money to reduce rates, larry, and about 10% of the money to dere deureduce the def. if we do that, we'll have absolutely dynamic growth in the country. >> you don't have to persuade me. i'm totally with you. it's interesting, erskine, i had jeb bush on the show yesterday, i interviewed him yesterday. he's actually talking about some compromising. the common ground is what they're talking about, that's the new phrase, common ground. i actually heard that from speaker boehner today, common ground could be reached if people were willing to reach it.

jeb bush, for example, said how about 10-1, spending cuts to tax increases? i think you were about 3-1 in simpson/bowles. >> 3-1. >> in other words, why aren't people looking for common ground? i think the whole country wants some common ground. and i think you guys hit a home run. now, what's missing? what can happen right now? you've got a bunch of senators, there's a story on politico about this today. what can happen right now to get simpson/bowles back on the table front and center? >> i think it's going to happen. we've got about 47 members of the senate, 24 republicans, 23 democrats who have embraced what we're doing. we've got about 150 members of the house again a relatively equal number republicans and democrats. we've taken that original plan. we've now put it in legislative language. we're going to get it scored by cbo, so that when the time is right, we're ready. that's the key. you can't wait. you've got to get ready and you've got to be prepared so that when they're ready to drop it in and when the country has

come behind this we can get it passed. >> i think the time is right right now. >> oh, look, i do, too. >> the time is right this summer. if we can't solve this fiscal cliff business with the congressional budget office saying no solution to the fiscal cliff there's going to be recession, i think the time for simpson/bowles is exactly this summer. if the big guys won't get to it, then let's bring in the other troops. let's bring in the calvary. >> i think about this guy who was a nobel-prize winning scientist who, you know, had a project that was running out of money, and he turned to his team and he said, hey, we're running out of money. now we got to start thinking. well, that's what america is. we're running out of money. now we got to start thinking. we got to make these tough political choices. we got to set priorities. if we do that, this country can compete with anybody. but if we don't, we're well on our way to becoming a second rate power. we've got to get to work and we got to do it now. >> amen. erskine bowles, thank you for your great service and appreciate you coming on the show. >> thank you, sir.

>> up next, my exclusive sitdown interview with john boehner. he told me house republicans will pass a full tax cut extension next month, but he does not believe president obama is even going to pick up the phone until after the election. my thought, that is not good for the market, that is not good for business. that is not good for anybody. we can't wait. the interview with boehner is coming up next. please stay with us. [ male announcer ] how do you trade? with scottrader streaming quotes, any way you want. fully customize it for your trading process --

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welcome back to the kudlow

report. i'm brian schactman with a news update. lloyd blankfein is rooting for europe. he says the debt crisis is a very big test for europe as a concept and he doesn't believe a greek exit from the euro would be a lehman-like event. the goldman sachs ceo was testing again in the trading trial. angela merkel set in a tv interview that europe was ready to act to ensure stability as fitch cuts spain sovereign rating by three notches today. by some estimates spanish banks need 40 billion euros to keep their doors open. when larry comes back, his exclusive interview with house speaker john boehner. you do not want to miss it.

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welcome back to "the kudlow report." i'm larry kudlow. in this half hour, ben bernanke gets grilled in front of congress, he warns of a fiscal cliff and congress warns him he needs to do something about it. the question is what? go for qe-3 or stop qe-3?

we'll have the vice chairman and the former chair of the economic committee. because he didn't pull the qe trigger today, the stock market rally fizzled and we still have europe to worry about. will europe bail out spanish banks? we'll break it down for you. but first up my exclusive sitdown interview with house speaker john boehner. i flew to washington this morning to ask him whether anything can be done to avoid a rocky summer for markets and the economy by dealing with the tax and fiscal cliff sooner rather than waiting after the election in the lame duck. please take a listen. >> well t house is going to act. and the president's policies have failed. as a matter of fact his policies have made things worse. instead of working with republicans to fix our problems, you know, he's been out campaigning every day. but the house has already passed 30 bills. today will be 31 bills. over in the united states senate, they're sitting there. maybe the president could call harry reid and say, hey, why

don't you start looking at some of these. they all passed with bipartisan support in the house. next month, we will move a bill to extend all of the current tax rates for a year. >> and that's going to be the income tax -- >> income tax. >> the payroll tax cut for a year? >> no, income tax rates, all of them go up. we're going to continue all of those. the capital gains rate of 15%, tax on dividends at 15%, continue the fix for the alternative minimum tax. and all of the '01 and '03 tax cuts. >> estate tax? >> we'll extend the current estate tax plan for one year. and we will also work to outline our principles for reforming the tax code. the reason this isn't permanent and only for a year is that we really do want to fix our tax code, but the corporate code and the personal code, bring down tax rates, get rid of all the excess deductions and credits and all, car have been out the

nonsense that we have in the code today. >> so you have a tax reform outline as part of this legislation? >> an outline because we believe that the only way we're going to achieve real economic growth is we've got to fix our tax plan. and we've got to stop the regulatory nonsense coming out of washington, d.c. >> so let's look at this. i guess you got bill clinton on your side, i guess, at least that was his first instinct. and i think he's a pretty sly fox. >> he was for it before he was against it. >> that is true. >> but whether larry summers, peter orszag, a chorus of democrats now agreeing that we need to extend these current tax rates because of the economic uncertainty. listen i used to be a small employer. when there was this much uncertainty out there, i sat on my hands. i put the cash in the bank. >> and business may have stopped hiring because of this. >> it's very possible. >> let me just ask you now, you got clinton and you got summers and you got peter orszag and you

have ken conrad, all these leading democrats -- >> i wouldn't be surprised if the president doesn't come out -- >> but you don't have the president yet. >> i wouldn't be surprised if the president doesn't come out and say in spite of everything that i said, we need to extend these -- >> he made the statement yesterday, he said only the middle class tax cuts, not the upper-end tax cuts. he's still bashing rich people. he said he won't go there. speaker boehner, what are you going to do about that? >> listen, the president's policies have failed. as a result he's turned to the politics of envy and divide. listen, the american people are going to vote with their wallets. the election is going to be a referendum on the president's economic policies. we're going to move the extension of all the current tax rates in july to try to get as much of this done before the election as possible. but you know, we've got a crisis in europe. they're in a deep recession that's affecting our economic growth, and i suspect the problems in europe get bigger

before they get smaller. >> but the end -- >> and as a result, there ought to be a conversation and a negotiation now. >> right. >> to deal with all of these issues. if we're truly serious about helping small businesses and helping investors create more jobs in our economy, we need to take the uncertainty away because, in addition to all of that, we've got another increase in the debt ceiling staring us in the face at the end of the year. >> at the end of the day with all these issues, aren't you going to have to sit down with president obama, and what a lot of people want to know is, "a," when might that happen, and "b," it is going to be a repeat of what happened last year where all the chaos and uncertainty, you had a deal, you didn't have a deal, you had a deal, you didn't have a deal, hurt the stock market, hurt the economy? are you going to sit down with him? how's this going to work? is there a compromise in the works? >> there's nothing in the works, nothing. the president has been campaigning full time. he's not around to sit down and have a conversation with, a

serious conversation. and they've shown no inkling of attempting to address this before the election. >> the best-selling book on "the new york times" book list today, last two weeks is called "the amateur." and it's about barack obama. do you think president obama is an amateur when it comes to compromising, to leadership, to making that deal? is he an amateur? >> well, i don't want to use a derisive term to talk about the president, but here's the challenge. the president is a nice enough guy. just never done anything. you know he's never created a job, never run a business, a professor and a community organizer, and i think that's why his economic policies have not worked. they've not attempted to work with us to change their economic policies. that's why the election in november's going to be a referendum on his handling of the economy. >> let me -- i interviewed

yesterday florida governor jeb bush. and he's talking about how both sides are going to have to make a compromise of some sort. now, he said -- he was asked the question about the house budget committee. he said, would you take ten to one? would you take ten dollars of spending cuts for one dollar of revenue increase, and he said, yes, he would. i want to raise a second point. i heard governor chris christie a couple of times say, look, politics is about compromise. you can compromise without giving up your principles. that's called leadership. i want to ask you would you be prepared to compromise in a deal with president obama? >> i was last summer willing to find common ground. i don't think compromise is the right word. >> what is the right word? >> finding common ground. i didn't expect the president to walk away from his principles, and i don't think the president expected me to walk away from my principles. but having said that, the american people expect us to find enough common ground to

address the problems in our country. what we need here in washington are more leaders with more courage. a courage and conviction to do what the american people want. if you look at what happened in wisconsin the other night -- >> right. >> scott walker, the new governor, took bold action to try to do what the people of his state needed and was rewarded for his courage. >> did you see some of the polls, 38% of union households voted for scott walker? 38% of union households. do you think the reagan blue collar democrats who may be just as worried about fiscal bankruptcy and social values as anybody else, do you think they're coming back to the republican party? >> i certainly think they're available. the american people will vote with their wallets, and whether it's a union household or nonunion household, they're getting squeezed, gal olene prices higher, grocery prices

higher, health care higher and their incomes flat if they have a job. >> what does mitt romney have to do to get those blue collar households? that could be the swing factor in this election? >> he's got to continue to talk about his plan to fix our economy. it is the issue, and he needs to talk about it all day long. >> is he specific enough so far to your satisfaction? >> i think so. >> what he said, he gave an interview to "time" magazine and he's talking about this whole year-end extending the tax cuts. romney agreed with you, he basically said let's just have an extension of everything but not go into a grand design or grand bargain, not go through entitlement reform and tax reform until he is sworn in. and so you may have a new senate as well. so do you agree with that? in other words, is extension enough? or are you going to go to the white house and negotiate something that mitt romney might think is not a good idea? >> extending the tax rates to provide certainty for small business people across the country. when it comes to the debt, the

deficit and the debt limit and the sequestering, those conversations, the sooner we deal with this the better, but i don't see any inclination on the part of the white house to do that. >> markets are going to look at chaos, business will stay frozen. >> larry, it's the debt. and washington's unwillingness to deal with our spending problem. >> but it is also the tax rates. it is supply side. you know that. if businesses see taxes going up, if they fear it, all this uncertainty, the unemployment rate probably go up. you'll be accused of wanting to have a bad economy. the white house will say that. >> i didn't go down to pete peterson's debt summit and give a very detailed speech about the challenges that we face because i want to root for a bad economy. what i'm trying to do is prod washington to do the big things that we need to do. >> but you're not optimistic

about getting a tax extension deal before the election. so we're going to be in for some rough sledding. >> could be. but the house is going to do its job. i can't control what the senate does or can't control what the white house does. i would hope that they would understand that if they're serious about economic growth and putting the american people back to work, extending all of the current tax rates would be the first big step in the right direction. >> and if the president calls you, do you answer the phone, go down there and talk? >> absolutely! absolutely. >> and for a one-year extension for the taxes? >> yes, sir. >> all right, speaker john boehner, thank you very much. we appreciate it. >> thank you. >> all right. so he was very honest about this, speaker john boehner. he said nothing's going to happen until after the election, that puts it all into the lame duck congress. and the question is can it all get done there? can we avoid the fiscal cliff and the lame duck congress? i don't know how investors, i don't know how men and women in

business are going to react to that, but i don't think they're going to be thrilled about it. and i think people in the senate, the house, may try to rush the process, but speaker boehner's probably right. it takes two to tango and you can't get it done unless he works with president obama on common ground. i worry about this story. i think it's got a disappointing theme to it. we'll see how it ends after the election. anyway, up next on "kudlow," let's go to ben bernanke. he says all the options are on the table when it comes to the u.s. economy, but the message from congress today was loud and clear -- less is more. take a listen. >> i wish you would take a third round off the table. i wish you would look the market in the eye and say, the fed has done all it can, perhaps too much. i wish you'd look at this president in congress in the eye and say, it is time to do your job. >> all right. well, the man who helped bernanke's feet to the fire, that's the vice chairman of the joint economic committee kevin

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during his testimony before the congressional joint economic committee this morning. take a listen to this. >> the federal reserve retains broad-based authority to provide liquidity against collateral in the event of intense financial stress. that was retained in dodd/frank. and in its role as liquidity provider of last resort the federal reserve stands ready to do whatever is necessary to protect our financial system. >> all right. let's talk. with us are carolyn maloney, larry kudlow's congresswoman, she's the democrat from new york, and the former chair of the joint economic committee, how about that? and the committee's current vice chair kevin brady, republican from texas. carolyn maloney, let me just go to you. bernanke outlines it's not a good economy, he's worried about employment and unemployment, he's worried about europe, fiscal cliffs, he's worried about everything, but he didn't pull the qe-3 trigger. do you think he should have pulled the qe-3 trigger?

>> i don't think he wanted to make any commitments before the june 19th federal board meeting so he didn't come out strongly in any direction. he kept all options on the table. but many of the people around him did pull the trigger for any stimulus that's needed or any support for a fragile economy. janet yellen, the vice chairman of the fed, most economists, zandy to nobel laureate krugman, to more involvement, particularly when you see the crisis in europe and downgrowth in china, 2% looks good. i think he's done a good job, mr. bernanke and hopefully he'll do everything he can to keep this economy moving and to support a fragile economy. >> i pose the same question to you. as carolyn put it, you got a shaky world economy, a fiscal cliff, anemic economy here at home. is it bernanke's per view?

should he ease? >> no, q he-1 and qe-2 didn't work to produce the high. it gave us a sugar high in the stock market. it creates more uncertainty within the market. and again, i think the real problem is that we're facing this fiscal cliff that congress has not got its financial house in order. the president continues to talk about higher taxes on job creators, and now we've seen just this tsunami of red tape on businesses as well as his health care plan. i think there are limits to what monetary policy can do, and we've reached them. >> carolyn maloney, have we reached those limits? let me just pause this, i want to set this up. we've had roughly a trillion dollars in federal government spending, but with the fed, they've created roughly $2.5 trillion of new money. and what we got out of that is really the worst recovery since the end of world war ii. what happened? why didn't this work? you understand the economy, you are on the joint economic committee for years, all this

fed stimulus, it didn't work. what happened, carolyn? >> first, larry, let's put it in perspective. when president obama walked in the door this economy was shedding 750,000 jobs a month. we've now had, because of his fiscal policy, 27 months of job growth creating 4.3 million jobs. that record is 60% better than george w. bush's record in 7 1/2 years. >> well, larry, if i could, not to interrupt carolyn, but i like to point out that unemployment rate averaged 5.5% under president bush. i wish we will that same type of record under president obama. dead last in modern history economies is not a good record to be running on. >> well, i tell you, the republican record of supporting the old european policies of austerity and growing unemployment, they're at 11%. if we keep following them, we might get to 11% unemployment. we need a balanced approach,

that's what the president's calling for. and that's what actually chairman bernanke called for a palled approach. put everything on the table and solve this. >> let me come back to monetary policy for just a second, let me come back to the fed. kevin brady, you don't want the fed to come in -- actually, i read -- i watched on youtube some of your remarks a tt hearing today. you're worried about inflation and you don't want the fed to pour more money into inflation. >> yes. >> if you look at some of these market price indicators, the dollar is soaring, commodity prices are falling, oil is falling. that's probably a good thing. but it's another deflating commodity. the crb commodity index is deflating. are you at all worried, kevin brady, that there may be a greater risk of deflation right now in the usa and the world economy than inflation? >> you know, that always is that concern. as you know, deflation is so tough to battle. one of my big worries, again,

about shoving all this money into the economy is you really planted the seeds for inflation. you don't see it until it's in the pipeline. and it will occur so quickly the fed won't have the chance to exit appropriately and in time. and again, back to the uncertainty. i really think job creators back home are not waiting to hire people because of what the fed will do. they're not hiring because what government will do to them, higher taxes, not handling their financial situation, the regulatory flood that they're experiencing today. >> you know, ms. maloney, as a supply sider, i would prefer to lower marginal tax rates. you know that and are probably bored to tears, so i won't take you down that road again. but i will say this, as a longtime watcher of the fed, and i used to practice economics for a living, if the problem is deflation, carolyn, the solution is, in fact, to print more money. i'm going to give you the last word. what do you think? >> well, chairman bernanke testified today that he did not think that deflation was a

problem at this point. he said that we needed a balanced approach, that we had to address this with a balanced approach that implied not only austerity and cutting back but also revenues and investments in our infrastructure. why in the world can't we get a transportation bill? that used to be like apple pie. let's put americans to work and repair the 2 trillion of damage that has been reported in our infrastructure. >> over 30 jobs bills to the senate, the senate's sitting on 30 separate jobs bills to get the economy going. that's what we ought to be doing. >> and the president has sent over his transportation bill, his jobs bill, his balanced approach that would have tax breaks for everybody except for zillionaires and billionaires, even buffett supports it. >> both of you, you're great. i'm sorry, i've just got to move on. we've got one more segment to do. i would just suggest to you, be

careful about deflation. sometimes it creeps up on you. house member ps carolyn maloney and kevin brady. >> good to see you, larry. good to see my neighbor. >> up next, ben bernanke didn't pull the qe-3 trigger but china did, by the way, china cut rates. the question now if the market rally fizzled today, what is this summer going to hold for us? follow us on twitter. @the kudlow report or # kudlow. ttd#: 1-800-345-2550 ttd#: 1-800-345-2550 let's talk about how some companies like to get between ttd#: 1-800-345-2550 you and your money. ttd#: 1-800-345-2550 at charles schwab, we believe your money should be available ttd#: 1-800-345-2550 to you whenever and wherever you want. ttd#: 1-800-345-2550 which is why we rebate every atm fee worldwide. ttd#: 1-800-345-2550 and why our mobile app lets you transfer funds,

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welcome to the world leader in derivatives. welcome to superderivatives. well, stock markets fizzled after a big morning rally. the dow closed up just 46 points. the s&p flat, the nasdaq fell 14. you can almost chart it when the fizzle began. when bernanke didn't pull the qe-3 trigger when he had the chance, well, the dollar went up and gold went down. so what were investors looking for? joining me now ceo of bear and bull part nrs. i want to ask you what the market wants, but i just want to note, dollar up, gold down, dollar up, cbo down, dollar up, oil down. my last panel wasn't worried about deflation, but i want to ask you, are you worried about

deflation? >> absolutely. as a matter of fact, so is our fed chairman. that's one of the reasons why he's leaving all of those options open. everybody is so concerned about when you do the analysis it's deflation that's the real enemy. the enemy that every central banker knows they have to fight. the big difference if you notice, when we see oil prices going down. we don't look at it as bad news. we look at it as a tax break. in the long run, it might be. >> that's right. but sometimes the symptoms -- i mean, look, europe is suffering from deflation. the united states has a bout of deflation. i'm not sure it's a huge virus. china may be having some deflation. i don't know. but it just seems to me, jack, the inflation hawks right now kind of have the story wrong. it's awful hard to find any inflation. >> it is hard to find inflation. on the other hand, you know, there's not really a case yet for qe-3. and that's really what the fed chairman -- in fact, i love what

the fed chairman said today. he is connected to mario droge at the hip, because they both said the same thing. they scolded their respected politicians and said, hey, get your act together. that last segment was great. it's indicative of what is going on here. we are now facing this fiscal cliff, talking about the extension of the bush tax cuts. first of all, why do they even call it a bush tax cut extension? it is now the tax code. let's face it. all right? so any kind of an increase is a tax increase, plain and simple. it's no longer rolling back things. >> right. >> i think for us to fool ourselves into thinking anything else is wrong. >> last few moments, jack, right now this is a tricky market. i don't think there's a lot of confidence in the market. what's your single favorite investment, 25 seconds? >> i like buying financials when everybody else is selling them. i think that they're going to surprise people the second half of the year. i think europe gets its act together and we are very, very pleased with what our banks do, which are, by the way, in great shape.

>> so actually you're a bull? >> i'm a bull. i think we're on the bottom of the range, 1260 in the s&p is the lower end of the range. lower your protection and buy the market. >> thank you very much for that. that's it for this evening's show. thanks for watching. there will be a lot of pitfalls, folks. all i can tell you is we'll try to take you through them all. politics and money. washington to wall street. i'm larry kudlow. we'll see you tomorrow night. have you ever partaken in a car insurance taste test before? by taste? yes, never heard of it. well, that's what we're doing today. car insurance x has been perfected over the past 75 years. it's tasty. our second car insurance... they've not been around very long. mmmm... no good! no good? no good!

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