to its high of the year. why? because it's making the right acquisitions, making the right job cuts and it has fabulous earnings momentum. then there's groupon. what can i say about groupon? will it stop at the six level? as i always say to my friend david faber on "squawk on the street" it's too early after tonight's quarter to buy groupon. where she stops, nobody knows. but stocks do not go through certain key levels, like zero. there's always a bull market somewhere and i promise to find it for you right here at "mad money." i'm jim cramer. see you tomorrow. hey, larry. welcome back. what do you have for us? >> thanks, buddy. could romney veep paul ryan be the key to the election. i'm larry kudlow. this is "the kudlow report," back from the olympics and raring to go. our top story, republican vice presidential candidate paul ryan makes his first solo campaign stop at the uh iowa fairgrounds.

you, the kudlow viewer, now paul ryan well through our many interviews. i have known the congressman for over 20 years. he'll tell us why this country is on the wrong road and president obama is to blame. also joining me tonight for a first on cnbc interview, former minnesota senator tim pawlenty, cochair for the romney campaign and the dow drops. the s&p takes its first hit in seven days. we ask why is there a surprise spike in gas prices? 34 cents up since july 1. it could sink the consumer and the economy. first, i'm proud to say paul ryan has been a guest on the show many times. he's an old friend. he and i talked about his bold fiscal reforms as he became the intellectual leader of the house. back in march he made the urgent case for reforming medicare. please take a listen. >> the debt crisis is a spending driven crisis.

there has never been a moment where the other side has been willing to do fundamental entitlement reforms necessary to prevent a debt crisis. the problem, larry, is partisan roadblocks in the white house and senate, doing nothing and the white house isn't offering a solution to the fiscal problem. >> you know i'm saying these things with the greatest respect and affection. >> i love you, too, larry. >> i think somehow we've got to have a deal. >> that was just a little talk about compromise on the floor. medicare just the first monster under the bed. paul ryan wants to break the cycle of obama-era deficits. trillions of dollars worth. here it is. >> he's given us four budgets, $4 trillion deficits. four budgets that do nothing to address the ticking time bombs. it's a fiscal crisis. by his actions he's telling us he doesn't see it coming. he doesn't understand this. his people understand there is a cliff coming, but they are not

willing to do anything about it which is strange to me. that's why we need a leader. i'm here campaigning with mitt romney because we need somebody in the white house who will see this problem for what it is and get this debt under control before it gets out of our control. that's why i'm saying we need a new president. >> all right. after the house approved the ryan budget he took the senate and white house to task for their choice not to engage to bring spending under control. here it is. >> the debt crisis is a spending-driven crisis. there's never been a moment where the other side has been willing to do fundamental entitlement reforms in the first place. the problem is partisan roadblocks in the white house and senate, doing nothing the senate and the white house isn't offering any solution to the problem. >> you know i'm saying these things with the greatest -- >> i i love you, too, larry. >> all right. once again i was asking about a possible compromise about the fiscal cliff and ryan was clear

no compromise in sight. that's still true. there are worries that we are never going to make a deal, never going to have a compromise deal to save our credit and debt ratings. paul ryan is, right now, clarifying and emboldening the free market, free enterprise romney campaign. good for ryan. he's a man of bold ideas. he will make the contrast between president obama's big government, tax the rich, spend and spend, his government dependency and entitlement. ryan, supply side tax cut reforms, assault on unnecessary spending. his attempt to avoid entitlement bankruptcy and his devotion to economic growth to fix america's problems. all of it, and i mean all of it is to my liking. growth, growth, growth, paul ryan. stay on that track. remember what ronald reagan and

jack kemp taught us. growth solves almost all the problems. all right. let's bring in our ace political strategists. here now, veteran democratic strategist robert schrum and dick armie. dick, will ryan re-energize team romney with a bold message of economic growth and a mandate to govern? >> oh, yes. there is no doubt about it. the selection of paul ryan is a triumph of substance over ceremony, policy over politics. this is a man who understands the grieve use nature of the problems facing this country and has had the courage knowing the onslaught he would be faced with by the demagogues to step forward with a plan. bless his heart, it's nice to see somebody who dares to take on the big problems. he has an enthusiasm for getting

things fixed that i think will affect the campaign. >> bob schrum, my friend, we have a great youtube clip playing to millions of viewers in this white house conference. paul ryan takes president obama to the cleaners on obamacare. so ryan must be your worst nightmare. >> no, actually. i half agree with dick. he does energize the base. as i wrote in the daily beast column today, at the end of the election we'll have a new rule about vice presidential selection. don't pick a man with a plan or at least don't pick somebody with this plan. look, he doesn't balance the budget until 2040. let's stop talking about fiscal restraint. number two, he doesn't make medicare solvent. he makes seniors insolvent and puts them in a tradition where if they want to keep medicare they have to pay more. he devastates college loans, investment in education, investment in transportation. i call this the ryan-romney

ticket. in that sense i agree with dick. uh think ryan is a disaster for the republican party. >> with all respect to my friend bob. >> i'm glad you respect me, too. >> i call this bankrupting america. that's what i i call it. with no growth, government dependency going to 70% or 80%. that's what i call it. sometimes i disagree with bob schrum. at's your take? >> well, first of all, bob is giving us wrong inflation. h's able to be wrong on four out of three points. the fact of the matter is paul ryan's plan on medicare frankly which he worked out, by the way, across the aisle with the democrats' own favorite son on the subject, ron wyden, is a plan that saves medicare, makes it possible to keep commitments and gives young people freedom

to choose. this is what drives the left nuts. they can't imagine a government program where people are free to enroll or not enroll if they can do something better for themselves in the private market. they need a mandatory program that requires everybody at 65 to let the government be their only insurer of first resort and forces them out of any opportunity to choose from the private sector. that's wrong. that's just wrong. it's against the whole concept of -- >> if that weren't bad enough -- excuse me. >> under the ryan play seniors pay thousands more a year. >> hang on a second. >> no one disputes that. even ryan. >> hang on. >> the vouchers go down in value over time. >> i dispute that. you are ignoring the effects of free market competition. >> oh, the insurance companies are really going to come up for something to help seniors, right? that i i really disagree with you about.

>> how about taking millions out of medicare. you can't save it by taking $750 billion and transferring it to obamacare. >> in ryan's own plan he uses it for tax cuts for the rich instead of plugging the donut hole forcing seniors to pay 100% of prescription costs between $2,000 and $5,000. today seniors under the ryan plan go back to that. >> dick? >> how must have given ron wyden all sorts. >> he has you agreeing with him. >> no. the fact is medicare, as we know it today is the nation's number one worst possible threat for a national government insolvency and ruination of the company. >> say it to everybody. that will make sure the republicans lose. >> the do-nothing democrats have done nothing but -- >> that's not correct.

the affordable care act extended the life of medicare. >> we'll continue to search for common ground. thanks to bob and dick. we hope you will come back soon. let's switch gears to look at politics. wisconsin has traditionally been a democratic strong hold in presidential elections going back to ronald reagan in 1984. for an election which is going to come down to a crucial few swing states, will paul ryan now put wisconsin in play for republicans in november? let's talk to an expert wisconsin republican senator and romney campaign supporter, senator ron johnson. thank you. ron johnson, you won as a republican. the governor ran twice as a republican. can paul ryan carry it for romney? >> well, larry, i'm coming to you here from the iowa state

fair. we have stock car races behind us, so i have to talk loud. absolutely paul ryan can win wisconsin. what's changed? since november 2010 when our debt was exploding it's just gotten larger by $2.5 trillion. wisconsin is a fiscally conservative state. the citizens of wisconsin have a funny notion that government should live within its means. i see no reason why we shouldn't deliver ten electoral votes to romney. >> ryan's district in jamesville is a blue collar district that leans democrat. if he can win that and move around the state, this is what scott walker did. this is what you did. you conceded no ground. wisconsin, despite all the left wingers in madison, seems to be moving in the republican column. can it happen? >> larry, i think paul won his district with 64% of the vote when obama won his district. you know what? it will be difficult for the

democrats to demonize paul ryan. he's a wonderful man. a great father, great husband. just an aw shucks, regular guy. americans will like paul ryan. >> senator johnson, paul ryan attracted blue collar democrats in jamesville and it's the first congressional district. can he take that and move into michigan, into iowa, even into pennsylvania? in other words is there a strategy to work the middle west because he knows how to talk to blue collar democrats who are very unhappy and don't have a job? is it possible he'll run through the midwest and surprise people? >> i think out's very possible, larry. americans, first of all, are hungering for leadership. they are getting none from this administration. they are willing to be told the truth. what this signals is governor romney is committed to making this an election about big

ideas, big issues, actually solving the problem. unlike this president, how about unlike harry reid -- to be solved. >> does paul ryan put the gop ticket back on the offensive? last question, senator johnson. >> absolutely. you know, a romney-ryan ticket, another name for it is a winning ticket. it puts us on offense. uh could not be more pleased. this is an exciting pick. i'm looking forward to the november election. >> thank you very much, senator ron johnson, republican of wisconsin, at the iowa state fair. coming up, the s&p ends its longs winning streak since december 2010. why didn't stocks rise on romney's pick of paul ryan? we'll ask the highly regarded jason trenet. how will the romney campaign rebut democrats attack on romney's plan? we'll ask co-chairman and former

minnesota governor tim pawlenty. folks, free market capitalism is the best path to prosperity. that, by the way, is paul ryan's kre do, too. i'm kudlow, i'm delighted. we'll be right back. credo, too. i'm kudlow, i'm delighted. we'll be right back. there are a lot of warning lights and sounds vying for your attention. so we invented a warning you can feel. introducing the all-new cadillac xts. available with a patented safety alert seat. when there's danger you might not see, you're warned by a pulse in the seat. it's technology you won't find in a mercedes e-class. the all-new cadillac xts has arrived, and it's bringing the future forward.

[ male announcer ] when this hotel added aflac to provide a better benefits package... oahhh! [ male announcer ] it made a big splash with the employees. [ duck yelling ] [ male announcer ] find out more at... [ duck ] aflac! [ male announcer ] ...forbusiness.com. ♪ ha ha! ♪ it's something you're born with. and inspires the things you choose to do. you do what you do... because it matters. at hp we don't just believe in the power of technology. we believe in the power of people when technology works for you. to dream. to create. to work. if you're going to do something. make it matter.

we have been talking politics. let's do stock market work. the s&p ends the longest winning streak since 2010 with a small loss today. dow was down 39. na ended the day in positive territory. we'll call it mixed. let's talk to one of the best and brightest investment strategists on wall street, he's the chief investment strategist at strategis partners. i don't want to talk politics, but quickly, paul ryan free market tax cutting, jack kemp reagan kudlow type guy. how come the stocks didn't like it more? >> i think the fundamentals of the economy are trumping the announcement of the weekend. i truly believe that a romney win will have a greater impact

now that ryan is on the ticket. it suggests romney wants to be more than win. he wants to engage in fundamental reform. the impact if he were to win is greater with ryan on the ticket than other gentlemen that were mentioned. >> go back to basics. why do you think the economic fundamentals are lousy? to me, that's an obstacle to a stock market rally. >> listen, mainly because profit margins are two standard deviations away from the mean. nominal gdp growth is very weak. it's already probably in recessiona ry phase now. it's difficult, i think for companies to maintain profits at these levels. interest rates couldn't be much lower. labor costs couldn't be the much lower. there is no incentive to hire before the election. if you look at since 2009 profits are up 98%. top line is only up 2%. it's all profit margin.

companies have done a wonderful job. eventually you need top line growth, revenues to sustain the profits. that by itself makes you cautious on stocks. >> no question that there is enormous bernanke and draghi put. everyone is concerned if draghi clears his throat the market will be up 7%. the markets are clearly deteriorating in our view and in nominal terms i think you grew at 3% in the first half of the year. that's not enough to sustain profits. >> will bernanke clear his throat? >> i think it's harder because of commodity prices. in my view, you're a monitorist. you know what to expect from monetary policy. you have 30-year fixed rate mortgages at 340. when chuck schumer says get to work germany, no.

you have to do more. the fed has done plenty. the fed has given at the office. >> time for fiscal side. you've got the fiscal cliff, the threat of a humongous tax increase. what does that do to the outlook? >> it makes it worse. we were calling for a mild recession without the fiscal cliff. >> beginning when? >> probably in the first half, maybe second or third quarter of to 13. the fact that nobody takes out up before the election has growth now. >> business is slowing, investment is slowing. >> what company would make a significant change in terms of capital spending, employment, m & a, any of those things, every day that gets closer to the election. >> where do you run and hide? >> it sounds cliche. i think we have a group of stocks called the new

sovereigns. they are companies with the lowest credit default swap spreads. it's the big uglies. >> big cash flow. >> merck, intel. >> all right. jason trennert, one of the best of the best from strategic research. another broken dream from obama. a new report shows taxpayers could lose a lot more than $25 billion on that oil bailout. that auto bailout, that gm bailout. full details on that thing, plus some of the late-breaking headlines. taxpayers are getting hosed again. you know what i love about this country?

trick question. i love everything about this country! including prilosec otc.

you know one pill each morning treats your frequent heartburn so you can enjoy all this great land of ours has to offer like demolition derbies. and drive thru weddings. so if you're one of those people who gets heartburn and then treats day after day, block the acid with prilosec otc and don't get heartburn in the first place. [ male announcer ] one pill each morning. 24 hours. zero heartburn. [ male announcer ] one pill each morning. so what i'm saying is, people like options. when you take geico, you can call them anytime you feel like saving money. it don't matter, day or night. use your computer, your smartphone, your tablet, whatever. the point is, you have options. oh, how convenient.

hey. crab cakes, what are you looking at? geico. fifteen minutes could save you fifteen percent or more on car insurance. find any supporter of president obama and they will tout how he saved the auto industry. nonsense. even worse now, new numbers are out showing it's costing taxpayers more every day. cnbc's jackie deangelis is here to tell you about that and the latest headlines at the cnbc newsroom. good evening. >> good evening, larry. the treasury department says the government expects to lose more than $25 billion on the auto bailout. that's 15% higher than the previous forecast. it could be as much as another billion more because gm stock has dropped. the report calculated losses through may 31 when gm stock was more than $22 a share. gm closing today at 20.47. house republicans sued eric

holder in federal court asking a a judge to compel holder to hand over documents in the fast and furious case. congressman darrell issa wants the judge to rule that president obama overstepped his authority in claiming executive privilege. groupon reported after the bell reporting weaker than expected sales and lowering the profit outlook for the current quarter sending shares plummeting in the after hours trading session. helen g you recollect rley brown, author of the ground breaking book "sex and the single girl" and editor of cosmopolitan died today. her motto, good girls go to heaven, bad girls go everywhere. and engineers are putting the final touches on an experimental aircraft designed to flow at 3600 miles an hour. tomorrow it will be dropped from a b-52 over the pacific to go mach-6 for five minutes.

the pentagon will be watching. put on a passenger plane you could fly from new york to l.a. in 45 minutes. >> i miss the concord. that was where this whole thing started before the greenies got in the way. many thanks, jackie. coming up, we'll get up close and personal with paul line. ryan's old boss, governor sam brownback of kansas, will join us to tell about the ryan staff experience.

welcome back to "the kudlow report." i'm larry kudlow. in this half hour, what are soaring gas prices doing heading back to $4 a gallon nationwide? i thought it was over. wrong. it may hurt the economy more than you think. plus, what's this talk of a romney-ryan rift? democrats already seizing on it. but romney campaign cochair tim pawlenty gives us the truth. first up, paul ryan did his first solo campaign stop to

rousing crowds at the iowa state fair. uh-uh heard 10,000 people. nbc's peter alexander joins us with the rundown. good evening. >> good evening from miami where mitt romney wrapped up his final event of the day in florida. the tea party favorite marco rubio joined him on the trail. romney homoreads tw to ohio. in the hawkeye state, iowa, today there was a critical show down between paul ryan and president obama. president obama going after ryan today. again referring to him as the ideological leader of republicans in congress. also touching on an issue that's personal to people of the state that have been suffering through a punishing drought pushing ryan

to pass -- ryan going on the offensive attacking president obama for what he referred to as bloated federal spending. he said every turn the president takes is a left turn referring to what he calls his extreme liberal views. ryan will spend the night in colorado before heading to las vegas for an event tomorrow. larry? back to you. >> many thanks to peter alexander. paul ryan is now in the national spotlight but americans know little about the man. who better to ask than his former boss, sam brownback. ryan served as freshman congressman legislative director from 1995 to 1997. was paul ryan, a great friend of mine and yours, a nerd back then? >> yes, but a very nice nerd and one that liked to hunt. he's a policy wonk and he'll drive an agenda about what we need to do to grow the economy, and shrink the federal deficit. >> i didn't know this. paul was interviewed the other day. it turns out now as a big shot

congressman and vice presidential candidate he lives in his office on a cot. he sleeps on a cot every night. did that begin when he worked for you on the hill? >> it didn't. he had an apartment. i think it was broken into while he workford me. we tried to get him at $35,000. i think we had to get it to $42,000 before i could get him on board as the legislative director. he was pushing it at that point in time. he was 24 years old, larry. really a bright guy. you know paul. a very bright guy. a nice guy. incredibly principled. what uh i'm excited about is i think this is going to make the election about the big things instead of the little thing this started off to be about. >> why did you fold on the salary, congressman? you have always been a tough-fisted senator and a tough-fisted governor. you gave me new information.

you fold ed to labor. >> he called my bluff. i really wanted this guy. i was going to give him a lesser position. he got a bigger position and more wages, too. >> okay. let me ask you another thing. we are learning that paul ryan is a gym rat, a physical fitness guy. was that true when he was with you? >> he was. he's also a pure eater. he only eats good things other than what he hunts. he will fix those in ways that aren't as health conscious as everything else. he was a big guy on eating right and on fitness as well. >> was he always as attentive to details and facts and figures as he is today? >> uh i think so. he was then. we were running the new federalist group that was the conservati

conservative. he was always keen on getting the policy right but it had to be very pro growth. he inherited that from jack kemp who was so passionate about it. paul got a passion for nerdish things like policy that i i think will really carry him well in the campaign. it will be fun to watch him in the debate. >> we just had a picture of kemp and ryan as younger men. i miss jack kemp so much i can't begin to tell you. we all congregated, sam, in the empower america operation. jack ran that with some others. paul was an intern. i was one of the original board members. that's where i first met this tall skinny kid named paul ryan who was smart as a whip. >> that's where i i first met him, too. we hired him from empower america. i thought it had it just right of the two wings of the republican party. it was a pro growth wing

represented by jack kemp, a social conservative pro family wing as represented by bill bennett. i thought those were the two key wings that you really grow this country and glide it forward on. i still think those are the right things today. paul ryan represents those. >> i think he'll follow through as he always has. sam brownback of kansas, thank you for sharing personal vignettes. now to the hard-core tough political panel. cnbc contributors howard dean, former vice president governor. jennifer ruben of the right turn blog and robert costa, national review political reporter. robert, a question. is the ryan pick going to be a game changer and is it going to mobilize the tea party for team romney? >> it already has, larry. look at the crowds. i was on the trail with ryan and romney in virginia on saturday. there is real energy behind this ticket. a lot of people thought romney

would play small this campaign. play small ball in responding to the bain capital attacks of president obama. instead of picking someone run of the mill, vanilla, he went with a bold conservative. he's running on big themes, big issues, fiscal reform, entitlement. the third rail of american politics. for everyone who questioned whether romney had the guts to put someone bold on the ticket, this says everything about him. >> jennifer, could you take that up? what does it say about mitt romney and how surprised were you that he would make a bold choice and take a risk with paul ryan? >> i actually wasn't surprised. i have a piece up at my right turn blog, my shameless plug for the day, which details the relationship these men built over a year. romney is not a man without principles. he is as wonkish as we have had on the presidential ticket since reagan. the two of them like policy. they want to do big things. i wasn't surprised as all.

they are very compatible intellectu intellectually. they like each other. there was a buddy feel you could see building over the year. when i saw them in virginia on saturday, you could see also that romney was much better in paul ryan's presence. i think the best v.p. candidates make the presidential candidate better. uh think ryan will do that for romney. >> howard dean, uh want to get your take as an objective observer and former candidate. how do you read this? >> it's an interesting choice. clearly front and center will be whether you want to turn medicare into a voucher program or not. i have polling data from democracy for america which shows even in fairly conservative states like colorado the answer is absolutely not by 3 to 1. we are going to have something to debate. up fortunately for the republicans it will be turning medicare into a voucher program. we'll debate mitt romney's

cayman islands and swiss bank accounts. so, you know, it may have been a bold choice. i'm not sure he gets anything -- >> the reality -- howard. >> seniors are at risk. he does nothing for women because of his anti-abortion stuff. >> this is a canard. >> it is not. >> yes, it is. >> doesn't he want a voucher program? >> both mitt romney and paul ryan have said one of the options is to let medicare stand alone. there will be some trimming of benefits around the edges which has gone back through democrats like john browe and john kerry for years. medicare won't change. >> it certainly is. how can you say that? >> it will still be there. >> that's not true. say you and i are on medicare, for the fun of it. we're not, but say we are. instead of putting us on medicare in the current system he'd like to give us a check.

we go buy our own insurance. >> that's wrong. it is not a voucher system. >> that's what it is. >> no, it's not. you do not get a check. >> that's exactly -- >> no, howard. >> excuse me. >> one at a time. >> we get a voucher, choose insurance. the problem is the value of the voucher doesn't go up as fast as inflation in medicine. what he's cleverly done is what p big corporations have done. he's transferred it to medicare recipients. >> it's wrong. he doesn't give you a vouch. it's a premium support plan. no money kboes to the individual to shop around. you have a choice of plans including traditional medicare. the notion that you get a check from the government and get to spend it is not accurate. what he's said in numerous documents in the budget is this. first of all, doesn't affect anyone 55 ap youngerme. secondly, only individuals who

can afford to pay will be responsible for the excess of their premium costs over what this premium support gives you. third of all, in terms of the medicare system as it is, the rate of growth that the romney-ryan plan has is identical to the president's plan as well. it's .5 plus gdp, exactly the same amount allocated to both. >> all right. let's switch gears. >> nonsense. >> no more on that. i want to go back to robert. i watched carefully and read your tweets about the cbs interview with romney and ryan. it sounded to me like romney is going to give fiscal policy leadership and direction over to paul ryan. so we are going to have a different kind of white house here. i want to know if you had the same thought. omb may report up through the vice president because the vice

president knows more about it probably than almost anybody else. who knows? maybe the treasury department could restructure the white house which wouldn't surprise me given romney's background. >> larry, i spent the last week talking to former bain capital partners. when bain stard started, mitt romney founded it he wanted young talent, youthful energetic mbas to come in. this is a bain capital type pick. romney is looking at this as a governing pick. people say he's pandering to wisconsin, to conservatives, no. if you look at mitt romney's history he's trying to pick a governing partner. with that 60 minutes he's alrea already. who is the person? he picked paul ryan. >> and the added bonus, howard, is that paul ryan will carry wisconsin. >> the added bonus is paul ryan will scare seniors and help us carry florida.

>> jennifer, i don't know about what. you think this senior thing will play in florida. >> he can talk to someone like howard dean and set the audience straight. he wants to save medicare. the president doesn't have a plan to do it. the question is are we going to have the status quo, the fiscal cliff, insolvency from -- pardon the expression -- change of reform. >> i wanted to see howard's expression when you said paul ryan could talk howard dean into a reasonable view. howard, i must give you the last word. >> not very likely. he'd like to cut more taxes and raise the deficit. that's what his plan does. >> thank you, howard dean, robert costa, jennifer ruben. great stuff. coming up, gas prices are 34 cents since july 1. how high will they go and will

this sink the economy? we have the answers next. ♪ why not take a day to explore your own backyard? with two times the points on travel, you may find yourself asking why not, a lot. chase sapphire preferred. there's more to enjoy.

humans -- sometimes life trips us up. and sometimes, we trip ourselves up, but that's okay. at liberty mutual insurance we can "untrip" you as you go through your life with personalized policies and discounts when you need them most. just call... and speak with a licensed representative about saving on your policy when you get married, move into a new house... [crash!] or add a car to your policy. don't forget to ask about saving up to 10% when you combine your auto and home insurance with liberty mutual. security, coverage, and savings. all the things humans need to make our beautifully imperfect world a little less imperfect. call... and lock in your rate for 12 months. liberty mutual insurance.

responsibility. what's your policy? it's got that sweet honey taste. but no way it's 80 calories, right? no way, right? lady, i just drive the truck. right, there's no way right, right? have a nice day. [ male announcer ] 80 delicious calories. fiber one. ♪ [ male announcer ] its lightweight construction makes it nimble... ♪ its road gripping performance makes it a cadillac. introducing the all-new cadillac xts. available with advanced haldex all-wheel drive. [ engine revving ] it's bringing the future forward. gas prices are on the rise

again. what's pushing them up? how high will prices go? addison armstrong of tradition energy joins us. uh i'm so simple uh i think oil prices go with the stock market. they are highly correlated. stocks go up, oil goes up. stocks go down, oil goes down. do you think this will continue to rise back to $4 a gallon? >> it will if we actually end up getting stimulus from the likes of the fed and the ecb and the pboc. you know, this whole market, every commodity is basically bulled up waiting for the stimulus to come. quite frankly, if it doesn't, i'm worried the prices will collapse. >> i'm delighted to hear you say that. i'm not nutty about this. there is a relationship. suppose ben bernanke doesn't do his stimulus dance. what happens to oil prices? >> well, you know, the u.s. is a well known quantity in the oil markets now. we've got lots of oil. we are kind of divorced from

going on in the rest of the world in terms of demand and supply. you know, inaction by the fed isn't really the key here. it's more important that the pboc and the ecb come out and make moves. oil was treading water. maybe $10, $12 lower than we are now until mr. draghi opened his mouth a couple weeks ago. then we were off to the races. >> in terms of motorists you got to almost $4 at the pump, national average. then it drops to $3.30. now out's back to $3.70. is that not a trading range or should i get hysterical and worry about the next economic recession? >> i would worry about demand destruction if i were long gasoline. we can probably go up just on the back of enthusiasm for stocks and hard assets. we can probably go up another five, maybe 10%. getting back up to the nymex high of 3.41 we hit in april is

going to be very, very difficult. we run into demand destruction every time it happens. >> all right. the economy isn't strong enough to take it. >> absolutely. >> thank you so much. we appreciate it. >> my pleasure. >> programming note. stay tuned for "20 under 20, transforming tomorrow." tech investor peter thiel offers 20 teenagers the opportunity to drop out of school and fire up their own businesses. is there a romney-ryan rift developing already? democrats are already playing this up. we decided to get to the truth and ask former minnesota governor tim pawlenty to help separate fact from fiction next. down here, folks measure commitment by what's getting done. the twenty billion dollars bp committed has helped fund economic and environmental recovery. long-term, bp's made a five hundred million dollar commitment to support scientists studying the environment. and the gulf is open for business - the beaches are beautiful, the seafood is delicious.

last year, many areas even reported record tourism seasons. the progress continues... but that doesn't mean our job is done. we're still committed to seeing this through. as part of a heart healthy diet. that's true. ...but you still have to go to the gym. ♪ the one and only, cheerios [ male announcer ] aggressive styling. a more fuel-efficient turbocharged engine. and a completely redesigned interior. the 2012 c-class with over 2,000 refinements.

it's amazing...inside and out. ♪ join mercedes-benz usa on facebook for the best summer sweepstakes.

welcome back to "the kudlow report." tonight we are still talking about mitt romney's bold progrowth vice presidential pick paul ryan. i myself think it's a game-changer. now i want to take the negative side of the story. the dark side. joining us, national cochair of the romney campaign, former minnesota governor tim pawlenty. as always, great to see you. ryan is hardly out there and the democrats are already saying that he and now romney will end medicare as we know it. that's their first thought. what's your reaction to that? >> good to be with you, larry. it's hard for you to be on the

dark side. you're a hopeful, sunny, optimistic pro growth person. as to the attacks on medicare from the democrats on governor romney and paul ryan, there is only one candidate in the race who's proposed, voted for and signed into law cutting medicare by $7 billion. his name is barack obama. if you look at paul ryan's plan it doesn't affect anybody on the program or close to eligibility just yet. it moves the program by preserving medicare overall, as an option for future retirees and also gives them other choices and creates market choices and consumer choices and the only person in this race who has cut medicare, his name, barack obama. >> you treated that very seriously. i'm grateful. i appreciate that. in some sense, since we all know that medicare is going to stay as an option, untouched by paul ryan and i presume governor romney. is this one of the lies coming out of team obama or their friend es in the super pacs like

romney somehow had something to do with this poor woman who died of cancer, like romney hasn't paid taxes in ten years? is this a flat-out democratic smear? >> they don't have a positive record to run on. look at the so-called obama accomplishments. will he say, re-elect me because i passed obama care? no. that's unpopular and misguided. will he say, vote for me because of the porky signature stimulus bill i proposed and passed? no. that's not going to work. will he say, vote for me for my economy killing, relentless calls for tax increase? no. that's not going to work. will he say, i turned around the economy? it's sputtering and anemic. he doesn't have anything positive to run on other than killing osama bin laden which any president would have done. he has no choice but to dangle shiny objects in front of voters and attack. that's what he's doing. it's unbecoming of the office and him. let me give you an example.

he should stand up and denounce that awful campaign ad that essentially accuses mitt romney of killing that gentleman's spouse. >> you're right. it's awful. democrats are uh saying that the romney-ryan plan is for tax cuts for the rich and some of the wise guys in the main stream media are now saying that mitt romney is going to have a big disagreement with paul ryan over their budget. what can you tell us about that? tax cuts for the rich and budget disagreements. >> well, the romney-ryan plan is about getting the economy moving. the president likes to talk about people achieving the middle class. it's hard to be middle class if you are unemployed. it's hard to stay in the middle class if uh you don't have a job. this is about who has a better idea to get the economy moving and get investment and jobs moving in this country. barack obama had a chance. it's a failed presidency, a shrinking presidency. now we have a chance to give

mitt romney somebody who's done this in the private sector the leadership reins. >> do you believe as the wise guys in the media say that governor romney is uh trying to put distance between his budget and paul ryan's budget? is there any of that going on inside the campaign? >> well, governor romney said he'll have a plan. look, he's applauded and acknowledged congressman ryan's plan and views it favorably. he has his own plan. we talked about his tax plan first installment and the forthcoming budget plan as well. there are differences with two different people. but directionally they are moving in the same direction and governor romney has said favorable things about congressman ryan's plan. >> do you think now with the new momentum you have paul ryan out there on the campaign trail with governor romney. yourself and all the other key senior surrogates. can you get back on the offensive? can you get out from the defensive position that seemed to be happening in the last

couple of weeks with slumping in the polls. you know, the ten-year no tax return and the awful story about the woman with cancer. can you regain the offensive with a real growth message? >> absolutely. you saw polls this morning that showed governor romney actually is in the lead nationally. in the swing states it bounces around a little bit. the undecided voters will break against the president. they are undecided not because they are unfamiliar with the president but because they are unsure about voting for him again. absolutely the number one issue will be will i have a job, is the economy going to be okay? are my loved ones going to be okay? governor romney and paul ryan clearly have the excitement. people have figured out barack obama and joe biden, of all people, clearly don't. >> as always, thanks to former minnesota governor tim pawlenty, co-chairman of the romney campaign. good luck. >> thank you, larry. >> a programming night for

tomorrow, two special guests, conservative firebrand and syndicated columnist ann coulter joins us and america's mayor rudy giuliani will talk about whether veep paul ryan is a game changer for mitt romney or not. the power of capitalist ideas from mr. paul ryan. watch it. it's going to work.