romney's growth message. we're going to have an in-depth talk on politics, economy, and stocks with charles schwab. this is "the kudlow report," only moments away. got to take a moment out to congratulate vikram pandit and t i will see you tomorrow! >> larry, what are you looking at tomorrow? >> larry, good evening, i'm larry kudlow. this is "the kudlow report." how about this? women are running away from president obama and pushing mitt romney's momentum in the swing states just before the second debate tomorrow, believe it or not among women, it's now tied at 48. that's a big upset for obama, according to gallup. tonight, our own kudlow debate, democratic congresswoman carolina maloney versus jason

th chavitz. the dow up 9595! retail sales increased in every category and the bad news, still conducting a capital goods strike worried about inflation, an the fiscal cliff. more than 1900 investigations into obama alleged stimulus wrongdoing. we will expose how many millions of your tax dollars have been wasted and get to the exclusive interview of the legendary charles schwab. first up, preparations are under way as president obama and mitt romney face off in their second debate tomorrow evening. here now for a sneak peek inside president obama's playbook, robert acosta of the national review.

what are team romney telling you and insiders telling you about this town hall meeting? >> mitt romney may have excelled in that first presidential debate in denver, larry. tomorrow, it's a totally different format at hofstra university. tonight, what mitt romney is doing tonight is prepping and talking about how he will engage in voters and have empathy. >> you know, obama doesn't really answer question, i don't care what the forum is, gives lectures. if mitt romney answers questions and has empathy, i think he does. obama's comeback could be overrated. >> that's exactly correct. you know who's working witonigh is for romney to be himself from senator portman. not to try too hard to appeal to people but come harvad with the answers. >> do you expect with regard to this aggressive obama i keep reading about, do you expect obama to be aggressive in an

insulting negative way? will he bring up the 47%, bain capital, all the dirt he didn't really bring up in the last debate. >> history tells us obama's always had a cool political temperment. he never gets too hot or too cold. tomorrow, the media will be watching. does he get a little too aggressive? obama was cold in this first debate. tomorrow, important for him to have a little energy. important for him to have balance. if you don't think he will pull an al gore, do you and start walking over to romney to answer a question? >> if he does that, mitt romney should do exactly what george bush did in 2000, a little nod and set the pace. bush did it to gore in 2000 and mitt romney can do the same to obam obama. >> now, let's switch gears and turn to my exclusive sri with charles schwab, thank you very much for coming on, appreciate it. >> i'm a great fan of yours and

watch you every night on my treadmill. >> you're wonderful. i appreciate that. i really do. i have been reading your op-ed pieces. you have endorsed mitt romney. please tell us why. >> i think it's such a critical election, a turning point for the country. the last thing i can do is leave my kids hopefully a change in the administration. >> what were you looking for in this? you have obama, you have romney. it's a very close race. what are you looking for in the romney camp that's pushed you into his endorsement? >> it's all about economics for me, how this country has to return to its founding principles, frankly. it's about free enterprise, about the right to grow, right to do things that we've lost. we've lost that zest. we are in a funk right now. i hope we can restore that position to growth and i think the romney-ryan ticket will be able to do that.

i know congressman ryan, watched his career and watched governor romney what he's been able to do, a guy who can fix it, thinks about things, can negotiate very strongly. he can bring two sides together to get a solution. >> obama argues -- let's look at the obama side for a minute. obama makes the case that he, obama, can make a fair deal with congress. when he's going to do this, i don't know because he had a chance to do it last year and he failed to do it. obama's argument, just to get your take on it, a fair deal means raising tax rates on the most successful earners and small business people and somehow that will balance off spending cuts or entitlement reform we don't know about. >> frankly, larry, i've never seen -- i've spent my whole life dealing with economics and economic issues. unless we get back to lowering our rates and maybe taking way the exemptions people like me have and enjoy, i'm willing to give this all up for a slightly

lower rate for everybody and expand the base of people who contribute to the u.s. government. >> so you buy the romney tax reform plan but you don't buy the argument made by team obama that it's just tax cuts for the rich and the middle class. obama is saying tax hikes for the middle class and tax hikes for the rich. >> it's basically you want a growth policy. at the end of the day, you want to make incentives really an important part of whatever the tax policy is. you want people to work hard, even myself at age 75, i love wo working hard and talk about the senior issues. >> what about the seniors? >> seniors have paid the price in this whole recession. what this administration has done is delegatedny responsibility to the federal reserve. the fed, in response, any only game in town, has lowered rates

down to zero, those of us, like you, who have saved 35, 40 years, have nothing to show for it now. we have savings accounts, cdc, money market funds and get virtually no interest on that and the inflation. inflation in the last four years has been something like 8% total over the last -- >> 2% a year. n negligible in effect. you blame bernanke. it's about a trillion plus savers who rely on interest rates who have lost anything at zero interest rates. he doesn't really talk about that. >> never talks about it. never talks responsibility. i'm not blaming bernanke necessarily per se, i'm saying seniors have taken the brunt of this economic thing and it has been a complete abdication by the administration to the fed of getting -- we will not see interest rates rise until we get

some growth, has to be 3, 3 1/2% per annum growth. we need a president and vice president that understand the issues around economic growth. i happen to believe the romney-ryan ticket are the people who will understand how to negotiate the kinds of fixes we need for the country and get us back to where we should be, growing again. >> and he wants to cross the aisle. he said that several times, he and ryan said they actually crossed the aisle. back to the economy. from your vantage point at charles schwab, we had very strong retail sales numbers today. is it possible the economy is a little stronger than we think, question number one? >> it has to be stronger than we think given the amount of stimulus we put in. the there's been an unbelievable flood of money that's poured in. the retail sales look good. not sure about the unemployment number going down that much. i understand they didn't count california, where i live. that's always a little bit above 10. >> on the jobless claims.

>> on the jobless claims. exactly. i'm hopeful the economy is beginning to turn we all want to feel that way. i don't care which administration, we need to see job growth occur and won't happen until the economy grows. >> business is not really investing right now, almost a capital strike when you look at capital goods, they don't want to make long lived investments. romney wants the corporate tax cut. obama says he does but wants to penalize foreign companies. does that fly with you? why do we penalize foreign companies? >> we want to repat triate that foreign money sitting overseas, that will help more capital investment in this states, more manufacturing coming back for sure and bring that corporate rate down to 25. in our case, we pay a full 38 or 39% every year. it's very difficult at that

rate. >> let me ask you one question. you reported today -- actually, you beat street expectations. the stock went up a little bit. good for you. our research here says we have 300 s&p companies, 300 s&p companies who are below a 20 price ratio. the stock market is not overly expensive with pa 2% economy. what advise would you give on the stock market right now to your own investors and customers and to everybody else watching the show? >> i personally believe in obviously a very diversified portfolio, which includes some fixed income although i'm very nervous about fixed income because we're at the low end of a cycle interest rates come down near zero over a 20-year period of time. when that turns, interest rates start going back next year or we get the economy growing again. that will happen, fixed income investments will go down in value. that will be risky.

>> you should own some stocks? what percentage of the portfolio would you own in stocks? >> for me? a young guy like me? 80%. >> many thanks, chuck schwab, charmed and founder of the charles schwab corporation. i love a young guy like you. hope i look as well. coming up tomorrow, on the eve of the town hall debate. women are running away from president obama and boothing mitt romney in the swing states. a huge turnaround. is it the beginning of the end for president obama. don't forget, free enterprise is the best path to prosperity including the tax cuts chuck schwab and i are always talking about.

welcome back to t"the kudlo report." just ahead of tomorrow's town hall debate, female likely voters send mitt romney soaring ahead of the swing states. this is a gallup poll. romney, 51-48 among all likely voters in swing states. among women, it's tied at 48.

that is a killer for obama. let's talk about this big swing with samstein, political editor for the uffington post and mona, national syndicated columnist. mona, i'm interested how you see this, there's been a huge swing. blue collar waitress moms, blue collar waitress moms, according to the gallup poll, the hardest hit by the economy may be the ones in full revolt. what's going on here? >> first, let me say how proud i am of my sex this evening. not something i can normally say since women have usually been very reliable democratic voters. this is really interesting, very significant. obama needed to win women by a huge margin. really, if you think about what he's been doing all year long, this plea to women voters, contraception, free

contraception and giveaways and so-called republican war on women, all of that was intended to cement those huge margins he had enjoyed up until now. but this is very significant. >> hold on one second. first of all, this is one poll. let's step back for a second and say there's an abc poll that showed obama with a swing state lead of five points. you have to take it one poll at a time. if you talk to the campaign, did today, they seem generally optimistic with female voters, and understand if they were to lose the female vote it would be disastrous. i expect obama to stress a couple of those positions in tomorrow night's debate, contraception and abortion. >> you know what he might find is that's not in women's minds this year. that's a direct pander. they know that and worried about economy and jobs. >> i grant you that. why were the polls favorable to obama prior to this, because they were suckers for the direct pander?

>> no, no. i think they had not fully gotten a sense of who romney was. >> agree with that. >> the romney campaign was kind of absent until the debate. >> romney put on a very good, you know, presentation to women voters in the first debate. came off very moderate, talked about a desire to have a more moderate stance on health care with respect to pre-existing conditions, talked about the economy and how it afektfects wn voters. there are charges obama has been making and have been present and absent in the first debate and i would be shocked if he didn't bring them up. >> can you help me out. i've never seen this term blue collar waitress moms. >> think it's the first time it's been used. >> i've seen soccer moms and hockey moms from sarah palin's campaign. talk to me about that genre.

>> they create these artificial categories all the time. remember when the "new york times" created a white hispanic when there was that trayvon martin thing in florida. a lot of this is pure invention. every year, they pick out a group, this is the year of the soccer mom, this is the year of the angry white male. there is no evidence. you can pick any particular demographic in a close race and say they decided elections. cubans in florida, churchgoers in ohio. >> i agree with this. i think there are definite definitely -- pollsters like to find a proportional electorate that matter. >> i don't want to be d disrespectful. >> economic security, i think that mitt romney was far more persuasive about an economic growth plan and deficit plan in the last debate than president obama. i think he picked up a lot of people.

these are supposed to be late closers. women apparently make their decisions late. what i'm asking you, doesn't mr. obama, doesn't president obama simply have to have a real set of reasons to vote for him on the economy? >> yeah. wasn't that the big -- that was the big problem. you talk to obama advisors, that was the big problem they took away from the first debate. he did 23409 givennot given an different reason they should vote for him. >> it wasn't the first debate, the first four years of his presidency, the problem. >> going into the first debate, they will look at the past job numbers and saw it with the morgan freeman ad. things are going in the right direction not fast enough. the stock market, job numbers, not just blue collar soccer moms, dad's, everyone will feel this upbeat. it's aough sell. >> waitress moms.

i want to meet a waitress mom. i will go to the diner and maybe i will. >> sam and mona, thank you. you can see complete coverage of the second presidential debate right here on cnbc beginning with "the kudlow report." up next this evening, we ill expose how millions of spending system louse, yoyou lus was com wasted. more than 1800 investigations into allege d obama stimulus wrongdoing.

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talk about outrage. there's a report the feds have more than 1900 investigations open into alleged obama stimulus wrongdoing, hundreds of criminal convictions and civil judgments against those accused of misusing stimulus funds, millions of dollars of your tax dollars being wasted. let's try to get to the bottom of this beauty. jimmy, from the mernz enterprise institute. basic facts, 1900 investigations, already 600 convictions, mostly civil, some of it's criminal, from the ig's internal investigators, this whole thing is a big scam, jimmy. >> if you only knew about this from watch iing the

vice-presidential debate, joe biden, you'd think this didn't happen, all the money is safely accounted for, doesn't worry about it. that's the message of joe biden. to a good keynesian, what you described is not a bug, a feature. it really doesn't a matter those guys, as long as the government puts money out there, it doesn't matter if it's used to build a bridge or stolen, as long as it's out there. if those criminals spend that money, fine for the keynesians. >> you have stuff, a couple examples, 16,000 social security dependents matched those names who were dead. 16,000 matched the names of dead people. this small business administration, giving money to companies that defaulted, roughly 400 companies. of course, hhs and head start, we can expect that. here's another one you probably are shocked to hear this. wind power defaults and wind power misuse of funds.

isn't this exactly what happens when the government attempts to have these massive bailouts of the entire country? isn't this always what happens? this is a private sector thing. government is not equipped nor do they have the knowledge to do this? sn>> talk about a top down economics, this is the ultimate top down economics. you're right. this is why the soviet union fell. government cannot organize and keep track of all this money in a huge economy. i think you're absolutely right about this. >> this is like gsa large. you will wind up when all these investigations are closed down, it will take years to close them down, you will have 3, $400 million worth at least of taxpayer fraud. >> remember, this was on the $800 billion stimulus. this administration in later 2009, wanted to spend another $800 billion in stimulus and couldn't get it through congress. >> they just didn't spend enough

money, jimmy, the whole problem. cnbc contributor, thanks. up next on kudlow, must see tv. tonight, our own kudlow debate. democratic congresswoman carolyn maloney and jimmy, a primetime presidential smackdown politely side.

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welcome back to "the kudlow report." i'm larry kudlow. in this half hour, why has america become an entitlement nation? do you know more than half of nations get entitlement benefits of one kind or another? work, faith and family are the tenements of the american family. the social fabrics are at risk

here. we will soon be paying people not to work. what's happening to america and when will we go bankrupt with this money paid out. why is pureital just the best hope, the only hope to rescue our economy? why does government continue to stand in the way? we'll get to that one. first up, president obama and mitt romney set to square off in round two ofhree presidential debates. round two tomorrow night. the president has a lot to prove after getting his clock kind of cleaned during the first meeting. full cnbc debate coverage kicks off tomorrow night at 7:00 p.m. eastern. before the candidates take to the stage, we decided to host our own kudlow debate right before the big debate. here to make the case for the obama campaign is new york democrat congresswoman carolyn maloney and jason chaffetz. you will each get 30 seconds to respond to the question, then

you will have plenty of time to talk amongst yourselves at my discretion, of course. anyway, the first question goes to congresswoman maloney. this morning a rasmussen poll came out, 51% say the benghazi murders of our ambassador, 51% say the murders of our ambassador will hurt president obama at the polls. do you agree with that? >> no, i don't. i believe the president reacted appropriately first to protect americans abroad and then to make it clear that those villians that caused this visit attack will be punished as he hunted down and took care of bin lad laden. thirdly, we need to work to make sure this doesn't happen again. ambassador picker rin's report is scheduled and i'm sure mr. chaff veetz will have hearings it and answers how to protect

our country and make us saver in the future we will move forward on that positive way. >> you have been involved in a lot of investigations and hearings. so many people have said the stories don't seem to work with ambassador rice running around on television a couple weeks ago regarding intelligence and security. i want to ask you the role of the national security council, if joe biden says in his debate he didn't know about the security requests from the state department, wouldn't that stuff automatically go to the nsc and therefore be in a presidential or vice-presidential briefing? >> pleading ignorance is hardly an execution. the realtime is the intelligence community was foreshadowing a problem with libya. there was an assassination attempt. more than 230 security incidents in libya and twice our facility in benghazi had been bombed. my question is why hasn't the president, vice president and secretary of state and ambassador to the u.n., why

aren't they proactively asking what can we do to secure the facility in benghazi. you had flags from al qaeda flying over government buildings. then the excuse afterwards has been con voluted at best. >> to jason's question, why do you think they didn't react proactively, had this information and intelligence, why do you think they didn't react. >> i'd like to ask congressman chaffetz when given the opportunity to vote for more security he voted for half a billion dollars. there's a lot of rhetoric. when you were given an actionable task, you could have voted for that money president obama requested he voted against it along with republican majority. he voted to cut a half a billion dollars out. >> your response. >> over the past five years the state department budget has grown by nearly 100%. when asked directly in our hearing, we asked charlene lamb in charge of this, was the

reason you didn't give more security assets to the facility in benghazi because of funding? she said no. that's a red hearing. it tease distract they failed to protect that facility and covered it up afterwards because every story we heard from this administration has changed over the past four weeks. >> what always troubled me about this story, the state department testified under oath they actually sawhe terrorist attack in realtime on tape, that's the way it works now, so this story that went about that it was somehow a tv video or videotaping and it was a spontaneous uprising never had any creds, never had any creds. i want to ask you, does this story smack of some kind of political orchestration from the white house or the obama team? that question is being asked, does it have any political content at all, this story going about? >> no, not what -- not at

all -- it is the op -- it is the republican candidate and republican majority that is trying to politicize this tragedy. i would say the best way to react is as we did in 9/11. we came together, we were united, we were determined, we appointed a commission. they came back with recommendations, we worked together in implementing most of those recommendations into law, mainly reorganizing our entire intelligence system. it's important to hear what ambassador pickering has to say from his report. >> but we -- >> i preet, larry -- i repeat, larry, there were concrete actions. this budget they cut was for security. >> no, no. >> it was for bricks and mortar and personnel. let's get factcheck.org to come back to the show and look at what it says. i read the text. it was for security and you voted against security -- >> but charlene lamb testified that was not the reason the

request for more personnel was denied. >> was she the one that said it was done in real-time. they had real-time tape that showed there was no spontaneous uprising but a group of thugs came in to overthrow the embassy? >> she testified last week before the committee they would catch it in real-time and the ambassador walked out at 8:30 and the attack took place at 9:40 p.m. and the administration would tell you there was a protest outside. >> where did this story come from. that's why a lot of people -- i will ask you, you've been around a long time. was there any political campaign interference or creation of this story by ambassador susan rice that it was all about a video and a spontaneous protest that never occurred? where did this story come from? >> that's why we need to look at ambassador pickering's report. >> but you don't think it came from the campaign?

>> in terms of your own judgment, you do not think it came from the campaign? >> no. absolutely not. in fact -- in fact, candidate romney -- candidate romney came out and made pronouncements before -- he has been the one who has tried to politicize this. >> it is wrong to suggest that the congress should just trust the administration, just trust them. i was in libya, went there two saturdays ago. i was there almost all the day. there wasn't a single person the entire day that ever mentioned a video. >> i was in libya, too. i was there in march with leader pelosi. i was really struck by how the people were so supportive to america and appreciative of our support -- >> that embassy was bombed twice and they reduced the number of security personnel in the country. that is just wrong. >> the demonstration of support by the libyan people of ambassador stephens very moving.

i think the majority want democracy. >> i agree. the libya people are basically our friends except this radical fringe. i do not understand how vice president biden and others can say they didn't know about the security request from the state department. i will tell you this, jason, having worked inside the white house in the office of management and budget, the national security council would have known about those state department requests for more security because libya was very special, as congresswoman maloney is saying, libya is very special. if the nsc knew, why didn't the oval office know? >> the regional security officer, eric nordstrom, the man on the ground charged with protecting americans in libya made multiple requests for additional personnel. that was denied. his written e-mail to us was they were pressured to quote unquote normalize the situation as swiftly as possible on a political timetable that was arbitrary timetable.

>> congresswoman maloney, i will give you the last word because i think the national security council knew, it was put in the president's intelligent briefing book and therefore i think there is something of a cover-up going on. you get the last word. >> you said it, you think, you don't know. >> i do not. >> i would say. >> i'm asking you. >> i would sane the great country of america we should look at the facts, not you think but what are the facts? we have a republican who served in the reagan administration, ambassador pickering, who i am sure will work with republicans and democrats and interview everyone and come forward with the facts. before we pounce out there and make statements we should know what we're talking about. >> i got to go. >> in this sense of this, we should be united -- we should be united protecting americans and going after the terrorists and really supporting libya in their historic movement towards democracy. >> house members caroline maloney of new york and jason chaffetz of utah.

i appreciate it truly. you can see complete coverage of the second presidential debate, not this one but the second presidential debate on cnbc beginning with t"the kudlow report." you can see this one all over again, too, go to cnbc.com. you guys did great. appreciate you doing this. ready for a startling stat? for every dollar the government spends, it spends two more dollars on every entitlements? what's being done to top this nation of takers? two years ago, the people of bp made a commitment to the gulf.

bp has paid over twenty-three billion dollars to help those affected and to cover cleanup costs. today, the beaches and gulf are open, and many areas are reporting their best tourism seasons in years. and bp's also committed to america. we support nearly 250,000 jobs and invest more here than anywhere else. we're working to fuel america for generations to come. our commitment has never been stronger. well, if itmr. margin?margin. don't be modest, bob. you found a better way to pack a bowling ball. that was ups. and who called ups? you did, bob. i just asked a question. it takes a long time to pack a bowling ball. the last guy pitched more ball packers. but you... you consulted ups. you found a better way. that's logistics. that's margin. find out what else ups knows. i'll do that. you're on a roll. that's funny. i wasn't being funny, bob.

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>> is the united states becoming an entitlement nation? from social security to medicaid, government transfer payments over the past 40 years are escalating. my next guest says he's worried about the economic, financial consequences and moral results of this? the author of the new book out today called "a nation of takers," america's entitlement epidemic. nick, thank you for coming on. great for writing the book. i want to ask you, as you look at this story, what is the worst

consequence of entitlement nation in your judgment? >> the explosion of entitlements hasn't just turned our federal government into an entitlement machine, it has, it's turned our society into a place where people see entitlements as part of their main source of income. it's had an effect of adding a sort of something for nothing mentality to our politics, which i think is immensely corrosive. >> i looked at just some of the numbers, roughly 2 trilli$2 tri transfer payments in the 2010 budget. the budget itself is 3.4,kron 2 3.4,trillion. 2 out of every 3 dollars. what's this economic consequences? >> one of the economic consequences is we pay for our entitlements by taxing the unborn, adding to the federal debt. the unborn don't get a vote how this is allocated.

we're borrowing from future generations, that's one of the economic implications, the other is entitlements have given incentives for men, in particular, to flee from the labor force. we've had women going into the labor force, having men going out. >> is this why all these participation rates and populati population, employment population ratios are going down? is this what this is about? >> for men for sure. as the entitlement state has risen, the participation rates for men have been progressively declining. it started long before the bust of lehman brothers. >> let me just ask you another one that troubles me. work, i mean, i'm going to add work, family and faith. work is such an essential part of our lives, of the american tradition. what is happening here? are we eroding our very moral and social fabric with all this entitlement state? >> let me give you one

statistic. the number of americans of working age who are getting some sort of disability pay, that number is larger than the entire manufacturing sector in the united states today. >> what does -- what does that mean? families are not doing what they're supposed to be doing? men are not going off to work? they'd rather be wards of the state. how can this possibly help america in the next decade, two decades, 50 years? >> search me. it seems to me to be a terribly worrisome out look for our credit in the future. we have gone over the past 50 years from having entitlements account for maybe 7% of personal income to almost a fifth. we're becoming increasingly dependent upon this phenomenon. >> we should tighten up the entitlement stage, tighten up the eligibility, tighten up the requirements? >> have to and have to have a

conversation before we have a consensus. will be a big fight. >> nick, very important controversial book, "nation of takers" out today. you can see it on the full screen. you've often heard me say free market capitalism is the only path to prosperity. after 11 years on the air, i finally found someone who agrees with me. we will talk to this morning coming up. americans believe they should be in charge of their own future.

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welcome back to "the kudlow report." for more man 11 years, i've been arguing free market capitalism is the best path to prosperity. ever since milton friedman passed away, i've been searching exhaustively for someone to agree with me. october 15th, 2012, i think i found him. delight to welcome allison, and author of the new book "the financial crisis and the free market cure" why pure capitalism is the world's economy's only hope. john allison, god bless you, thank you for writing this book. let me ask you something, talking about freedom and pure capitalist model. as a former banker, do you get upset at too big to fail as an i do? too big to fail, how much damage

is that doing to our banking system? >> it's done an enormous amount of damage. in my career, citibank has failed three times and every time best record by the government and every time gotten bigger and worse. the same thing will happen again. if you have an implicit government guarantee, the ability to take enormous risks in the good times always results in bad results in the bad times and you get to do it again. >> would these banks be better off broken up and sold off in pieces? would they be better value for investors if sold off and broken up into pieces? >> that's an interesting question. a lot of these have traded less than book value long periods of time which makes you wonder if the economic models make any sense and whether the boards are objectively looking at the shareholders. it's nice to be big. here's one of the temptations. if you are too big to fail, who wants to give up that implicit guarantee. can you make an objective

decision when the government is backing you up. >> the breakup value may be better than the book value, something you don't hear. we have the worst economic recovery in modern times going back to 1947, from the joint economic committee, also the slowest jobs recovery. if you can single out one free market action, what would it be, to improve the economy? >> a massive reduction in the regulatory state. we had an exponential increase in regulations really hampering business, not only new laws but the implication of existing laws where the regulators have tightened, any time i talked to any business, particularly small businesses, the regulatory attack is unprecedented. which means people can't focus on creating new jobs by creating new products. >> i don't want to put words in your mouth, i want to ask you, the greatest regulatory intervention we have ever seen

is the obama-care health plan. i want to get your take on that because businesses do not appear to be investing in long term assets, john, you probably know that better than i do. is it at least in part because of obama-care? how big a regulatory barrier is obama-care? >> i think obama-care is a major problem. one of the biggest problems is you can't figure out what it means. the law is so appleby gu us to, you can't calculate what your health care cost is going forward. i think the fed printing money is a big problem because businesses can't calculate what inflation is in the future and makes you not willing to take long term investments. >> a lot of people think what the fed is doing with quantitative easing 1, 2 and 3, has done more harm than good, john, your thoughts? >> i think it has done much more harm than good. the purpose of money is a standard of value. when a yardstick like in engineering is 36 inches one day and 56 inches the next day, how

do you run a business and make economic calculation? how do you feel comfortable making investments. >> let me ask you about mitt romney, who purports to be the free enterprise candidate in the race with mr. obama. from your standpoint as a free market guy and head of the famous kato institute, a baston of free market thinking, how do you view the romney campaign? >> i like romney's policies b better than the current administration's policies, romney is definitely not a free market candidate. the free market has a much more radical set of solutions than proposed by the republicans. >> if you had a nice dinner with him, what would you tell him to persuade you he was more of a free market guy? what would you say to him? >> i would ask him about the seriousness of major regulatory reform? is he really willing to appeal obama-care and really willing to appeal dodd-frank and really willing to reduce employment in government by about 50 to 60%?

are we really willing to make serious changes. >> thank you very much. i appreciate it. his new book the financial crisis and free market cure, why pure criticism is the world economy's only hope. that is available now, music to my ears. at the end, we have breaking news, secretary of state hillary clinton says she quote takes responsibility for the attack on the benghazi embassy on september 11th. this comes in an interview with cnn. the secretary is in lima, peru, told cnn the white house is quote not at fault for the attack that killed ambassador chris stephens and three others. cnbc.com will have coverage throughout the evening. of course, we will have much more about this on squawkbox tomorrow. this benghazi business is one of the biggest factors in the election right now according to polling data, the administration's story, in my humble opinion, simply does not hang together. if the state department takes

responsibility for that, i'm still not sure what that means. who can kokted the susan rice story? the u.n. ambassador, who went on five news stories and contrary to facts, said to everybody, it was a youtube video and a spontaneous demonstration? we know that was not true. the question is who put it into susan rice's head and who ordered her to go out and make that story, which is without any creds whatsoever? that's tonight's so. thanks for watching. we'll be here debate night tomorrow. so uh this is my friend frank and his, uh, retirement plan.

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