it after the waiting period. wells, listen to me. all i want is more mortgage lending, and we didn't see it enough. the rest of it? pretty darn strong. i'll give you that. i like to say there's always a bull market somewhere. i promise to always try to find it. i will see you monday. good evening, everyone. i'm larry kudlow. this is "the kudlow report. "ann coulter and grover norquist are about to debate the immigration. norquist says immigration will booster the economy, coulter does not agree. and it was also a major sell-off today in gold. gold down almost 90 bucks and still falling. okay, you don't need gold because there's in end to world trade. u.s. energy independence, an end to bury gold. we'll get to that in a few minutes. and new information in the

kpmg trading scandal. jane wells diving deeper into the criminal complaint. we'll take a look at what the risks are for kpmg. will the big four strangle hold on the account industry be broken up? "kudlow report" begins right now. first up this evening, the senate's bipartisan group of aid says it plans to reveal the long-awaited immigration reform bill next tuesday. this is a bill that in national review reporter betty woodrow dubbed grover versus the bitter enders. grover norquist believes the immigration reform will boost economic growth and slash our budget deficits. all right. now from washington, the aforementioned grover norquist and with me onset, my great friend, syndicated columnist an coulter, author of "mugged." this is great fun, two great

funds, grover, who are the bitter enders and what is your case against them? >> well, i think the american people are looking to move towards immigration reform. we have senators like marco rubio, jeff flake, rand paul, all moving in that direction, but what really happened over the last ten years is the business community, small businesses, independent businesses, that have been silent for too long on the need for immigration reform, guest worker program, high-tech immigration, stem immigration, they have been silent. they are now coming out strongly for it. and the various communities of faith, evangelical protestants, the southern baptist convention, the roman catholic church, the roman church, all the so-called religious right coming out strongly for immigration reform. the base of the modern conservative party, the base of the modern republican party,

ronald reagan republicans are going home to their base, which is also welcoming to recognize immigrants are an asset to the country. and they help make us stronger. they make us grow faster. some great studies have come out on the economic benefits as well. >> we'll get to the economic benefits. ann coulter, i want to even up your time in this. business and evangelicals is a heck of a coalition. so is the immigration -- should it change? >> anti-immigration is changing the current immigration policy. i think we aught to be trying to get immigrants better than us, not worse than us. 85% of legal immigrants come from a third world since teddy kennedy changed immigration law in this country. 65% of them need some sort of government assistance. i mean, when i hear that -- don't worry, immigrants are only on welfare 15% higher than native americans, it shouldn't be any immigrants. we aught to be getting we can't get the surgeons, the

businessmen, the people who would be competing with everybody who is talking about immigration, is the servant class that is coming in who taxpayers need to support. of course, the business community has always been for immigration. some elements of the evangelicals always have, but the point is is it a good policy or bad policy? it is good for those who want cheap labor and the rest of us subsidize cheap labor. >> let me try this point, one of the reasons the economy is so weak and the unemployment rate is so stubbornly high is something called the participation rate. people are leaving the labor force. and if you leave the labor force, you can't grow. you got to have workers. i think what grover is going to say, and i think what's in new studies is that immigrants will replenish the labor force and help the economy to go. >> but you talk about the labor force, the problem with that is as everyone is also saying, we are in a global economy. we do not need more low-skilled workers. we need high-tech workers.

we need high intelligence and highly educated workers. the last thing we need are more cabbage pickers here who are putting the low-skilled workforce out of work. i think as i've said before, i think there's a reason mitt romney got 20% of the vote of black males under the age of 30. they want jobs and mitt romney had the toughest immigration policy in terms of bringing in more low-skilled workers to compete with them. if we were bringing in immigrants to compete request you and grover and "the new york times" and senators and lawyers, you see these rural areas don't have enough lawyers. how about bringing in and importing lawyers to compete with them? i don't think we would hear so much about compassion and being welcoming. >> grover, is the issue brain yaks versus the low skilled? or just one large pool of labor that can benefit? ann is making some very important distinctions here. i need a response. >> well, look, there are several -- the immigration reform package that's being put together, i have and some of it. as i think, it's a good step in the right direction, but it

doesn't have enough high-skilled workers coming in under the new rules. certainly not under the old rules in opening up the number of h1b skilled engineers got filled within a number of days. we should have a great number of high-skilled workers. but we also need guest workers and farm workers. let's understand, i really hesitate when i hear conservatives use the rhetoric of the flcio that more people somehow reduce wages. this is what the unions have been saying for 100 years. there used to be 3 million americans, we were quite poor. there are now 300 million americans and we are much richer. in a free society, people are an asset, not a liability. that's the difference between the reagan camp understanding of the dynamic economy, more people, more babies, more immigrants make us better off. fewer people, fewer babies, fewer immigrantssot the path

to success. that's europe, that's not the united states future. we are going to be running the globe over the next 50, 100 years, because we do immigration better than all the other countries in the world. >> ann coulter, we have a population rate, i'm just going back to this very simple. we should have as many brainiacs, i agree. >> i pay their housing and medical care and food stamps. grover is arguing against a strong man. no one is saying -- no one is saying we want fewer people, but it is indisputable that you are bringing in -- >> ann, that's not true. >> i am not. be quiet. when you are bringing in immigrants who take government benefits as opposed to immigrants who are paying in to the tax system, that is definitely an economic loss. yes, it's an economic win for the businessman who gets the cheap labor, but it's not an economic win for ann or most workers. >> some people are saying, though, that this argument about

getting entitlements in welfare is not true because the legislation will be written better than that. >> oh, give me a break! we have 50% of illegal immigrants getting food stamps now! >> grover, what's your reaction? this is the entitlement argument, this is the heritage foundation, this is the robert recollecter argument. you have to contend, you heard ann, what's your response? >> let's be fair to the heritage foundation nchlgt 2006 they put out a professionally, seriously done study that said immigrants are a boon to the country and produce more than they consume. so heritage has been on the record with a serious study that was quite good and we shouldn't stick them with some of the other studies that haven't been as well thought through from time to time. holt seekan has done another study to reduce the deficit over the next decade, 2.7 trillion, because of this. these are serious economic studies. >> because more people entering the labor force would increase economic growth by 1 percentage point a year. if you get that kind of growth

from more people coming into the labor force, then the deficit falls by nearly 3 trillion dollars. >> this is preposterous. >> preposterous. >> ann has said a couple times what i have heard from other people in other areas, and that is, gee, we have a welfare system and that makes some people dependent. we do. most of the people who go on welfare aid the families with independent children over decades and decades were born in this country. we should fix the welfare system. we shouldn't organize our immigration policy around a failed welfare system. the republicans have already passed through the house the ryan plan, which does for all 185 welfare programs what clinton signed, the republican plan to do for aid for families with independent children. let's reform welfare because it needs to be reformed. >> why not, ann? why can't we do that? what's wrong with that strict stipulation? i'm all for it.

it is preposterous that will come next. it's like when the rubio plan enforced them, then we legalized the border. i'll not only talk about open borders, i'm talk about legalizing drugs. but as far as i'm paying for them, and the two of you agreeing with your fake little studies, it is like the liberal gun studies. you bring in an immigrant who is not paying taxes, who is taking food stamps, who is collecting medicaid, is somehow a boon to the economy. no, it's a boon to the people who are getting the slave labor, the businessmen. that's not m of america. >> you give them so little credit, ann, don't you think they work? they work. >> no, it is a fact -- >> the majority of them come to work. >> i don't care. if 65% are getting government assistance, i'm subsidizing the cheap businessman's cheap labor. >> i don't want to disagree with you on the entitlement. all i'm saying -- >> i asked one of my friends, peter teal, about this idea,

especially the agribusiness. they keep saying we need the guest workers, and peter made a very interesting point to me which was when he was creating paypal, they tried to do -- have the phone service, you said that didn't work. when that didn't work we just fixed the problems. when one solution doesn't work something is created because i had asked him, look, you are inventing everything. you can't invent a machine cabbage picker? we have to bring in hordes of mexicans collecting welfare? and he said, no, they will invent it. they have invented it. >> if they work at stores and fast food restaurants -- >> and they do not pay taxes and collect government assistance. >> they do not pay taxes and collect government assistance. what's your response to that one? >> we have been through this before. people said this about irish catholics, eastern european jews and the southern european catholics, they said this about the asian, the japanese, the chinese, every wave of immigration in this country has made us stronger, better, wealthier.

yes, we should reform the welfare system. if there are no immigrants, we should reform the immigrant system, but immigration has made us a better and stronger -- ann, that's what i'm working on. love to have your help. >> i want to say the other immigrants you mentioned went back because of no welfare. 30% of italians went back to italy because they could not make it. now you don't go back, you go on welfare. >> by the way, the immigrants have gone back to mexico. there's more job creation there -- >> there's no border. >> okay. open border. >> was i fair? >> yes, you were. >> it's a great debate. and it's a debate that's going to continue. grover norquist, you're the best, thank you very much. an coulter, you are, too. ann is coming back to talk politics later on. right now on "the cud ler report," the shine came off gold today. a huge sell-off, almost $100. why buy gold with no rising inflation? later in the show, more details on the kpmg insider

case. we have take an closer look at the criminal complaint and we will talk more about what the worst case scenarios are all around. don't forget, folks, free market capitalism is the best path to prosperity. you know my bias, if i can get the immigrants to work, i want them here. america is a great country. both the brainiacs on the low end, i think i can fix it, but i have to work more on my pal, ann coulter. i'm kudlow. we'll be right back. we know a place where tossing and turning have

given way to sleeping. where sleepless nights yield to restful sleep, and lunesta eszopiclone can help you get there, like it has for so many people before. do not take lunesta if you are allergic to anything in it. when taking lunesta, don't drive or operate machinery until you feel fully awake. walking, eating, driving or engaging in other activities while asleep without remembering it the next day have been reported. lunesta should not be taken together with alcohol. abnormal behaviors may include aggressiveness, agitation, hallucinations or confusion. in depressed patients, worsening of depression, including risk of suicide, may occur. alcohol may increase these risks. allergic reactions such as tongue or throat swelling occur rarely and may be fatal. side effects may include unpleasant taste, headache, dizziness and morning drowsiness. ask your doctor if lunesta is right for you. then find out how to get lunesta for as low as $15 at lunesta.com there's a land of restful sleep, we can help you go there, on thbut i am yournesta. rmarket data.

i know what you're looking for. i'm not chained to your desk anymore. i'm faster and smarter now. and so much less expensive. i am your market data. and if i do say so myself, i have never looked better. superderivatives introduces dgx. data done differently.

today the hot story on the tip of every investors' tongue was the major sell-off in gold. cnbc's josh lipton is joining us now with the details. good evening, josh. >> major commodity markets falling hard today. gold breaking below $1500 for the first time since july 2011 entering a bear market. traders talking about deflation fears. also reports of cyprus selling its gold. can piplation in the gld, the gold eft, trading almost five times its average volume. that along with margin calls fueling the fire. minors also taking a hit in newmont mining and barrick gold deep in the red.

as for oil, also dropping to a nine-month low. concern about a weak global demand outlook. u.s. retail sales fell in march. remember this week the international energy agency also cut its global oil demand growth estimate for this year by 25,000 barrels per day. larry, back to you. many thanks to josh lipton. what's driving this commodity sell-off? a couple points, first, there's no end of the world, all right, gold, no end to the world gold trade. second, there's no end to the dollar gold trade. third, there's no inflation. fourth, maybe cyprus and egypt in some of the euro central banks are selling gold, maybe. we don't know that yet. but how about this thought? a hat-tip to my pal, dave goldman. u.s. energy independence from saudi arabia and elsewhere ends our trade deficit over time, boosts king dollar, and winds up crushing gold. all right? let's bring in jim yurio, his

director from institutional services, and we have jard bernstein, cbs contributor. you heard my thoughts, what's your take? >> i like most your thoughts. by the way, today this move puzzled a lot of very intelligent people that i talked to today. by the end of the day it seemed like to consensus is that gold is obviously trading very heavy, based mainly on the strength of the dollar, probably a lot of it caused by yen, plus we're talking about nine years of speculative positions building up. the weakness selling tends to beget selling. remember what happened with apple in the fall? they started selling apple for tax reasons, but after that for a couple months people had no interest in selling for tax reasons, like my holdings are going down, i better get in before this gets too painful. we broke through the old levels, 1525 in the gold, and that brings in a bunch of selling. that was the velocity of the move. >> larry glassman, we found you.

stay with us. one reality in this whole story, you have to go back a year and 18 months. gold has really been falling quite a while in starts n round numbers, 1900 to 1500 bucks. one point i want to make is there's no end to the world, there's no end to the united states, there's no end to the u.s. dollar, and if anything the american stock market rising has knocked gold down. what's your take? >> the issues are to keep us awake this weekend and the sell-off is not one of them. gold is a source of funds to fuel other asset classes. it is in redemption. that's not necessarily a bad thing. in fact, that's probably a bullish thing. when i look i see gold, it's a safe haven, a hedge against inflation and a hedge against financial calamity. when it drops, it tells you neither one of those is apparent. gold is an insurance policy, right? when we look, we want our insurance policy to decline. we want it to expire worthless. what worries me is certainly not going to be gold, it will be the decline in interest rates or the

decline to emergency we saw today. it is definitely not the decline in gold, a bullish indicator going forward. >> let me go to jared. i think a rising economy hurts gold. i think a pretty strong currency hurts gold. i think a low i nation rate hurts gold. in some sense, i'm going to go to ben bernanke. i don't know about the obama -- you want to argue obama, go ahead, but to some extent the drop in gold justifies bernanke's policies at the fed. >> i think so. i think the reasons you and others ticked off are the reasons we saw this drop off today. i'm a little surprised hearing them from you because i thought you were more of a gold bugger. >> i'm a gold-backed dollar, but i hated it when gold shot up to nearly 2,000. i hated that. >> in your list of reasons, three impressed me the most. the world is not coming to an edge, so the hedge is not as important. but the inflation situation is what it is and doesn't see much pressure there. then equities. you know, if you're in gold as

opposed to equities, you're getting slammed. >> i want to go back to the other argument given to me today by my pal david goldman. i want to give him the argument. we are going to become energy independent in the next ten years from saudi arabia and all the rest. that means a bunch of things, okay? it means our trade deficit goes away or basically so. it means that the dollar keeps strengthening. and without a trade deficit and with a strong dollar, then gold has to go back down. so a more reasonable level. that's a longer run play, but i think that's been kicking in because you know this energy independence talk has been around the past year. >> i love that talk. you and i both love that talk. and if that happens over the next ten years, that's great. but for me to use that as an explanation of the gold sell-off today, i don't agree with that at all. and i think as long as we are in the white house that keep fighting different energy sources, i think that's being called into question, too. but in the dollar, the dollar

has been getting strong. the dollar realistically what's been happening is that the ecb, the bank of england, the boj has been crushing their currency. so of course the dollar looks hugely strong by comparison because it's the only safehaven. when the dollar starts rallying because of things like that, that will be great, but i don't think that's today. >> larry, what do you do now? what happens now? let's go to monday, peer into the future, does the gold wrap continue? john paulson, very smart hedge fund guys, but he's getting killed right now. what happens monday? >> well, you know, selling does beget selling in some instances. you'll see margin calls here, you'll see a whole host of redemptions and liquidations that result from this. what's interesting and where the opportunity here is when you see selling in gold, it also causes selling in other commodities. some of those commodities are industrial commodities like energy that are actually going to be beneficiaries. the miners, some of the more cyclical names have been left behind in this rally. that's the opportunity in sympathy with gold sell-off

because energy is hope, it's the future. gold is fear of the past. >> let me just come back on that. there was a story posted up on market watch all day long. yes, the energy commodities have been going down. they are not crashing, by the way, year to date they are off just a little bit, but other commodities like cotton and orange juice, that stuff is widely traded, they are actually strength anything. so it's a diverse commodity universe. maybe the gold thing obscures opportunities in these other commodities. >> again, i think it's the -- i think you want to see the industrials and the cyclicals lead the rally. what you don't want actually in this market is you don't want food and defensive and consumer staples leading the rally if you really think this is going to be sustainable. you want to see the more cyclicality begin with commodities. if i have a broad basket, let's hope i don't. >> not only do i agree with that point, but i think we began to see gold reverse sharply, that would be a negative cyclical indicator. i agree with the point what we

are seeing today is kind of an absence of the need for that insurance or fear that the world's collapsing. >> guys, i have something to add. >> jim, larry, appreciate it very much. jared did the work on almost no notice for the stock market discussion. does this look like a place where you can walk in and expect to play with virtual currency bit coin? that's what cnbc set out to find out today, even as bit coin values continue to crash. that story up next. welcnew york state, where cutting taxes for families and businesses

is our business. we've reduced taxes and lowered costs to save businesses more than two billion dollars to grow jobs, cut middle class income taxes to the lowest rate in sixty years, and we're creating tax free zones for business startups. the new new york is working creating tens of thousands of new businesses, and we're just getting started. to grow or start your business visit thenewny.com clients are always learning more

to make their money do more. (ann) to help me plan my next move, i take scottrade's free, in-branch seminars... plus, their live webinars. i use daily market commentary to improve my strategy. and my local scottrade office guides my learning every step of the way. because they know i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade... ranked "highest in customer loyalty for brokerage and investment companies." none of us think bad things are gonna happen to us. i'm here at my house on thanksgiving day, and i have a massive heart attack right in my driveway. an artery in your heart, it's called the widow maker. and mine was 95% blocked. they took me to the hospital, and the doctor put me on a bayer aspirin regimen. [ male announcer ] aspirin is not appropriate for everyone, so be sure to talk to your doctor before you begin an aspirin regimen. i'm a blue-collar worker. to me, bayer aspirin is another tool. go talk to your doctor. you're not indestructible anymore. ♪

all right. the bit coin digital currency is highly volatile, but there are still businesses promising to accept it. cnbc went to one of those places. mary thompson has the story. mary, is this for real? where is this place and how does paying with bitcoin work? >> well, larry, if you visit new york's city gastro lounge on 54th, bring your digital wallet. they started accepting bitcoins as payment this week and a dozen clients have settled their tabs this way. an early investor in the digital currency partner charlie schrem believes bitcoins are better than credit. >> they are irreversible, private, and the fee is less than 1% to accept it as opposed to a 5% credit fee. and we get the money the next day in bank account, in dollars, no currency risk at all. >> maybe if you're ever because the bar doesn't take ownership of the bitcoins. here's how it works, a bitcoin

owner pays a wallet app and the tablet converts it to coins and bitpay takes bitcoins from the digital wallet and sends dollars to the bar's account. so while they get their cash, bitcoin owners are out of money. the digital currency falling 77% in the last two days to a low of just over $54 before rebounding slightly. created by the unidentified person or group known as satoshi nakamoto. their value determined by transactions between buyers and sellers with sellers or some speculate they are getting out of this virtual world. >> many thanks, mary thompson. jo joining me onset, jared here and robert costa from the national review. a lot of conservatives have argued that we should have

competing currency. the money the fed prints is not reliable. so here's this bitcoin as a competing currency. do you think it has a shelf life? >> i really think it does. it is not liberals versus conservatives. a lot of people in their 20s like this bitcoin. people find you don't deal with banks, it is online currency. so the younger generation is really going to start to click with this. >> i think, jerry, for this to work, bitcoins should be linked to gold. that would give them value and permanency. and that would give them legal tender, the states can give it legal tender, what do you think? >> i think that's pretty and theft call to what robert was just talking about. >> stabilize it. you've got to have -- >> that's my problem with -- look, there's a lot to be said for bitcoins. robert, i agree with his assessment, but one of the problems is stability. we recently saw the huge bubble in the bitcoin market and that

happened all the time with gold. we were just talking about gold, we are not talking 4% like we saw today, we are talking about real volatile swings in prices and gdp because you can't link your currency, i think, to such a fixed commodity when you need the flexibility. >> we did for hundreds of years. we did until 1971. all i'm saying is you would see -- this is a new kind of money, digital money, but i think it needs a backup because i don't think it's -- what art laughter, calls the moneyness of money. i don't think people will trust it until whether it's a commodity basket behind it or gold, something has to guarantee that its value is relative. >> i think you're right long-term, but i call my buddies who use bitcoin and say the stability is not a fair one because it is early, it is capped at $22 million, they are at $11 million now. online currency is going to have volatility early on. i have only used it sparingly with my friends, but the volatility is just because it is

beginning. >> i think it's the way of the future, i really do. >> one of the thing that is the strong bitcoin operatives say is the opposite of what you were saying. the thing about bitcoins they really like is not that it is based on trust, it is actually based on lack of trust. and you don't really need any authority, any regulatory body to look at this. it is just a bit -- >> you know who loves it? libertarians. >> i know. i'm just saying, they said legal tender should be linked to gold and the government shouldn't run it. i have to get out. it's fascinating. >> let's tack it. >> oh, please. ann coulter is going to rejoin us on whether the republican party should make a background gun deal. but should the gop really make a stand on obama's easterable budget? it jacks up taxes by a trillion dollars. that's where the gop aught to make its stand. we are going to tee up another good friday night political debate next. stay with us. we are kudlow. everyone's retirement dream is different;

how we get there is not. we're americans. we work. we plan. ameriprise advisors can help you like they've helped millions of others. to help you retire your way, with confidence. ♪ that's what ameriprise financial does. that's what they can do with you. let's get to work. ameriprise financial. more within reach. transit fares! as in the 37 billion transit fares we help collect each year. no? oh, right. you're thinking of the 1.6 million daily customer care interactions xerox handles. or the 900 million health insurance claims we process. so, it's no surprise to you that companies depend on today's xerox for services that simplify how work gets done. which is...pretty much what we've always stood for.

with xerox, you're ready for real business. which is...pretty much what we've always stood for. they're coming. yeah. british. later. sorry. ok...four words... scarecrow in the wind... a baboon... monkey? hot stew saturday!? ronny: hey jimmy, how happy are folks who save hundreds of dollars switching to geico? jimmy: happier than paul revere with a cell phone. ronny: why not? anncr: get happy. get geico.

welcome back to "the kudlow report." i'm larry kudlow. in this half hour, more details come to life in the kpmg insider case. just how much money did the players walk away with? jan wells has been on the money trail all day.

don't forget, folks, your taxes are due this monday. the obamas and bidens released their tax returns today and you might be surprised by some of what we found inside those numbers. but first up let's talk some friday night politics. why shouldn't the republican party compromise on a background check that the whole country seems to want and then save they are a fire for obama's incredibly bad tax and spend growth-busting budget? sorry, jerry. let's bring back ann coulter, jared bernstein and robert costa. i think the republicans have basically won the gun debate because they got the magazine limitations out, the assault weapons limit takes out, and now they have a decent background plan, they should go on to the budget, which is a horror show for economic growth. >> i'll let you handle the budget, let me hand tell guns. i think they need to keep going on guns because for one thing you're right, we do win on this. you keep hearing liberals say,

oh, as newtown fades into the background the enthusiasm for these gun control rules is fading. no, it's not that. people are finding out what these gun controls really are and background checks, for example, we already have universal background checks. any licensed gun dealer including all licensed gun dealers at shows, which is approximately 100% of sellers at gun shows -- if you want to sell a gun to somebody in your church and put it in the church bulletin, the church bulletin goes online, that's a federal felony. >> i did interview mike lee, i don't know all the details but -- >> you're talking person-to-person sales. >> person-to-person. >> or transfers. >> you don't have to do it. >> but it is not just family. >> right. hang on. polls show people want background checks. polls are not -- i want to rest my case on polls, but i think that's different. the banning of assault weapons that obama originally wanted

is -- the limitations of these multi-fire magazines, that's gone. that was the worst part of this stuff violating the second amendment albeit, but the background check is a republican idea they should stay with. >> look who is standing at that podium. you interviewed pat toomey. he is critical in this pageant because now this is coming to the health. pat toomey is a viability conservative republican who is going to make his case. i think a lot of suburban republicans who represent moderates in the suburbs will back this background check bill. >> all right. before we get to your budget -- >> yeah, the fact that this poll is at 90% and the fact that the politicians are so far behind the people on this issue to me is just a key piece of evidence that on the issue of guns, democracy is pretty broken. i'm kind of with you, i just don't understand why the gop is

stonewalling and can only believe it's really not the gop, it's the nra. so the question is they must believe they're going to lose their seat if they vote against the nra and for the people. and i don't think that's the right calculus, but i guess we'll see. >> democrats have the same problem. democrats behave pretty rationally. this is john's column in the new york post today. >> i missed it somehow. >> he's pretty good and says republicans may be bubbling their way through this because the democrats took the assault weapon out, the democrats took the magazines out, that's trickty can i business. does the gop filibuster everything? >> no, why do we not filibuster the things i want filibustered? that 90% poll is nonsense. they keep lying about all these guns being bought without a background check. all guns go through a background check. if you were buying from a licensed dealer selling out of his kitchen, he's putting you through a background check. >> it doesn't make a difference.

if they all that checks anyway -- >> right now it is universal. what they are trying to get to is your neighbor has an ex-husband after her. you can't lone her your gun. you don't that's right? let's see the toomey bill. that's true in colorado, that was true in connecticut. as soon as people find out the truth about what is in these things, they turn against them. and what we need to do, i would also say what we need to do, i don't want to declare a victory and move on, i want to solve the problem. and the problem is the schizophrenics who are deinstitutionalized -- >> now that -- toomey said that -- >> instead of declaring victory and moving on with hillary care, we get obama care. let's solve this once and for all. >> the mental illness issue is supposed to be very prominent in the bill. >> no, they want to let your shrink put you on the no-buy list. it's the most nationally unconstitutional thing i have heard of. >> regardless of the policy

sell, which is the critical argument, the politics are that democrats want to run against republicans in 2014 to say you didn't want to support background checks after sandy hook. so i think larry is trying to say democrats will say we gave up assault weapons and magazines. all we wanted were background checks and even republicans were -- >> i think you are wrong and wrong about pennsylvania, all those pennsylvania voters who are clinging to their guns and religion are going to remember this. this is a big mistake toomey made with a tough election to begin with. to be selling out the gun people -- >> can i just say for the record i'm in favor of guns. and i'm in favor of religion. so i'm there. i've never lived in pennsylvania. i just think we need a background check. let me move on because this is jared's favorite subject. we have this budget called the obama budget. and i'm a simple-minded guy. here's the way i look at the budget. this budget says no to the budget-cutting sequester and this budget says yes to a trillion-dollar tax hike. more spending, more taxing, anti-growth, this is where the

republican party should say no compromise, we are out of here, we are not buying it. >> well, look, the sequester is just a terrible idea because of the across-the-board cuts. what the budget actually does is it generates the same savings you get from sequester, remember, there's $1.8 trillion in reduction over ten years in this budget. >> i love the sequester. >> it generates the same savings as the she sequester -- >> the day the sequester passed the stocks went up. >> i take your point about the trillion, the president talks about that, 580 billion, basically there are two budgets. the offer he made to boehner and that's 580 billion in tax increases that republicans could take today if they were willing to accept the compromise of the chain cpi, the social security benefit cut in order to -- >> not for a trillion dollar tax hike! ann coulter, this is where i

don't want compromise, i don't want bipartisanship, i don't want political fallout on this budget, i don't want nothing. and if the gop gets something, they become democrats. >> and i totally defer to you on this one because you should defer to me on guns. >> i haven't shot a gun since i was a camper. you have been meeting with senior republicans, what are they going to do with this budget story? >> i think jared is bringing out the republicans won't accept the tax increases. the house republicans will push that away, but the chain cpi is the most interesting part of this. the obama camp for the first time in this administration is floating an it intomentment reform. the republican question is what can they get from leverage and get in the deal if they accept the chain cpi? >> so obama has been extremely clear it's not a menu. you can't take the change -- >> i think the chain cp sirks a

good idea. but i'm not going to trade that for a trillion dollar tax height. guns, bibles and no taxes, ann coulter. that's my motto on a friday night. many thanks to ann coulter. now, many more details from the still developing kpmg insider trading case. and we asked, what is the fate of the kpmg audits of the companies who had their information leaked? we have a live report from los angeles with cnbc's jane wells coming right up. oh, he's a fighter alright.

since aflac is helping with his expenses while he can't work, he can focus on his recovery. he doesn't have to worry so much about his mortgage, groceries, or even gas bills. kick! kick... feel it! feel it! feel it! nice work! ♪ you got it! you got it! yes! aflac's gonna help take care of his expenses. and us...we're gonna get him back in fighting shape. ♪ [ male announcer ] see what's happening behind the scenes at ducktherapy.com. [ male announcer ] see what's happening behind the scenes trust your instincts to make the call. to treat my low testosterone, my doctor and i went with axiron, the only underarm low t treatment. axiron can restore t levels to normal in about 2 weeks in most men. axiron is not for use in women or anyone younger than 18 or men with prostate or breast cancer.

women, especially those who are or who may become pregnant and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur. report these symptoms to your doctor. tell your doctor about all medical conditions and medications. serious side effects could include increased risk of prostate cancer; worsening prostate symptoms; decreased sperm count; ankle, feet or body swelling; enlarged or painful breasts; problems breathing while sleeping; and blood clots in the legs. common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting, and increase in psa. ask your doctor about the only underarm low t treatment, axiron.

the kpmg scandal continues to grow today. jane wells has been digging into the criminal complaint against scott london and is joining us from west lake village, california, this evening. good evening, jane. >> reporter: hi, larry. so many unanswered questions. why could scott london do things that friends and golfing buddies here at the country club say is so out of character for him. why would he do it for so little money? and will the ex-friend that he allegedly tipped off, brian shaw, ever be charged? lawyers today are telling me they don't have an update on that front. but when we went to shaw's house, which is inside the exclusive debated community today here, a man answered the

intercom saying all information would have to come from shaw's lawyer. we talked in the mississippi about the fbi recordings allegedly revealing how london counseled shaw to avoid detection, but as log kon's own attorney told me when the feds catch you taking kickbacks, bags of cash as they allege london is doing in this photo, that's when they've got you. but brian shaw said scott london was being too generous in his kickbacks if the auditor still took them. we have didbits from the criminal complaint. when shaw offered over the phone to play london some cash, quote, london told shaw that you don't need to do that. and shaw responded that he would feel better just because we haven't done anything in six or seven months. that was followed by two encounters between the two men which the fbi witnessed. shaw gave london $5,000 in cash in bags. the second time after he profited from a tip, he apologized to london that he didn't have more money at the

time. end quote, london told shaw not to worry and to keep the money stating they would figure out out later, another time. nevertheless, london accepted the envelope of the $5,000 from shaw. london got between $35,000 and $50,000 in cash and gifts while brian shaw reaped more than $1.2 million in ill-gotten profits. back to you. >> jane, how dumb is london? i mean, this guy, what, that envelope for $5,000, is that where the picture came from that everyone is looking at between the cars? this guy, he didn't get much of a cut and gets a $5,000 envelope, which in his world is peanuts? >> reporter: he obviously wasn't in it for the money, larry. that's a big question, everybody's scratching their heads, why do this? he says he was trying to help out a friend whose business was in trouble, and yet in the end he took the money. >> all right. jane wells, thank you very much. appreciate it. let me go to my two guests, jared bernstein, what about the

kpmg angle here? if we find out that there was any book-cooking or it's hard to get for herbal life particularly at the center of the hedge fund guys going after it, if anything happens there, where does this lead? >> it could lead to some very tough for herbalife. if they have trouble finding a new auditing firm to accept them, the auditing firm doesn't have to take you on. they actually do pretty deep research in the case that's been as controversial as this. that's going to send some very kind of positive messages to the plate that's trying to short this whole thing. so there's that dynamic. also, there are going to have to be re-audits of herbalife. if they look worse than the originals in the first place, they have to do more because of the alleged fraud here. that's also going to go against them. >> they have been killing each other over this thing.

if we find out that the books were cooked, and that's ackman's position, not that the books were cooked but it was a ponzi scheme and he's been allegedly shoring it. i don't know all the facts and details, but does the fbi come in on those folks? this is an era where all law enforcement want to go after everybody all the time, does this spread this investigation? >> undoubtedly this is a messy story, but it seems like we are seeing the tip of the iceberg. bags of cash in the parking lot bad enough, but as jared says, this goes deeper and deeper and it will be interesting to see what the investigators turn up. >> even though they may not have a case, once you unravel this thing you start pulling the strings out, who knows where it's going to end up. >> one of the problems we have here in my humble opinion is there's a bit of a market failure in the accounting business. why are there just four firms? >> post enron. that's really what -- this came post sarbane, i didn't like any of that stuff, the government

gives them favorites, that's not good. taxes are due on monday, isn't that a happy thought? you also had your own tax burden too high, everybody's tax burden is too high. you know, president obama would make it even higher according to his budget. now i ask, do you also know that his tax returns paid a lower effective tax rate this year than he did last year? 18.4%. 18.4% while a lot of our tax rates are going up? by the way, isn't 18.4% pretty close to what mitt romney paid? interesting numbersful we'll have the details in just a moment. she's still the one for you -

you know it even after all these years. but your erectile dysfunction - you know,that could be a question of blood flow. cialis tadalafil for daily use helps you be ready anytime the moment's right. you can be more confident in your ability to be ready. and the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph, like needing to go frequently or urgently. tell your doctor about all your medical conditions and medications, and ask if your heart is healthy enough for sexual activity. do not take cialis if you take nitrates for chest pain, as this may cause an unsafe drop in blood pressure. do not drink alcohol in excess with cialis. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury, seek immediate medical help for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision, or if you have any allergic reactions such as rash, hives, swelling of the lips, tongue or throat, or difficulty breathing or swallowing, stop taking cialis and get medical help right away. ask your doctor about cialis for daily use and a 30-tablet free trial.

so president obama released his federal 2012 federal returns today reporting a gross income of a little more than $600,000 and a tax rate of 18.4%. does he wish he paid a lower rate? his policies indicate that won't happen any time soon for the president. jared bernstein and robert costa still here. if i get all these numbers right, the president, 18.4%, a few percentage points lower than he paid last year, robert costa, so his tax rate is going down, the rest of ours is going up. what's wrong with that picture? >> a lot, but the president is not looking for a tax cut, he's looking for tax increases if his budget is an indication. this is the president's tax return, but this is a big tax president. raise taxes, new spending, i'm not surprised. >> 18.5% not far from mitt

romney. you know i can't resist that. >> i take your point. and if you actually go to the white house website where they talk about this, there is a sentence about how the president understands he would pay more under his tax policies and that's fine with him. by the way, he gave about 24% of his income to charity. that's a lot. >> that's a lot. i want to ask you about that, i admire he gave a quarter of his adjusted gross income to charity, but if his own 28% limit on deductions were in place, would he still give that much to charity? because that means he would either have to make room for other deductions or wouldn't be able to do it anymore. and might he learn by that limit is not good. >> it's a great question. i suspect he would. and the reason is that i -- the reason for that is that there is actually a fairly robust body of literature that looks at this question and finds that charitable contributions aren't nearly as sensitive to changes in the tax code as we think. >> i have actually seen that same late ature.

what about joe biden playing a little share? lower than last year, but his charitable rate was about 5%. >> vice president biden has been in public office since he was 29 years old elected to the senate. he has been making that public servant salary for a long, long time. not really surprised by what i saw on his tax return. >> all right. what's coming up on taxes? let's just broaden this out? we are going to have one hell of a discussion, one hell of a debate, house and senate on taxes, what's your call? >> where do republicans really start to bring up this corporate tax reform idea? rates aren't going to change, the president wants to raise rates, republicans won't move there, but maybe something on tax reform. >> jimmy did a study, if you total up the business tax hikes and the business tax cuts, there's room for a one percentage drop in the tax cut. that's not what we want. >> i thought that the white house just taking off what robert earth was saying, i thought the white house sent a

pretty big message on corporate tax reform. one that i by the way didn't love, so perhaps you guys feel better about it, which was that they are comfortable with revenue neutral tax reform. i thought it should be revenue positive because i'm getting nervous like a lot of economists hoe low corporate taxes are. >> i don't think there's room for it in the high tax budget. jared bernstein, thank you, robert costa, as always. that's it for tonight's show. i'm larry kudlow. we'll see you on monday. impact y in the u.s., real estate in hong kong, and the optics industry in germany? at t. rowe price, we understand the connections of a complex, global economy. it's just one reason over 75% of our mutual funds beat their 10-year lipper average. t. rowe price. invest with confidence. request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. with investment information, risks, fees and expenses welcnew york state, where cutting taxes for families and businesses is our business.

we've reduced taxes and lowered costs to save businesses more than two billion dollars to grow jobs, cut middle class income taxes to the lowest rate in sixty years, and we're creating tax free zones for business startups. the new new york is working creating tens of thousands of new businesses, and we're just getting started. to grow or start your business visit thenewny.com i know what you're thinking...

transit fares! as in the 37 billion transit fares we help collect each year. no? oh, right. you're thinking of the 1.6 million daily customer care interactions xerox handles. or the 900 million health insurance claims we process. so, it's no surprise to you that companies depend on today's xerox for services that simplify how work gets done. which is...pretty much what we've always stood for. with xerox, you're ready for real business.