money"" family. congratulations to george and anna, we cannot wait to meet her. so great. listen, there is aulgss more for you. promise to find it for you. i'm jim cramer. see you monday! good evening, everyone, i'm larry kudlow. this is "the kudlow report." all right, it's free market friday. our distinguished panel will debate whether jeb bush should run for president. his brother says yes, his mother says no. what say you, folks? and have you ever played a $2 million poker game, especially one run by mobsters and russian sordid dealers. we have a story about a guy that lost his ambassadorship to france toened and poker may have been the culprit. is the budget cutting sequester still in place? score one for limitedç

government, folks. i'm larry kudlow, "the kudlow report" begins right now. first up, the bush family back in the national spotlight this week, leading to the hot political question, will jeb bush run in 2016? all right. take a listen to what his brother thinks. >> i think with he would be great. he would be a marvelous candidate. he doesn't need my counsel, because he knows what it is, which is run. >> on the other hand, it's a different story if you cc their mother, former first lady barbara bush. take a listen to her. >>bush, would you like to see your son, jeb run? >> he's by far the best man, no, i really don't. i think it's a great country. there are a lot of great families and it's not just four

families or whatever. there are other people out there that are very qualified and we've had enough bushes. >> all right. so, the question is, who's right and why? here s are cnbc contributors. with us also is kelly anne conway, ceo of the polling company prchlt i don't know what president is doing in there. checks. >> teleprompters can be doing very weird things. where is robert costa, i want to go to you first, you heard mrs. bush, she said it's more than four families, there are too many bushes out there? is she right? >> i think she has a smart mind, jeb bush has not been in office since 2016. if anyone is going to run from florida, it's going to be marco

rubio. >> why is his brother pushing him so much? what do you think is behind george w. bush's strong endorsement, which i took to be very unusual? >> that's true, because george w. bush sense he left office five years ago stayed out of politics. i think he knows jeb is qualified. a two-term in florida, did a lot of immigration, look, politics have changed since he left office. i think george w. bush may not realize that much, perhaps barbara bush does. >> does george bush not realize politics have changed, jeb bush, a fabulous governor, a good man for anybody that knows him, a bright guy. i know there is sympathy for george w., i'm glad, he is running in the polls with obama, that's a nice resurrection, what do you think that jeb could do it? >> he could do it. the fact that he speaks spanish, he's a two-termç popular governr in miami, more popular even among hispanics than whites.

he's done tremendous amount of work for charity and education since he's got out of office. his name i.d., his ability to raise money that goes with it. his spanish-speaking skills, the fact that he carried a state that obama shouldn't have kwaerd both times. i think our wonderful charming barbara bush is being fabulously machiavelli, she says no more bushes. what she wants to hear is no more clintons. good for you, i agree. >> that's fabulous. keith boykin, did you hear that? no more clintons? >> you know, i disagree. i think barbara bush has a tendency from time to time to actually say what she really means, which is something that doesn't happen in washington. i remember in the 1980s, she made a famous comment about geraldine ferrara, i won't do it now. i think she is doing the same thing now about her son, jeb.

i think george w. bush, programs he feels guilty, because he knows he wasn't the brightest guy in the family. it was always supposed to be jeb bush. and he probably feels a little guilty about. larry, real quick, one of the reasons i think george w. bush is bringing up jeb is like kelly anne said, hillary clinton. the parties has a lot of stars for 2016,ç if hillary is the prumttive nominee, a lot of top republicans will look around and see who is available and think jeb is the most viable. >> i will get to new leadership in a few minutesch jeb bush had over 50% of the hispanic vote. that's remarkable. he's for immigration reform. good on tax, good on spending. good on school choice. i mean, a reformed governor. so you can't really doubt his qualification. the issue i think is whether barbara bush is right, are there too many bushes? would it be too many bushes? and does the last name hurt him? >> there's the dynasty issue,

there's the name issue. to get back to what bob said, how has the party changed? what lessons has the party drawn from the last election. is it they need a middle class agenda on actual problems, everything from take-home pay to college affordability? or do they want to do something harder, double-down on the let's shrink government radical message that ran paul? if that's what they want -- >> where does jeb bush come out on that, austerity vs. growth? >> i think he'd probably be more on the growth side. republicans don't like this phrase, more on the compassionate, conservative side. >> oh, that sounds like george w. >> education. the conservativism gets him in trouble. >> come passion is great.n cf1 o look, there are a lot of governors who have, who are in office right now, don't don't have the kind of message that

jimmy says resonate with every day affordability. we need to talk to the job seekers and creators. you have to talk to the yob holders, you think the job is no longer enough, where's the money? you got governors who this week presided over a billion dollar tax cut. a billion dollars, folks, 5% for everybody, businesses, individuals. so you will have recent -- >> look at the front lines, right now, it's a little far removed. >> hang on, we have another clip from former problem on the current state of the republican party, itself. take a listen. >> we are leaderless now, the republican party is leaderless. it's not the first time we have been leaderless, nor it will be the last time a political party is leaderless. in other words, we have been in the wilderness and pretty soon our party will start coalescing around somebody to become our leader. >> so leaderless, it doesn't bother him. i think he makes a very good

point. keith, you have emerging, we won't know until the elections for sure. you have marco rubio around senator rand paul and chris christie, if chris krissy wins in new jersey this fall, he will be aç hugely important republin and as kelly anne said scott walker in wisconsin. that's a party with a deep bench, is it not, keith? >> i think it has potential, but i think they will make the wrong mistake as they did in the last election. i had a conversation last time i was offset with you, i remember this and i believe this, chris krissy is the only republican candidate who could beat hillary clinton in 2016. nobody is going to listen to me, they're not ever going to nominate chris krissy for the gop nomination. instead, they will go with smbl, marco rubio who won't win the election. marco rubio won't even win in florida. i can tell you, that's a wrong direction for the republican

party. >> because you have gone to bust stops, street stops, you've asked them whether they would vote for marco rubio. >> those taxicab drivers is there they're all telling you no. that's the least scientific thing i hard you say. >> yeah, i tell you, i said this stuff in the last election, nobody listened to me on the republican side. they ended up picking mitt romney and he lost. >> they weren't listening to neither one of us. >> don't count out chris krissy, this guy, he wins re-election in 2016, as larry said, ewill be able to move to the right. >> people like a winner him people like a guy that can went. -- that can when. >> he is a contender. >> chris krissy wins new jersey, a very blue state. if he winles it big and i believe he's going to win it as a pro-growth fiscal conservative, took on the unions. he is actually pro-life, also. i think that puts him in a tremendous, tremendous position for the nomination. he will be the most sought after

speaker in 2014 and he eclipsd all the others. you win jer circumstance you might win california. who knows people have said that. >> even mark zuckerberg i believe had a fundraiser for him last year, which is gray. i love our governor, chris krissy, if he runs for president, i think he should. i think in a post-obama world, remember, every open seat is in part on the referendum after the president leaving after two terms. obama is seen as a little pafs, soft, a boirld on the shoulder now. krissy is seen as the opposite. you know, he's tough. he speaks his mind. he engages people and that is a great strength for him as well. he needs to show the penchant reform of a scott walker and the tax penchant. he is also hamstrung here in a way they're not. he has a filly legislature -- a

philly legislature. >> don't you think he's a pariah? >> no. >> why is he a pariah, because he went with the president during the hurricane? >> he didn't get invited to cpeg, yes, bob, he also got in trouble because ofç his endorsement in embracing president obama. >> c'me on. >> he supports gun control. the guy is more to the left than where the republican party is willing to accept the nominee in the 2016 election. if they're willing to make that move, i'll be the one first to praise him. i think he's a great nominee for the party. >> we will not be endorsing. keith boykin, i had you down to run the interior department. no question about get i want you out running all those parks and mineral resources. robert costa, with regard to jeb bush, let us end where we began. is your point that the gop needs new faces? is that the bake underlying --

the basic underlying point you are making? >> jeb bush is a real name. he has a lot of political hat. i think barbara bush had it spot on. >> thank you very much, we appreciate you coming out for us. now, a lot of people took that gdp report today as a big disappointment. 2.35% -- 2.5% growth. i found an important silver lining. i will share it with you next up. by the way, we saluted that mike pence tax cut that kelly anne referred to the other night. way to go, governor pence. i'm kudlow and we'll be right back. i know what you're thinking... transit fares! as in the 37 billion transit fares

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welcome back to "the kudlow report." we have news tonight president obama is no longer considering a high profile hedge fund manager for the u.s. ambassador to france. could his alleged involvement in moneyç landering, illegal high stakes poker game be an issue? we have more on this later in the program. on the economic front today, we saw the first quarter gdp came in a little light at 2.5%.

but the key point to me is lower government spending did not stop the private sector, which grew at a 4% annual rate. and that is a hot ticket. here now to cnbc contributor and a chief strategist. dan greenhouse, what do you take away from this? government spending is falling because of defense cuts. they are probably the demobilization of iraq in afghanistan. it's not affecting the private sector, at least so far. >> yeah, you haven't seen knockdown effects as of yet. we are a little nervous what the sequester will mean over the next couple months, generally, the last two quarters has been among the worst we have seen in 60-some years, it's not affect it yet, the gdp numbers would have been better if not for government spending in each of the last two quarters. >> zach, i don't want to overload with data, factoid,

since the peak in defense spending, that's why i think it's the demobilization of iraq and iran, defense spending has fallen $37.5 billion. private sector gdp has risen ç $332 billion. so magnitude is vastly much more powerful than government accounts. >> and government employment has been falling every month. so in many way, it's a partisan debate we have about the direction of the commitment it's the criticism that has been leveled against obama, the government has been shrinking in this period of time and you did have a pretty god consumer number this quarter. critics will say that consumer number was bolstered by people drawing down savings. look, you do need people to be comfortable functioning economically. >> a lot of income was shifted from the fourth quarter, all right, to the first quarter because of the taxes. a lot of income. people took it in the fourth

quarter, right, now they're spending it. i think that's a huge thing for the tax hike. >> i think we're in the economy we're in right now. i don't think we're going to get 4/5% growth. i don't think we're going to get 0. we should be adjusting to this as a benchmark, we are doing better than europe, better than japan. >> the larger point is this is the economy we have, borrowing something fundamental, this is what it will be. sometimes better, sometimes worse. >> by the way, i want to commend you, you wrote a good column, "statistics don't matter." swing swoon, that's what everybody is talking about. you look at today's number, do you see a spring swoon? >> there is no doubt at this the economic data, at least. i can say when i would meet with clients in february, there was an optimism, the federal reserve, the wind is at your back, things are looking straight up. çk

be on the s&p 500. but what you see each of the last four years is a strong start and virtually no returns. >> very interesting to me this week, okay, you are up 165 points on the dow. the averages are basically up 1-2 percentage points, major avenues, spring swoon or not, it was the cyclical pro-growth that led the way. energy, materials, techs. >> all are so lagging majorly, healthcare has done very well. defensive sectors, so feemp you

have a rotation in the markets, so these more growthier names start doing well, you have another leg in the market. i'm still both troubled and astonished by, there is a massive amount of wall street sort of cheer leading against the marks very well. it may be because people are underinvested, maybe they've missed something. >> can i put in -- >> three years. >> a great recovery of american business. that's what they've missed. they have missed a great recovery of american business profits and you know what, not only gdp growing at 3.5%, what matters is profits and earning. that's what the pessimists mixed. not only is business has done unbelievable wale e well in spite of the head winds. >> the way this is being spun is the companies are missing revenue expectations. companies do not xis in a universe where their business model is to beat wall street analysts expectations.

it's a great ongoing sustainable business. a lot of these companies are growing 15-20%, regardless of whether or nott they are meeting or not meeting. >> this quarter is, i don't disagree with you in general, this quarter is one in which revenue growth is virtually nonxint. >> but profits are rising better than people thought. that's the rate of return on investment. the rate of return on capital. that shows you have nimble and good business managers. >> listen, corporate america has managed this anemic recovery as phenomenal as could have been expected. the one thing i would add, zach brought up managers been invesd, at least what i have seen over the last three-to-six months is a shift in tone, people are for lack of a better word worried about the defensives that zach brought up. the idea that there is somehow something unnatural or unnerving with the rally. >> last time, google financial indicators, now, according to some studies, they've looked at google words up like stocks,

portfolio, economy and debt. those words appear massively, that's a negative sign for the stockmarket. when those words don't appear very much, that's a positive sign for the stockmarket. is this google financial indicator a good financial indicator? i ask you, zach? >> is this appearing -- >> the study is delayed. it's not up to date. >> the one interesting thing about google they have been trying to turn this reliable and almost all of their indicators have tracked government indicators, whether it's inflation and whether it's growth. because the fact is, the crowds in this particular case move much the way the data, you think, would have them move. so i think google is about to predict forward move him in the stockmarket. if they had that kind of ability, they would be in this and not in the surtax business. >> you are skeptical. by the way, inflation was virtually noncombivenlt dan

green interest house, you buy or sell? >> i am neutral through the second quarter. if the question is do the stocks end the year higher, yes. >> very good. a sobering discovery near ground zero this evening. bertha coombs has that and top headlines just ahead. changing the world is exhausting business. with the innovating and the transforming and the revolutionizing. it's enough to make you forget that you're flying five hundred miles an hour on a chair that just became a bed. you see, we're doing some changing of our own. ah, we can talk about it later. we're putting the wonder back into air travel, one innovation at a time. the new american is arriving. ♪ there'll be the usual presentations on research. and development. some new members of the team will be introduced.

the chairman emeritus will distribute his usual wisdom. and you? well, you're the chief life officer. you just need the right professional to help you take charge. ♪ oh, boy. [ groans ] ♪ ♪ [ engine revs ] ♪

the great president ronald

reagan's legacy only seems to get better and better. he re-ignited the economy triggered a two decade boom and brought down soviet economyism. that men has an end of the world armageddon book out. he will join us later in the show. right now, a major discovery in manhattan, bertha coombs has that story. >> lower manhattan, landing gear believed to be from the planes in the september 11th attacks found between two buildings. police say the part has a clear boeing identification number. it was discovered by a company doing a soil survey. it is still there, they may not be able to get it without damaging the two buildings it is wedged between. moving on, syrian officials are denying using chemical weapons. a government official says it was the rebels there who used the chemical weapons in an attack on a village. the obama administration yesterday saying it thinks

president assad's military did use the chemical weapons but hasn't said whether it crossed the so-called red line. lastly the twinkie is making a comeback. the new management at hostess is bringing them back by this summer, but they will be made without unions. the company management blamed union rules and management for sending them into liquidation, labor experts say this is a huge blow, because hostess was able to go into bankruptcy and essentially get out of those union articles. an article on cnbc.com about this, one thing they will not do is change the recipe. >> all right, thank you, bertha coombs, we appreciate it. now, the total vict i for the republicans. democrats backed down at the furlough at the faa by merely switching money around without touching a dime of the overall spending cuts. we will talk about the winners and the losers with our super

free market friday panel just ahead. [ tires screech ] .

welcome back to "the kudlow report," i'm larry kudlow. was it a high stakes poker game that killed a man's bid to

become the next ambassador to france? cnbc has new information on that coming up. also, former reagan director has a gloom and doom prediction for our economy again. he has a new book laying out his case. he was dead wrong last time. he is going to join us in just a few minutes to defend his case. first up, qual it a political victory for the gop. congress approved a bill today that will bring an ento the faa furlough fiasco. our own producer elizabeth schultz snapped this picture on her way through washington, d.c. if less than a week, lawmakers put together a bill giving more discretion how sequester cuts are alocated? just who are the winners and losers from this furlough fight? let's bring back keith boykin, you are furthest away, i maintain the democrats were the losers. >> i think you are exactly

right. i flew down here to miami on wednesday from new york. there were 863 delays, flight delays that day according to faa, a lot because of the sequester. what the democrats did on thursday night in the senate and today in the house is that they basically caved in and gave up all the leverage they had on the sequester and gave it over to the republican. now there is no reason, no justification to say this is supposed to be applied to everyone when we know and who is rich and powerful can basically buy tear way out of the impact with the sequester. i think it was a horrible move with the house. >> all those rich and powerful people flying on a plane? is it like everybody? >> members of congress. members of congress. they were concerned about it. >> thfts a mo mas, no mas moment. republicans, they're going to keep the house. they have completely won the battle on spending. at this point the only thing democrats should do is go and give a bill, give all agencies

the same flexibility and move on. >> by the way, keith, i know it's the rich and famous. i would say this, the airlines and businesses did very well in this debate. let me move on, this is president obama's big moment. he was represented by harry reid which is an encouple bruns on obama. this is where they made the last stand, as you noted, they lost it and gave it up. can i assume you also believe the sequester is here to stay for the 10 -year period? >> i don't think it will last that long. i think they will eventually negotiate and get out of this i think for the for seeable future, i think -- foreseeable future, there will be an impact. it won't be on the people flying on the aircraft. it will be on the people who depend on headstart, the people

that depend on pem grants. those will be reduced. it will be the people that need the help from the federal government, not on the rich and powerful, the people flying airplanes every week. >> listen, if the democrats would like to replace, parlay the sequester, i think that would be an interesting conversation. the whole thing to place a sequester with about $500 in additional tax hikes, that's not happening. >> i thought it was a trillion. i thought it was a trillion. >> right. so we're talking close to a trillion over ten years, that itself not going to happen. >> what other chances of entitlement reform, president obama, i give him credit, what are the serious chance of entitlement reform? >> i think what you saw from the president's budget proposal he did the very bare minimum that you can still say, well, he's doing something. i don't think right now -- >> the bare minimum? >> it's joke, c'me on. >> first of all, it wasn't a joke when the republicans were

saying -- john boehner and other republicans were saying this is one of the things president obama needed to do to prove he was serious along with -- he does it. this is not even his agenda. >> i know it isn't his agenda, i'm very aware of. i'll acknowledge that, too, getting into the gop agenda, they won't be willing to compromise. this is exactly why, larry, we won't get anything done. >> it takes too much out of the defense, that will have to change at some.. next year, that will stay. >> this is the weirdest thing exactly what was done to the faa, where they loosened up some move him between accounts, so money could move between accounts, large accounts, this is what republicans have been suggesting to president obama. he had rejected it all the way. that's why i think it's a double loss for obama. not only is the sequester still in place, precisely the maneuvering, theking that republicans wanted saved the faa

furloughs and the airlines. i mean, that's really, it's a -- >> you are wrong, larry. from still would be cuts. $253 million of cuts. >> i understand. >> in the transportation. >> but the brought avoided a route of minimizing any pain instead of maximizing any pain, that's the point. >> they are moving around the pain so you and me and the rich and powerful -- i'm not a part of the rich and powerful don't have no suffer. >> you are assuming that $1 of cut cautions maximum pain. there is nothing they can do. this thing is being run like fedex, the government is hyperefficient. it's all bone and muscle, there is no fat. and that's not the case. >> i don't assume that at all. i do assume, this is not the time we need to be worried about deficit reduction. we need to be worried about growth. that's something we haven't been talking about enough. congress has been awol on that issue entirely. what is so corrupt about this sit took them less than 24 hours

for the senate and if house to pass the legislation within it took them months an months and they still haven't done anything. >> i agree with you on growth, but i think lower spending is pro growth. to me, it's flat tax reform or deregulation. keith, i think you saw with the faa which can be seen in other agencies is the difference between essential and nonessential services and individuals and that's what they're doing with the faa and that's what they should do with the other executive departments. the sequester can go through, but there has to be choices between essential and nonessential services. that's all i'm saying. that includes personnel. >> well, it's only essential if it doesn't affect you and me. >> no -- >> i think that's the problem. we have the congress here that has been bought and paid for basically by special interests. we saw with the vote last week on gun background checks, we are seeing it now with the faa furlough vote. anybody that has money and influence can buy what they want

from these. that's not good for democracy. >> where is the president speaking today on planned parntdhood? >> let's get out of here. thanks to the free market panel. i appreciate it, gentleman. now, for the story that everybody is talking about. did a top hedge fund manager's alleged ties to a high stakes poker ring kill his chances to become our next ambassador to france? we have that story next up. .

union corzine jon corzine. other side effects include dry mouth and constipation. .

may have caused mark lazry his ambassador to france. bertha coombs has it all for us. >> good evening, larry. it certainly seemed like a sure bet. more details on why the billionaire decided not to pursue an appointment as the u.s. ambassador to france. sources telling cnbc he withdrew his name from consideration this week, in large part, because the obama ma administration was pressing him to move his stake. in the past, some wealthy nominees have been allowed to place assets in a blind trust, which means they had no control over their investments.

sources say the white house was requiring the firm to sell its position in france, which are worth roughly $400 million. lasry is a long-time do nor to the clintons. chelsea clinton worked for him. he had social connections apparently with a poker ring that is now alleged to have included two men involved in money laundering and that proved to be the last straw in negotiations that have already reached a standstill, according to sources. >> all right, many thanks, bertha coombs, we appreciate it. all right, now we want to get a look at these insider high stakes, big name poker games and find out what kind of bhoin is involved and why is the russian mob supposedly behind all this? here now we welcome reed albergotti. you are covering this. what is lasry in bed playing

poker with russian mobsters? >> one thing we didn't learn, poker is a lot of large high financed hedge fund bucks in these poker games. the reason the russian mob got involved, it looks like, from looking at this 84-page indictment is that they needed ways to, you know, make sure the money was collected as these games got bigger and bicker, sore of more like mini casinos, very fancy mini casino, that is. >> let me ask you, lasry is involved in the high stakes game, sometimes in his own apartment, according to another report. the question is about the russian mobster, let me pursue that one more time. are these guys just processing poker money or are they using this to launder money from other illegal activities, including an art dealership? >> look, we're still sort of picking through the evidence as

it comes in, according to this dime, yes, they're accused of laundering money through, you know, both the art gallery, also through a plunge company in the bronx and using actually poker chips from casinos such as bellagio to sort of get the money overseas to places like cyprus the former soviet union where it could be further laundered and routed back into the united states. so, certainly, a lot of money laundering is accused, is alleged here in this indictment, but they've also alleged that these russian mobsters were threatening the poker players who couldn't pay up right away. >> right. maybe they wanted to take a little vigorous from them, too. a well known art dealer, it's in bed ilia trencher, who seems to be a checker of money. maybe he's the connection.

he had 100 million betting in money laundering operations. so bottom line, mr. lasry is being fingered by the fbi, which sinks him as ambassador to france. is that fair? >> i mean, look, the reports are out there. it's a little unclear exactly what his role is. i mean, a lot of these guys were just playing in these poker games. they weren't involved in the russian mob side of it. because they were playing games that have a connection, they've now been linked. and as we get more evidence as this court case sort of moves on, there are 34 people. so a lot of people here, a lot of evidence. we'll start to learn more about the connection, you know, how involved were these people. were they players or did ahave involvement? >> that's the thing. i'm a cynic and a subsequentic. i want to know if this guys, lasry might have been managing money for these mobsters or the other players. i don't know that, i'm saying that's a possibly. the other thing is, this is my last one, pardon me, why is it

illegal to play poker? you want to play poker, why doesn't this country let you play poker? >> well, it does. you are operating in sort of an illegal grey zone, it's not illegal in new york to play poker with your buddies in your apartment. what is illegal ois to operate a casino. these high end, high stakes poker games were sort of somewhere in the middle. so i think the view of some of these poker play, at least my understanding of it is, that as long as they weren't paying a fee to play poker. >> oh. >> somebody wasn't collecting what's called the rake or a cut of the house, the games were legal. now, prosecutors may not see it that way. they may see you know as long as the dealers and the people serving them are getting tips and thousands of dollars, this was an illegal poker game. >> all right. reed albergotti, a wonderful

friday sordid story. thank you. now, he we worked together in the reagan administration, in fact, he was my boss. we don't see eye-to-eye, david stockton is up next to explain why his new book is so gloomy and doomy. we'll be right back. [ music playing ] (announcer) scottrade knows our clients trade and invest their own way. with scottrade's smart text, i can quickly understand my charts, and spend more time trading. their quick trade bar lets my account follow me online so i can react in real-time. plus, my local scottrade office is there to help. because they know i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade. voted "best investment services company."

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welcome back to "the kudlow report." all right, in his latest

armageddon gloom and doom report, david stockton has a pessimistic view about the country. again, here is the aforementioned david stockton, a former governor from michigan, president ronald reagan's budget director and the author of "the great deformation and corruption of america," which is climbing as the best sell. i didn't read the whole book. i read a big chunk. there is so much in there i afree with, overspending, capitalism, back in '86 when you wrote your first book, you were just as gloomy and doomy as you are today. we had a two-decade run, you are still blasting ronald reagan who i would argue was the launcher of that two-decade run of pros period of time, dave, why do you keep blaming reagan who gave you your start in big-time politics? >> i'm not saying i blame him.

i'm saying a lot of what you are saying is an urban legend. we did not have anything unusual. we had a devastating recession in the early ''80s because of the great deplation -- inflation. voelker crushed inflation, reagan backed him. i give him credit for. ah. >> we had a nice rebound after that which you always have when you are that deep. take the 12 years of bush and reagan towing, you had 3% gdp growth average. after that, we've had bubble after bubble of what i call inflation. first we had the fis dal bubble from reagan an bushment. >> what fiscal bubble? i went back and looked at the numbers. look, you are my boss, but i was the numbers guy in omb. i went back and checked some thing things. okay, reagan increased the debt by $1.5 trillion, a pittance

according to growth. bill clinton also raised the debt by about the same amount. the two of them. i'm putting the ''80s and '90s together. i always thought it was clinton's third term. if you take a look at all this stuff, $3 trillion of debt was held in the ''80s and 'nine. do you know what household's net wealth did, they increased by $35 trillion a. factor of just about 12. $3 trillion in federal debt, $35 trillion in private holdhold debt. david stockman, you are not doing your math right. >> yes, i am, larry. >> the economy was soaring, they were inundated. >> debt was soaring even more. >> i got to tell you, debt went up $3 trillion, household net worth up 35. >> do you want to talk about this? >> those are the numbers. >> those aroundt the numbers we

were talking about. total debt, it was 5 trillion. it's 56 trillion today. it's up tenfold the gdp which you told me about when you were my economist, it's up about fourfold. we had a massive leverage buyout during that period because of easy money at the fed and big deficits. >> you are talking about the 2000s. >> no, i am not talking. >> the ''80s and '90s. >> i am not talking act the 2000s. i'm talking about greenspan's first 13 years. he expanded the fed 8% per year, worse than arthur burns. it yesated a massive bubble which collapsed in 2002-'01. we had no economic growth to speak of. >> 50 million new jocks with a roaring stockmarket. i don't think you give that much credit. by the way, greenspan kept the inflation rate down very low, following in the foughtsteps of voelker.

i want to make a comment, having known you as long as i have, i admire you, you are a friend, i loved working for you, tough, i just want to say this, i don't, you fell me, i don't believe that you ever really understood the economic incentive model of growth. i think you're obsessed with this debt argument and i think you're partially true, particularly in the last ten or dozen years, but regarding the ''80s or '90s, in particular, look, dave, if it pays more to work and invest and take risks and innovate, people will. i don't think you ever understood that or believed get. >> that is wrong. >> i heard eric smith of google last night, he was on sean hannity's tv show. sean asked him what to do about debt? he said, grow and innovate. that's what i want to say to you as i have in the past the tax rate reduction, the deregulation, the disinflation

remade the american economy so it became a gloet machine. that's what held down deficits. that's what held down debt until the 2000s. >> that is not right because since 2000, it hasn't been groek. we had the huge -- >> since 2000. >> wait a minute, we had the huge bush tax cuts. that didn't do any good. we had huge bubbles on wall street that only basically helped speculators. we've created really no middle class jobs since 2000 you can look it up. >> we are arguing past each other. i'm not disagreeing with you. i'm saying that you've lumped the ''80s and '90s into the last ten or 12 years. >> you are mythologizing. >> no i'm no. you don't understand that lower tax rates and deregulation unleashed an economic boom. >> larry, can i tell you something? >> it made america the envy of the world in its free market economy. >> how did you get into the reagan administration at the

economist at omb? i came to wall street in 1981 preaching the lower rates -- >> but you gave up on it, david. >> i did not gift on it. >> they gave you to bill ryder, it sounds like you are turning back on it, dave, how could you do that? >> that's not true. i can look at reality, we didn't cut spending at all. defence got out of control. we had massive deficits. part of the plan all along was fiscal recollect tude, you couldn't -- fiscal rectitude, you couldn't -- >> just like the debates we had back then, you had 2 trillion worth of deficits during the bush-reagan 12 years. the economy grew at 3%. at the end, the deficit was still 4% gdp. >> the deficit was less than 2% of gdp. that boom continued into the '90s, david. >> that's not even right or even close. >> rethink -- look i think you

got a point about the 2000s. i think you got a second point about bad monetary policy, those are good points. i think you got a good point about crony capitalism. all good points. i think you are mistaking the benefits of deregulation in the ''80s and '90s. dave stockman, author of "the great deformmation and capitalism in middle america." we have another set two. that's all right. we can all take it. i wish you good luck on the book. i'm larry kudlow. she knows you like no one else. and you wouldn't have it any other way. 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

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