i like to say, there is always a bull market somewhere, and i promise to try to find it just for you right here on "mad money." i'm jim cramer. see you next time. it's time for kudlow report reality check. starting with new jersey governor chris christie. he's still taking criticism from some conservatives for appearing again with president obama on the jersey shore today. but does obama need christie more than christie needs obama? and christie can win with a pro growth tax-cutting agenda in a big, blue state. and here's another reality check. the troubles facing president obama are not going away. there are now four separate congressional investigations into the irs scandal alone. another investigation is still going on benghazi, and at least one probe looking into whether attorney general eric holder lied to congress. and one more reality check.

a good one. the economy is improving, and stocks continue to rally. the spending cut sequester is working as pro growth. republicans get it. and here's another one, according to one prominent insider. get this. ben bernanke may be reappointed fed chairman, after all. all those stories and more coming up on "the kudlow report," starting right now. trying to divert attention from all his washington scandals, president obama again joined chris christie on the jersey shore today, seven months after hurricane sandy wreaked havoc on the region. but it won't work, mr. president. here's a note to my fellow conservatives. still bitter over christie working with the president to save new jersey just days before the november election. all right. here's my point. if governor christie wins big in new jersey, as i believe he

will, he's going to cut taxes by 10%, he's going to pinch union benefits even more. he's a pro-growth republican in a blue state. that can give the gop a much-needed shot in the arm this november. why? attack christie. i don't get it. here now is cnbc contributor and former clinton white house aide, keith boykin and republican pollster jim mclough lynn. joining us shortly, jennifer instead of anno on americans for prosperity. jim mclaughlin, let me go to you. you're the republican here. why does one wing of the gop or someone in the gop with a big mouth want to go after chris christie? he's not the enemy. >> no question about it. it's ridiculous. because chris christie is the most popular governor in the country. he's got 70-plus percent job approval ratings right now. and you know what the best part is? chris christie doesn't care what the washington insiders say. he doesn't care what the establishment says. that's why he has the numbers he has right now. and the truth of the matter is,

i think he hit the nail right on the head. right now, barack obama needs chris christie a lot more than chris christie needs barack obama. >> obama -- obama is going to new jersey. he loves to go to new jersey. try to get away from all these scandals inside the beltway in washington, d.c. but he can't. he can't. not even chris christie can help him. >> the only person talking about the so-called scandals is you, larry, and a few other people on the conservative side. >> liberals are opposing this too. come on, there isn't a liberal that's defending the irs. you know that. >> most americans have moved on, realize the president wasn't involved in any of these so-called controversies, there was no criminal wrongdoing. and in fact, the republicans are overreaching. darrylisa issuing subpoenas to hillary clinton and her staff. what's going on with president obama, president obama understands this is an opportunity to understand the importance of the role of government as he visited oklahoma and spoke to mary fallon. the republican argument against government is decimated when there is a crisis.

some sort of controversy. so the best thing that president obama said today, we as americans, we help each other out in times of need. >> i think he's dead right. we should help each other out. but jennifer, let me go here, this is the same president obama who said i didn't know about benghazi. the same president obama who said he didn't know about eric holder's actions with surveillance on various reporters. this is the same president who said he didn't know about the irs problems and the targeting of conservative groups or the politicalization of the entire bureaucracy. you think he wins points on that? i don't know? is that so he can manage the government? >> no, it shows the government is completely unmanageable, which all of his surrogates have been out in the news saying. how could the president know, the government is so big, which exactly proves the point of people like me, advocating for a limited governor. when government is limited, still scandals, still abuse, still fraud. you can't make anything fool-proof because fools are ingenuous, but keep it limited and you don't have big government like barack obama. >> axelrod said at one point,

there is so much going on beneath the president, inside the government, they can't keep track of it. i think that contradicts what keith is saying. >> absolutely. and -- look, the point is, the government is supposed to be there. you're right. okay, in a crisis, it's supposed to be there. let's point something out. the government is so big, there are people dying of thirsts, on staten island, looking for help. the president offered nothing. he couldn't get the supplies and help there when they need it. the government -- the president ought to focus -- >> are you kidding? >> i am not kidding. >> do you remember hurricane katrina when george w. bush didn't even bother to send american troops and the national guard to help people in new orleans, an entire american city was about to -- an entire american city was about to be destroyed? >> you don't want to hear the truth. hear truman in 1948, the befr lynn airlift, got food and supplies to people. the president of the united states was a couple miles away. he couldn't get anything to those people. all he could do would say was a

photo ops on the beach. >> you have gone off the deep end. >> this is the problem. >> i can't believe this. >> the government can't do what it does well. >> the party responsible for hurricane katrina and george w. bush has the audacity. >> they conjured up a hurricane? >> president obama of not responding -- even andrew cuomo and chris christie acknowledged the president obama has been very -- >> i want to go back to chris christie. i want to go back to chris christie. >> that's ridiculous. >> you feel that chris christie should not have done business with obama. i personally don't know how in the world you could possibly say that. and i want to ask you this, too. you say chris christie is not a conservative. okay. you are entitled to your opinion. but mary fallon, governor fallon, a friend of mine, who is a red state conservative down in oklahoma, also embraced president obama, just the way chris christie did after the horrible tornados they had. you run a state, you got people in trouble, you've got to help them out. that is -- i agree with you on

this, that that is what presidents do. to criticize christie for that or maybe you're going to criticize mary fallon is absolutely nuts. >> no. >> all due respect, jennifer. >> listen, christie -- americans, when there is a tragedy, we always come to him. that's when it's great. do you have to have a bro manns on the beach with him? that was a little odd. christy has had some great policy achievements. first of all, when the democrats tried to push through project labor, driven up the price of paying for all the reconstruction, $30 billion, would have driven up the price by 30%, he vetoed. he vetoed when the democrats tried to rail through obamacare. he pulled the state out of reggie. those are good policies. >> and if he has a big -- i want to come back to this. i don't know what the number is. but let's say for argument sake he wins with 60% which i think he will, if conservatives just lay off the guy. although he doesn't really care what the beltway conservatives think. he could have a better

legislature, he could get his 10% tax cut which new jersey so desperately needs. and keep marching towards greater spending cuts. i thought that was the essence of the conservative supply side message. i argue that christie is a supply sider. >> ronald reagan would be so proud of chris christie. >> thank you. >> in a democratic state, people said there was no way he could have done these things. he's given them middle class tax cuts, property tax cuts, he's created 140,000 jobs. it's the best job creation record we've seen in over a decade. it is the classic example of supply-side economics. and you know what the best part about all this is? >> should be behind him. >> you know what the best part about this is? you know who he has some of his best numbers and better numbers than even barack obama has? with young people. with women. why? because he has been successful. that's why barack obama couldn't waiting to be with chris christie. chris christie has been so successful. >> like i said, i think right now today, given all the scandals, we may disagree about these hearings.

but this is going to be a big problem for the president all summer long. right now, today, president obama needs chris christie's political glow more than chris christie needs president obama. >> obviously, president obama is not as popular as chris christie is in the polls, national versus new jersey. however, chris christie also needs that -- that era of support, showing he's a bipartisan leader, not beholden to washington, not beholden to the republican conservatives or liberal democrats. he's his own man, that's his brand. so meeting with president and obama and defending people like jennifer and cpac, he embraces the brand. >> christie has argued you can seek common ground without giving up your political principles. and i think that's example exactly right and a very good message right now. i've got to get out. he is. and i think -- you should lay off him. lay off him, okay? kudlow dictum, lay off chris christie. keith boykin, jennifer and jim

mclaughlin, stay with us, we'll come back to you later in the show. first up, the stock market rallied today and some really good economic news for consumer confidence. and home prices. we're going to talk to a top flight investment strategist who has already raised his market target this year by 11%, and let's see what his next move is. and later on, just look at this train wreck, and explosion near baltimore today. a lot of damage. but what caused it? seema mody will have some answers for us. and please don't forget, free market capitalism is the best path to prosperity. you know what, it could even come to new jersey. think about that. i'm kudlow. we'll be right back.

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call it super tuesday, as the dow hit yet another all-time high. we now have 20 straight tuesday gains. seema mody joins us with all the details. good evening. >> good evening, larry. summer kicking off with a sizzling start on wall street. thanks to up beat housing data and consumer confidence data this morning. the dow notching a record 20th consecutive tuesday and in the black on its way to a closing high. and get this, tuesday rallies

now account for about 68% of the gains for the dow this year. and it's not just the dow. today marks the tenth consecutive tuesday gain for the s&p 500, as well as the nasdaq. in terms of stock-specific action, valiant pharmaceuticals among the bin wiggers after announcing bausch & lomb for 8.7 it is billion. the eye care giant that was taken private back in 2007 by a private equity firm, pink us. valiant says this acquisition will help it capitalize on trends driven by an aging patient population, and an increased rate of diabetes and demand from emerging markets. in the retail space, all eyes on tiffany's, shares back on better than expected earnings thanks to improvement in same-store sales and weaker yen helped tiffany shares move higher. other winners include tesla, expected to speak at the all things d-con african-americans wednesday. shares breaking the $110 level for the first time ever.

and defensive sectors, utility stocks down for the fourth straight session. the biggest loser there, ex along after deutsche bank downgraded the stock. some also saying that utilities sold off in response to the rise in the ten-year yield, which, larry, this was a chart of the day. the yield rising to its highest level in more than a year. you can see right here, 2.167%. back to you. >> seema, i have it up 16 basis points, as you said, to 2.17%. i look at that as a sign of economic growth. in other words, the fact that rates are rising and stocks are rising, i think is pretty cool and a harbinger of good things to come. >> sure. and we also have those encouraging comments from the boj and the bank helped the ten-year yield rise. >> seema mody, appreciate it. let's talk to one of wall street aces, morgan stanley's u.s. chief equity strategist, adam parker. you want to jump in on this real quick. bonds sold off today, so the rates rose. you know this better than i to.

2.17%, the highest in many months. up 16 basis points. but stocks still had a good day. what do you make of it? >> better economic data. pure and simple. consumer confidence is up. as you know, a key -- in fact, in our model for earnings for the s&p 500, the biggest driver in that model right now is higher consumer confidence, the reason we see earnings growing into next year. so i think the fed has done its job. >> the kudlow theorem. i said earnings would outperform and profits are the mother's milk of stocks. i want to know why you have changed -- you have gone, by your own admission, changed your s&p forecast from 1434 to 1600. >> we did that with -- >> nice 10, 11%. >> over three months ago. >> why? >> the idea was that what we're calling this quarter, the second quarter, is the hall pass, which is there's a hall pass to the second half of the year, because everyone believes the second half is going to be better. and the reason they think this quarter was a little weaker was the government was in the way with sequestration. so as long as you can dream the second half is better, you had a terrible april jobs data report,

terrible production date in may, nobody cared, they bought every dip because the dream is alive. the rubber meets the road by july if we don't get better economic news like we have seen the last few days, if we don't get a continuation, then you can have a chop for your market. >> you have a correction. i calculated 3.6% from your peak, what i got from the notes. call it 4%. 4% correction to the second half ain't worth worrying about. >> i think the market is going -- >> stay long. >> i think the market is going higher in the near term for sure. and i think there's a chance it could go even higher in the second half. i think the key debate will be the unconvention "snl" policy, the fed. and you saw last week, whenever there is any glimpse they might taper, the market kind of freaks out. >> not now. i think they rethought it. again, i think they took -- the kudlow dictum, i argued this last week, in between stanley cup hockey games when we were off the air. but seriously, suppose the fed has a little taper from $85 billion a month to whatever you think, $60 billion, choose the

number. >> right. >> they won't do that unless the economy looks good. >> right. >> and if the economy looks good, then your idea kicks right in. that that means better earnings and buy stocks. >> right. i think what's going to happen, the transition, good economic news that was good for stocks. bad economic news that was good for stocks, because qe was going to last. the transition will probably be more to good is good and bad is bad. i think that could happen, but if you do get the good news, you'll have to have a more san win outlook. >> we will look at higher bond rates, higher dollar exchange rate. talk to me about the dollar. dollar has been king dollar. i love it. how long will it last? >> it's a little bit tricky for s&p earnings. the dollar strengthening isn't good for the s&p earnings in terms of the mix of profits that the companies have. so every 1% the dollar strengthens against the euro, you take 60 basis points out of your s&p earnings. you don't want the dollar to strengthen too much -- >> commodity prices are cheaper. in fact, all goods and services

coming into the -- everything we import is cheaper. why wouldn't the strong dollar be great for the economy? these companies hedge. they know how to hedge their currency exposure. they're all buying japanese stocks and selling the end. right? isn't that the trade? >> there's -- you know, there is a difference -- as you know well, translation and transaction. i think the companies are still hurt. pick your favorite large cap tech stock, whichever you want. and they talk about currency when it hurts them and don't mention when it it helps them. i generally think that lower oil, for example, is probably worse for the energy sector earnings than it is better for the discretionary sector earnings. so in the s&p aggregate, there's really a sweet spot. you don't want it to decline too much or it's bad for the big energy stocks. >> what is the plunging gold price tell you? >> it's one of two things. either one, we have deflation, right. particularly in china and -- >> or? >> people think the economy is improving, they no longer want to use that as a hedge. >> no end of the world. >> right. >> no inflation.

have to give bernanke credit. i've already done my mea culpa, i don't know whether you have too. i thought we have inflation two years a we did not. i was wrong. i was dead wrong. bernanke was right. >> i just think we have deflation. >> you do. so they should keep pumping. >> i don't know if they should keep pump organize not, but i think we have deflation and we're masking with global monetary policy oh and seeing in places where you can see demand and supply like every commodity market where it's pretty clear. >> how high will this market go, dow or s&p? >> i think the s&p could go materially higher. our bull case this year is over 1900, larry, definitely possible. and that's just -- >> we closed today at 1660. >> certainly possible if the multiple keeps expanding. when i talk about the market, there is the earnings, and then there is that p/e ratio. i think the earnings will slowly improve, not drastically but slowly but the multiple could keep expanding in part because of the alternatives people see. low bond yields aren't attractive, need to find somewhere to put their money. >> even if bond rates go up.

>> if they go up tooch -- if they go up modestly, it could be fine. >> i guess what i'm getting at, you sit at the top of your firm, morgan stanley, a great company. okay. why not a multi-year continuation. stocks have had a four-year, but really just a recovery in a sense. back to something like -- why not from here have a multiyear expansion. politics aside for a minute. look at the world scene, look at american businesses. why not? >> could certainly have -- we debate a lot, 1994 and about to be on a multiyear run of productive growth. certainly possible. ceo confidence is certainly below average, despite the fact the market is near record level. so it's going to take the -- the next phase is going to take more confidence from ceos to invest in capital, build buildings. >> you see that coming? >> i don't think in the second half of this year, but certainly by next year, continue to see some of the improvement. >> good stocks and good housing, wealth effect. takes longer -- but paying out -- cyclical pay is all

panning out. >> it should. i think the one major variable on the horizon is most big companies borrowed a lot of money and pushed out their debt until 2016 or 2017. and they borrowed low. so if bond yields back up too much, that could be a problem by 15 or 16. but i think there is a chance that in the interim, we have pretty good -- >> i think bond rates just normalize. that's all they do. anyway, adam parker, thank you very much. we appreciate it. thanks for coming out here. now, the recovery crews and investigators are swarming to the scene of this massive train derailment. an explosion in the baltimore area today. a 20-block radius near the crash has been evacuated. seema mody has the latest for us on this story, next up. all stations come over to mission a for a final go.

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risks, charges, expenses, and other important information and should be read and considered carefully before investing. for a current prospectus, visit etrade.com/mutualfunds. very scary-looking train derate in baltimore today. cnbc's seema mody has that story. >> good evening, larry, that's right. look at the amazing video. here's what happened. a freight train collided with a truck, causing 15 cars to derail. that led to a fire and a huge explosion that could be felt half a mile away. but so far, we have reports of only one injury. the truck driver. several buildings nearby are damaged. the area around the fire had been temporarily evacuated. but fire officials say the chemicals on the train were nontoxic. and new attention in syria as the eu's weapons embargo -- russia is threatening to supply syrian president assad with new missiles if europe arms the

rebels. and israel says it will respond if russia sends those missiles. so the situation remains very intense. meanwhile, syrian rebels telling senator john mccain that assad is using chemical weapons against them. mccain visited syria over the weekend. and finally, a huge blow today for digital currencies. federal prosecutors charging seven liberty reserve employees with money laundering. that's not a big surprise, considering the anonymous nature of these services. but it is it have people questioning the viability of bit coin, the most well-known of these digital currencies and quite controversial, larry. >> it is not money, i will say it again. it is not money until it's tied and linked to something else. anyway, we'll talk about that another time. seema mody, thank you very much. in case you were wondering, the many scandals surrounding the obama white house did not go away over the long holiday weekend. irs reporters, surveillance, benghazi still out there. they all spell real trouble for

president obama, and frankly, his entire second term agenda, and frankly, aa lot of his key staff members. we will debate and discuss all of that with our returning political panel up next on "kudlow." [ shapiro ] at legalzoom, you can take care of virtually all your important legal matters in just minutes. protect your family... and launch your dreams. at legalzoom.com we put the law on your side.

welcome back to the c"the k repor report", i'm larry kudlow. a new poll shows the country remains completely opposed to obamacare. by the way, that includes the major unions, as well as young people. they all wanted high benefits and lower costs. but they're going to get higher costs and worse benefits. and have we all spoken too soon about ben bernanke's expectedty par at your from the fed? well, one insider tells me bernanke may yet serve another term in office. we'll look at that one. first up, the white house may have been granted a breather for the memorial day weekend. but don't get me wrong. president obama still in a heap of trouble. he's surrounded by multiple scandals, irs targeting, media snooping, lingering benghazi questions that won't go away. my question, will congress or a special counsel be able to penetrate what looks like a series of cover-ups. we're back now with cnbc contributor, keith boykin,

republican pollster jim mclaughlin and jennifer instead of anno, republicans for prosperity. one of the key cover-ups, this idea that the justice department had to shop around for a judge to sign the warrant to surrender veil jim rosen. that story just broke today. they had to go to a third federal judge to do that. now that's nuts, considering that mr. holder said he didn't have anything to do with it. >> i'm not aware of this controversy, but that doesn't necessarily mean that eric holder signed off on going to three different judges. >> he actually signed the document, however, that allowed them to go after rosen. >> okay. i'm not sure what this means. i can't say, because i haven't seen the story. but look, i don't have any reason to think that eric holder is lying about this. i think there should be some sort of investigation that's going on right now. i don't think that they have any reason to cover this up. and if there is a cover-up, it will come and be revealed. but i think the republicans have

a danger, a tendency to overreach on these stories. and if they do and they try to make this into another white water like they did in the 1990s, they will pay the consequences. >> just a week of hearings, for heaven sakes, jennifer. let me go to this. a week of hearings, four subcommittees. we don't know much. all we saw was lerner taking the fifth amendment. so what happened, how did it happen, who quarterbacked this irs politicalization inside the agency, and how to stop it in the future. these are huge questions that have to be answered. >> sure. and i think they're fair questions and i think it's great to see republicans and democrats in solidarity in trying to get the answers. this is egregious and outrage s outrageous. the irs targets the opposition of the sitting president. whether you're liberal or conservative, that is wrong. because although he might be targeting the political opposition of barack obama, he is not always going to be the president. what if they do it to liberals, what if it's a republican. this is wrong, it's wrong at every level.

when you run for president of the united states twice and you win, you are the final authority on this. you have to stand up and the buck stops there. >> that's the thing, jim mclaughlin. it is bipartisan, so far. that may not always be the case. i want to find out who was quarterbacking this, okay? all right. we know lerner's name, she took the fifth amendment and maybe she'll have to do it again, i have no idea. sarah hill ingram. she was lerner's boss in the tax-exempt section. we haven't heard from her, she is the one running obamacare. here is one. holly paz, p-a-z. she was in all of the interviews of the treasury's inspector general of irs personnel. huh? what was she doing in all of the interviews. and, of course, this guy douglas schulman, i don't care if he's bush's guy or not. so far hasn't told us a single thing. he knew. this stuff has to be found. i like jennifer's point. in a sense, this is an institutional issue. if the irs stays rotten and

political to the core, then its damage on the country, given its importance is just going to be gigantic. >> no question about it. an important question i want to hear answered -- i want to hear the national press ask this question. why while mr. schulman was in the white house over 100 times. i think in one story it's been documented. 118 times. and meanwhile, you had had the irs commissioner during george bush's presidency, was there once. who was he talking to? who in the obama campaign was he talking to? the three-most feared letters in the american dictionary are irs. and the average working people, small business people, everybody understands that the irs is one organization that shouldn't be politicized. and we saw what happened with it during the nixon administration. and people want answers. >> you know what -- >> hang on. i want to ask keith a question. i have more questions. these questions may come to naught. i understand that. but i want to know, for example,

when neal wolin in the treasury council got the information the irs was being investigated for targeting groups, did they tell timothy geithner. did geithner tell the white house counsel who learned later but told the chief of staff but they wouldn't tell the president. i think you have to narrow down on all these key individuals, in the irs, in the upper echelons of the treasury, and in the upper echelons of the white house. that's why i suspect at some point you're going to need a special counsel. >> i think a special counsel is something you do when there is a prosecutorial role. we need an independent investigation, outside the role of congress, outside the irs, to have an independent investigator to find out what took place. maybe give that person subpoena power. >> do you give grand jury power? >> i don't know. that goes into prosecutorial function. no allegation of criminal wrong-doing. no one has suggested that. the big issue is the 501(c)(4)

status and it's a very complicated role in defining what this is. but you kind of skated over the whole issue about doug schulman. yes, he is a bush apointy, and yes, maybe he may have visited the white house several times. >> if he's -- if he's as rotten as the rest of them -- >> there is a history with the irs. not just the nixon administration, in the george w. bush administration, the irs targeted organizations, liberal organizations, like the naacp. >> first of all, can i -- >> and there have been other organizations that were targeted even under the 501(c)(4) status rule. >> all of them. >> full comprehensive review. that's what we need to have. >> that's what i want to do. >> this is a problem, because people have an inherent distrust of the government, because the government has become so big that these organizations can be influenced outside of -- and have influence outside of what they should. it is entirely too large. now you're going to add up to 15,000 new irs agents to police the nation's health care.

this has got to be -- >> before we do that -- >> seriously. and this was empowered by the president. >> not the size of government -- >> let me switch gears. on a very important topic, the media surveillance. more and more about this. look, roger els delivered a letter or you could call it the -- a dictum, the els dictum or so forth, defending free press and said he will not be intimidated and i say good for him, he's got that story exactly right. now, holder is in the center of this controversy. where do you think that's going to lead? because you can't get a straight answer out of holder. >> i think the worst part about this for the white house, and especially for eric holder, is the press is starting to wake up about this. it's really an out of control government. and just to go back to the irs again, to go back to the irs, when did the real bad things start happening with the irs? it appears once obamacare was passed, this is the agency that was going to implement and enforce obamacare and they're out of control.

>> completely not true. it started belong before there is a long history of irs abuse going back to several administrations. >> do not wipe out -- what's happened under president obama. >> they didn't just target conservative groups. >> his rhetoric has been -- no. >> george bush ever did -- >> tea party -- don't tell me -- >> can i -- just want to ask -- >> name one -- name one -- that lost his status. name one 501(c)(4) -- >> was done to -- you can't wait a minute to hear the answer. let me tell you something. it's not just what the government is it. does to a couple of groups. >> because you can't name a single organization -- >> that went out across. just like when they went to the poll tax, when they tried to -- >> you just can't answer the question. not a single 501(c)(4) -- >> what the irs did, didn't causs caussin intimdation -- >> name one conservative organization that lost its 501(c)(4). not one.

>> terrible. there is nobody who was defending this. there is nobody who is defending this. you know that. >> you're politicizing. >> one last thing. >> thorough investigation. >> did david axelrod throw holder over the -- under the bus today. he says, the notion of naming a journalist as a co conspirator for receiving information is something i find disturbing. second, i don't think reporters should be considered criminals for doing their job. now, that sounds like axelrod is a leading indicator that obama is going to throw holder under the bus. i'll give you the last word, jim mclaughlin. >> i agree with david axelrod, i think he's 100% right. i think eric holder is in real trouble. >> he is in real trouble. and roger els is after him, and maybe the president too. leave it there. thanks. our political panel, keith boykin, jim mclaughlin, jennifer stefano, all coming back for one more segment if i can take it.

published reports say harvard president larry summers is in the running to replace ben bernanke as fed chairman. but one key source tells me ben may not be ready to leave after all. the story is next up on "kudlow." [ male announcer ] when gloria and her financial advisor made a retirement plan, they considered all her assets, even those held elsewhere, giving her the confidence to pursue all her goals. when you want a financial advisor who sees the whole picture, turn to us. wells fargo advisors. who sees the whole picture, turn to us.

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all eyes are on the fed, as ben bernanke is set to retire this coming january. or is he? yes, he's not even going to the jackson hole fed conference this year. but one key source told me, he always hated going there anyway. today a reporter created a stir, calling for secretary larry summers to fill bernanke's shoes. maybe. and then, of course, there is the front runner, allegedly, janet yellen. but wait a minute, one source tells me that bernanke may just serve a third term if the president asks him. after all, folks, if it ain't broke, don't fix it. bernanke may have patched up the economy. even i have said mea culpa, done better than i thought. so let's go to ben steel, director of international economics of the council on foreign relations and author of the great new book, "the ballots of bretten woods." let's go right to it.

what do you think the odds are that bernanke would be asked to stay and would, in fact, stay. >> i think bernanke has let this story run too long. i think this train has left the station. i think he's out. >> what if the president says, look, the economy is healing, you were the architect of this healing economy. there are going to be some challenges coming up. but you have the confidence -- look, even guys like me. i said two years ago, high inflation, ber narvegy, wrong, balance sheet wrong. i have to eat my words. a lot of people were wrong. maybe this story is going to be better. if that's true, if it ain't broke, why fix it? with a new person? >> well, first of all, i think bernanke has probably had enough. it's going to be a difficult time running the fed when you're pursuing an exit strategy. as you said, he's been quite successful over the past few years. it may be the time to leave while you're at the top of your game. >> all right. do you think the president would ask him to stay. >> i don't think at this point, larry. and that's because, as i said,

bernanke has let this story run too long. i think the market has moved on. we're into the short list. >> do you think the president would ask his former top adviser, larry summers, to take the job. >> i think he's right there at the very top of the short list, right up there with janet yellen, as you probably know, former treasury secretary, tim geithner, has said he's not interested in the position. so those would be the natural two front runners. >> or do you think there's speculation being created because the white house wants to have choices and doesn't want to hand it over to janet yellen just yet. >> i think that's part of it. no doubt. the market is really coalesced around the idea that janet yellen is taking over the fed. but larry summers has one big advantage. since 2009 when he came to the white house, he has been studiously quiet about monetary policy, whereas janet yellen in effect boxed herself in with repeated statements about the need to keep accommodated for an extended period, into 2015. as you know, the employment data

has been much better than most at the fed have expected. >> indeed. indeed. all right. so you wrote a great book about the dollar and gold and foreign exchange rates and the like. where would larry summers come out? would he be a supporter of king dollar, for example, because when he worked for robert reuben in the clinton treasury, we had king dollar. and we had low gold. and we had a good economy. >> yeah, i don't think larry summers has any view about where the dollar should be. >> rather be steady or stronger than weaker? >> he might like it to be weakened against certain currencies. >> i don't like -- >> people in his position generally speaking, larry, take it for granted the u.s. dollar will always be the king reserve currency and aren't worried about that. la last. >> last one. when do you think the federal reserve will start to slow down its bond purchases, or dour do you care. >> i certainly care. everybody should care. the fed has been running an extraordinary accommodate active

policy. i think the fed are running in front of them. i think they're going to have to start tapering later this year. the employment data are going to continue to be robust. and there will be a real heated battle within the fomc, larry. >> second half economy, better or worse than the first half economy? >> definitely better. barring any catastrophic developments. >> that's what the stock market is really telling us. still -- >> very cheery market. >> ben steel, council on foreign relations, read his book. obamacare still unpopular with most voters and now a new surprise opponent. the big unions. we have that story. we'll take a close look at what may be a case of crony capitalism involving obamacare. the white house is in this game, firms, crony capitalism and insider trading coming up next on kudlow. [ male announcer ] frequent heartburn? the choice is yours.

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obamacare is as unpopular as ever with a new poll showing 54% of americans oppose the health care law. only 43% favor it. now, original supporters like unions are even turning against the law. could this be the end of obamacare? let's bring back keith boykin, jim mclaughlin and jennifer stefano. keith, everybody hates obamacare. the public hates it, the unions hate t the students hate it. the irs hates it. that's what got them in trouble with the tea party in the first place.

the tea party hates it. nobody likes this thing. >> when medicare was introduced first by jfk, only 28% of the public supported that. >> lbj. >> no, jfk, when he first introduced it. lbj was the one who made it into law. but jfk proposed it in 1962, and only 28% supported it. when lbj actually passed the law, only 46% of the public supported it. and now it's overwhelmingly popular. so just because something is unpopular doesn't necessarily mean that it shouldn't be enacted. secondly, in terms of the polls, jim will tell you this, and he's a polster. 90% of the american people support background checks on gun purchases, but that didn't stop republicans from blocking that legislation in the u.s. senate. i don't know if we should use as determination -- >> i don't think there has ever been a point -- four years now, obamacare, the discussion of obamacare, the polls have never been favorable to obamacare. another group. businesses don't like obamacare, because they're going to have to lay off workers or cut back on hours worked or put everybody in

the pool. the unions are now turning -- you have got to have a constituency someplace to survive. >> the worst part about obamacare and for the president, for the white house and the testimonies, it's becoming more and more unpopular the more people see what's in it. it's like max baucus said, a democratic senator, it's a train wreck. and people are seeing it. it's why jobs are -- >> what we found, an interesting story today, unions are coming out against obamacare. but students and young people are coming out, really for the same reason. they wanted low costs and high benefits. what they're going to get is low benefits and high costs. that's what they're going to get. >> and also, there was this myth delivered that oh, you'll have lots of choices with obamacare. in fact, quite the opposite. one of the reasons you saw the union write that op-ed, originally the president promised you would not lose your insurance if you liked it. and as the -- as mr. hanson wrote in his op-ed, that was an

untruth. and basically, the law is written, 2,700 pages, to really create a scenario where it's going to force the 170 million people in america with private insurance on to a single-payer system, what the democrats wanted from day one. that is a lack of choice. it is a lack of ability of individuals to control their health care and their health care choices. >> and that is also a lack of honesty. it's a lack of honesty, completely untrue. >> i've got to move on. hang on. another big problem with obamacare is cronyism and insider trading. this is very important. "washington post" reports a top white house health care adviser met with hundreds of people, including pension funds, hedge funds, mutual funds, managers, all the talk about something called about something called public information, quote, unquote. do you really believe that? just public information? does anybody believe that? here now is former federal prosecutor, mitch enner, counsel at will being as lander. welcome back.

let's get this right. elizabeth fowler, i'm not casting aspersions, this is from the "washington post" story, elizabeth fowler was a top white house health care aide. she met with hundreds of people. sometimes in small groups like one or two. now, the bush crowd, richard painter, who was in charge of ethics in the bush crowd, said no. that you should not meet with outside groups, because nonpublic information will come of it. who has got this story right? >> larry, i would think that you as a free market guy, you've mentioned that free market capitalism is the best path to prosperity, would want the people who have the biggest stake in this game to be part of the process. and what we're talking about here, there are former bush people who were quoted in that same story as saying, there is nothing wrong with bringing people who have a stake in the game who have billions and frankly up to trillions of dollars invested in our health care system.

>> insiderism. >> no -- >> washington post insiderism. >> i'm opposed to insider -- >> some of the best funds in the country -- t. roe price, a great fund. why should -- here, let me look at it another way. i'm going to argue that nobody really understands obamacare. that, in fact, when you talk about nonpublic information, or you talk about stuff that might be material but is not well-kno well-known. they don't know what the regulations are going to be, they don't know what the funding is going to be. they don't even know the pages aren't dry before they make changes on waivers. wall street can can put that money to work. main street gets screwed. that's my problem with this story. >> if what you just said was -- proven to be true, that would be a huge problem. but the best information we have from the -- that very same "washington post" article is that what was being discussed there was public -- >> asserted that, mitch. they didn't prove that. i mean, it's the same story. it's the same story with the --

with the health care discussion and the medicare drug prescription choice program, okay, medicare -- medicare -- >> well, medicare advantage is a very different situation. >> but here's -- >> let me tell you what happened. >> here's where a lobbyist who also was doubling for a investment fund got information that the funding would go up rather than go down, and it was worth so much money, all these hospital stocks and provider stocks exploded up. how do we know this won't happen again and again. >> look, let me be very clear on this. what was alleged there is about one former senator grassley aide who is alleged to have gotten information and it's not clear from whom, about medicare advantage rates going up rather than down. >> funding. spending going -- a huge difference. >> rereimbursement rate going up rather than down. >> keep meeting in the white house, mitch, how do you know that's not going to leak out. that kind of thing. maybe inadvertently, because

nobody understands what this stuff is. >> the thing that -- >> ten seconds. >> ten seconds. that is something that is the subject of a criminal investigation right now. that is very different from what was alleged today in the "washington post." >> and grassley wants, by the way, a full investigation of this whole story. anyway, mitch enner, thanks very much, i'm larry kudlow. that's it for this evening. tomorrow night, much more on free market capitalism. are you still sleeping? just wanted to check and make sure that we were on schedule. the first technology of its kind... mom and dad, i have great news. is now providing answers families need. siemens. answers. do you want the long or the short answer? long i guess. chevy is having a great-deal- on-the-2013-silverado-

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>> trash -- across the world, we're producing more of it than ever before, and there's no end in sight. in the united states alone, we make 250 million tons a year -- enough to cover the state of texas twice. for most people, this is where the story with their garbage ends. but this is where the story really begins. >> if it disappears, that's the end of it. and there's so much that happens from that point, it's fascinating. >> garbage -- it's being reborn in ways you never imagined. >> it's hard to believe that a plastic bottle is the same raw material source that goes into making a t-shirt, but it is. >> garbage -- it's an emerging