there is millions of shares for sale. put the idea in your head afc, pop eyes i'd like it. chart industry, the stock is a horse. i like to say there is always a bull market somewhere and i promise to try to fine it just for you right here on "mad money." i'm jim cramer. i will see you tomorrow! another day's worth of revelations in the irs scandal. today we learn the former irs chief doug schulman absolutely visited the white house 157 times in less than five years. how often did he meet with president obama then and did they target conservative groups in those meetings? what on earth could i have have been talking about? his predecessor was in the white house, once, there was something very fishy going on here. also, top members of the press, including the new york times, nbc, the a.p. reject eric

holder's off the cuff offensive. legal export alan dershowitz is about to join us on the irs and holder scandals. and president obama's chief promise of obamacare, if you like the plan, you can keep it. guess what, you might not be able to keep it with estimates as many as 35 million of your fellow americans. all those stories and more coming up in the kudlow report beginning right now. first up tonight, at least two more congressional hears on the irs conservative target scandals are on the books for next week. we are still learning how connected the irs was with the front office when the controversy began. it turns out, the former irs commissioner doug schulman went to the white house at least 157 times during the obama administration. is more than twice as much as any other obama cabinet member.

now, take a listen to his explanation at a house oversight committee hearing last week. >> what would be some of the reasons you might be at the white house? >> the easter egg roll with my kids. >> what a ridiculous and cocky an goofy answer. it must have been a lot of easter egg rolls. get this, his predecessor had one meeting at the white house during the bush years. something is wrong here. we are honored to be joined by the distinguished law professor alan dershowitz. also with us democratic political analyst mark hannah and former bush chain adviser. thank you very much for your time. listen, it's bad enough the irs targeted and harassed these conservative groups, which we are learning included some pro-israeli groups. now this guy schulman is 157 times in the white house. it is hard for me to believe alan dershowitz, that he had no

discussions, no connections, no nothing about the irs targeting. it's just hard for me to believe. >> well, the best thing is to call him back in front of the committee and ask him direct questions about whether he had any conversations, then give immunity to the woman who pleaded the fifth amendment. remember, you can give her use immunity. that is, she can still be prosecuted. but the evidence she gives can now be compelled and can't be used against her. ask her why she pleaded the fifth amendment. what she has to hide, was there anything criminal going on and let's get to the bottom of it. accusations are not going to do it. what you need is hard evidence, testimony, from the people, themselves. >> you know, there is a poll out, a quinnipiac pom, 78% of independents believe that there should be an independent counsel u council to investigate this whole episode. they don't have any confidence in the holder justice

department. would an independent council serve a better purpose alan, or not? >> well, there are real questions whether or not an independent council fits within the constitutional separation of powers. all of that has been argued and debated over and over again, but if there is ever a role for independent council, this would seem like it. certainly, you can't expect the justice department to investigate itself or to investigate this administration's irs. look, the president appointing a republican as head of the fbi clearly is in response to what is perceived to be questions about the partisanship and you certainly don't want any questions raised about whether or not the head of the fbi is a partisan. so they've appointed a very distinguished and very able republican. >> that's a great point a very interesting point. let me ask you one more before i get some of our other friends in here. do you feel, suppose that lois lerner continues to stonewall, what happens there? oor, let me put it differently,

suppose schulman is called back as you suggestings and he's stonewalled. it seems these witnesses stonewall or out and out lie. what do you do? >> first of all, good lawyer, some of whom do serve on these committees, some of whom don't, good lawyers can stop somebody from stonewalling asking very, very god questions. second, lerner may have waived her fifth amendment privilege. i think she was badly advised to get up and use the fifth amendment both as a sword and as a shield. she said, i didn't do anything wrovenlg. i followed the rules. within they asked her specific questions, she said, now i'm going to plead the fifth. they can call her back and say you say you didn't violate any rules, what about rule 16.32, that rule says this, how do your actions not violate that rule? if she tries to plead the fifth as to that kind of specific question, she's if real trouble. and they can compel her to answer the question and convoke

contempt if she refuses. >> convoke contempt. robert, let me go to you, one of the arguments you here it was 118, now it's 157 trips to the white house by skullman. who know, next week it will be 250. i have no idea. what you hear is he was going there to talk about obamacare, right, rob, that's what they say. i want to know, if that's the case, why is it that the person in charge of obamakafr, that being miss sebeliu sze at hhs. she was obviously there 48 times. am i to believe schulman went 157 times to talk obamacare, the woman in charge went 48 times? it doesn't make any sense to me. >> it doesn't pass the smell test. you would think that kathleen sebelius would be the person speaking on behalf of the actual organization when it came to obamacare. here's the real question, when

you go to the white house, there is a spec reason to go there. it's nice to go there for easter roll, so forth. to go there over 100 times means it is a specific reason why you are going there, especially leading up to the president's re-election campaign if 2012. there is a reason for this. the reason is i'm sure he very much wanted to be in concert with whatever the administration wanted him to do. whether it's obamacare, whether it's the irs rulings, in terms of some very specific ruling. so it just doesn't add up. no question about it. >> mark, i want to give you a whack at this before we move on to mr. hold er. why should anybody believe that this guy didn't talk to political oimpts for example about the harassment of these conservative groups? why should anybody believe them? >> i think the line between the political policy person and the white house is admittedly vague. but i want to get something back to what robert said and the contrast of other members of the

cabinet. >> wait a minute. i used to work in the white house. they work in a different section in a different neighborhood. if you are going to talk policy, are you in the policy shop. if you are going to talk politic, then you go down the road, you go down the floor and you talk politics. what bothers me is this guy was there so much and sebelius wasn't there afl the time he was there. >> that's not true. >> i think he was talking politics. that's not what the head of the irs is supposed to do. >> if you go within the article, it says the visitor logs probably don't include every time somebody who is a cabinet level position was visiting the white house. for example, jack lewis vis i itted 40 or 50 times while he was chief of staff. of course, he worked most of the time in the white house. >> sebelius 48 times in the log. this guy, schulman, 157. come on, that log, that is so far out. be honest with me. >> larry, the only reason that log exist, let's not forget is

because of the historic decision by president obama. to make a visitor log and a move towards transparency. now, we're criticizing the administration with this irs scandal as we like to call it as sort of violating or being nontransparent. the only reason this log existed is because of the spirit of transparency. >> it didn't work too well. anyway, let me switch gears. there appears to be a growing road blocks for eric holder's planned media charm offensive. okay. the attorney general invited washington borough chiefs for all major national news organizations for an off the record meeting to discuss the guidelines for subpoenas of reporters. already some, including nbc news, new york times the associated press and others have declined the invitation. this as congress continues to investigate whether holder lied under oath earlier. take a listen to this.

>> with regard to the potential prosecution of the press for disclosure material, that is not something i have ever been involved in or heard of or would think would be a wise policy. >> all right. once again, we are joined by distinguished law professor alan dershowitz. alan, you got to help me on this one. did he lie? did he mislead? we know he signed the warrant for james rosen. i mean, what's up with this? >> well, the law permits prosecution of journalists for printing classified material. it has for many, many years. the policy is always been again it. the new york times, of course, published classified material in the pentagon papers case. just last week, "time" magazine bothed it was publishing classified material given to it by someone in the administration. but there has always been a policy with going after journalists. with wick can i leaks, not of course -- wikileak, not of

course. we are not prosecuting any journalists. the search warrant that he signed was for a journalist but for investigation of the leaker, himself, who was possibly a target of the investigation. i don't think he lied. >> don't you have to consult or tell the journalist or the journalistic group? shouldn't holder or someone of his deputies talk to the people in the a.p. or talk to jim rosen? that i thought went part in part, hand-in-hand with this approach? >> well, usually. but now you have the hypocrisy of the press who love to have off the record meetings, they die for off the record meetings with the president, saying we are above off the record meeting, we only want meetings on the record. what we need is new legislation that determines when and if ever you can go after journalists for publishing classified material. can you not leave it to the discretion of the toempbl. >> so you don't think he lied?

>> i don't think he lied i think he should write a letter apologizing for what he said. because it turns out that he did have some contact with some aspect of the case, but i do not believe he sat there and said, i am now deliberately telling a lie. >> all right. you heard what will dershowitz said, do you buy it? >> no, i think he didn't lie, i think he was disingenuous. the splix horrible. one would have think he would sat down with fox news or whatever the case would be, this is what we think we are doing. off the record, you need to understand there are national security ramifications if we do this. it sounds like his office didn't handle this very well and was totally tone deaf when it came to handling this in a lower way. >> i have been to many press gatherings. it can be off the record

quote/unquote. but there is also something called deep background so that as a writer you can say senior justice department sources told me this. is is that what they're going to do, clarify the policy and do it on deep background? >> i don't think they'll allow it. the aa.p. said unless it's on the record, they're not going to prosecutor. we have an overzealous pursuit, it's a holdover from the bush administration war on terror and the spying. >> that's a good point. i don't mean to interrupt. you are making a great point before we leave this, in a way, holder is more zealous than the president. in fact, oddly enough, while holder is being so overzealous with these under surveillance the president is out there telling us in his speech the war on terror is over. holder is to the right of obama on this. >> this is a sticky issue. professor dershowitz can probably speak to it a lot more than i can. the balancing act between freedom of the press is a tricky

one. it requires a judgment call. i don't know whether, you know, there are democrats and progressives who are upset with this decision then. >> mark hannah and i will give you the last word on this. >> well, absolutely right. it is so hard to strike the appropriate balance. it has to be done legislatively. there have to be exceptions. you can't just publish the names of spy, secret weapons and expect to get away with it. they shouldn't be prosecuted for publishing material that the administration basically wimpgd and said, can you publish this we need standards. they have to be legislatively adopted. >> i have to leave it there. alan dershowitz, we appreciate you coming back on this show, very, very much. robert tranumm and mark hannah will join us in a couple minutes. one man does not agree the irs is related in this

corruption. flat tax? can this be right? we have as to straighten them up next up. later in the show, obamacare's broken promises starting to stack up. but the biggest broken promise is the one the president made himself over and over again. remember this? >> if you like your health care plan, you will be able to keep your health care plan. period. no one will take it away. no matter what. if you like your plan, you can keep your plan. if you like your doctor, can you keep your doctor. if you are one of the more than 250 million americans who already have health insurance, you will keep your health insurance. .

irs scandal have a silver lining? yes, it is time to remove .er from the corrupt irs an generate more incentives for better economic growth. take away the unnecessary deductions and exemptions, take away the irs power. maybe wind up abolishing the thing. here's my great pal from the

american enterprise institute and cnbc contributor. he seems to have gone over to the darker side. fix, don't fix the tax cut. i have two goals, one is the obvious goal we talk about economic growth. lower the rates, get rid of the deductions and exemptions. now, i have a second agenda item. i want to shrink the tax code in order to shrink the irs. because the irs is a country agency. why won't you help me with this? >> i have three items on my agenda, two of which are like yours. one a pro growth reform. i would like to reduce the obtrusiveness of the irs. i'd also like to have a tax system that allows us to pay our bills. i think to accomplish all three of those things, a flat tax doesn't do it. the good news here is that you can take, a flat tax is a flat consumption tax. all you have to do is take the

classic flat consumption tax, just have kind of a progressive rate structure. there you have a progressive consumption tax. you don't tax investment income. you only tax businesses on cash flow. by a mazingly pro growth. bring around exemptions. >> i love that. you shove spelled that out in your article. i saw this as coming. look, i can take away. you got how many brackets, six brackets? all right. why not go to two brackets like we did in 1986? let's take all of those middle class brackets out the 28, the 25, the 15. take them out, jimmy. ache out the 33 while are you at it. there is a huge middle class tax cut. have ten and 25 or ten and 28. do what you said on the corporate tax. will, i don't know, be so dynamic in terms of nick growth. it's got to work and it takes the irs out of play. the irs will have nothing to do.

all these political bour kratz at this time arounded by thele their thumbs before they get fired. >> of course. what the president is trying to do. he's trying to get rid of all these exemptions, keep the rate high or raise the rates. raise a straight jacket tax code, you can't avoid the high tax rate. remember, half the country doesn't pay income tax, if you cut taxes on the top half, you have, i think you need to make up that somewhere else. i just don't think raising ref now of like 17 or 18% of gdp will cut it going forward if, a, you want a first class military and, b, have you an aging economy. >> i don't know. we have been down to 18% gdp before in the clinton years. >> that's right. >> i will say this, i think, let's say you had a 10 and 25% tax. let's say you had your corporate tax, sales and that of investment. i think the feedback there, the dynamics score, a good 50%. now, do you have to cut spending? yes, you do. the spending cuts have to go

hand-in-hand with the tax rate reform. but i think the combination of that will deal a severe blow to the power of the irs. the flatter the code the fewer the deductions. you don't need deduction and exemptions, jimmy, if the middle guy or gal is paying a 10% rate. i'm not sure you need 501(c)(4)s and 051 c 3s. we don't need own after that crap if you get the tax rate down and have a fair code. >> i want to say two things, three-quarters of what we will spend on entitlements going forward is strictly due to aging. forget about efficient sis with the health care system. it's strictly due to aging. the other point is, listen, i don't know if we can do 18%. listen, they have been trying to lower the corporate rate down to 25%. the tax rates had a hard time getting below 30, fwimpb some deductions you want to key. you don't want to get rid of the

expensing. >> we don't have leadership. we got to have leadership on this economic growth and leadership. economic growth will solve so many of these problems. >> i'm all for economic growth. >> it is. it will solve so many problems and putting the irs out of business for the most part will solve the rest of the problems. anyway, my great pal, thanks, buddy. appreciate it. now, seema mody is about to join us with the other big headlines including the latest on why ohio state university president is in hot water with off color comments he made caught on tape. all that nup next. please don't forget, free market capitalism, calm eight modified flat tax. i'm okay with that. take the irs out of play. i'm kudlow. we'll be right back. [ male announcer ] with wells fargo advisors envision planning process,

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more tornadoes could be hitting oklahoma today. cnbc's seema mody joins us with more on that and the rest of the news. >> good evening, that's right. we are watching several big storms in oklahoma city. there has been a couple tornado up the down today. and there could be more this evening, which is obviously the last thing the people there need right now. they are still cleaning up from the devastating tornadoes that his e hit last week. it's not just oklahoma. there is a tornado warning for am bean, new york. the president of ohio state university is in hot water. gordon ge was at a meeting last november talking about notre dame was never invited to join

the big ten. here's who he had to say, i'm saying here t. fathers are holy on sunday and they're holy hell on the rest of the week. you can't trust those dam catholics on a thursday or a friday. gee apologized for those remarks saying they were plain wrong. tomorrow an asteroid is going to make a close bush by earth. by close, we mean 3.5 million miles away. even so nasa astronomers will be keeping their eye on it. it is called qe2, even maybe ben bernanke is watching it as well. that's a finance joke. >> i have to say one thing ge, i didn't find his remarks at all not remotely amusing. >> you have to be so careful, especially when you are holding such an important role. >> many thanks, we appreciate it. now, president obama's biggest promise that you won't have to dang your health plan with obamacare is being broken

all right. will this kill it politically? we bought the the latest on which plans are being cancelled against your will. that's up next. please stay with us. [ male announcer ] we gave the new e-class some of the most advanced driver systems ever made. stereoscopic vision... distronic plus braking... lane keeping and steering assist... eleven enhanced systems in all. ♪ twelve, counting your adrenaline system. the 2014 e-class. the most intelligent, i

. welcome back to "the kudlow

report." i'm larry kudlow. in this half hour, are we getting much closer to a wider war in the middle east? syria says it received those missiles from russia. are those the same missiles israeli vowed to take out? we will have the latest. if you like your health care plan, you will be able to keep your health care plan. period. no one will take it away. no matter what. if you like your plan, you can keep your plan. if you like your doctor, can you keep your doctor. if you are one of the more than 250 million americans who already have health insurance, you will keep your health insurance. >> all right. we've heard the president say that a million times, but know the news is out, individuals and businesses who want to keep their health care coverage still may have to cancel it if it doesn't meet obamacare standard.

some estimates run as high as 35 million people who will have to switch. will president obama ever stop breaking promises over this doomed affordable care act? here now is john goodman, president of the national center for policy analysis. he's the author of "bryceless, curing the health care crisis." mark hannah and robert tranum are with us. robert, tell us in brief, why are between 10 and 35 million people have to change their health care plan, count tore what the president promised? >> you know, with enthe president ran in his first election bid, he made it sound like he had a plan for the help a few poor people and everybody else was going to be obviouslied. now we discover everybody is going to be affected. 300 million americans are going to be affected by this law. some more than others. >> why is that? in other words, it's not just little businesses, it's big businesses. the way i understand it is a lot of people just don't want to pay

the fee. they don't want to pay the cadillac tax. they don't want to pay the premium. they don't want to pay the deductible. if you are a small business and you work 30 hours, they don't want you to do that. are those the reasons why everybody will have to be displaced? >> yes. if you think about a home, just about everybody you see in a hotel is making about $15 an hour the made the busboy the waitress the car parkers, they're all $15 an hour employees. this law is going to try to force that hotel to provide very generous health insurance, say $15,000 for a family plan, but there is no new help from the government. meanwhile, we have these exchanges over here, where they're huge subsidies, so the hotel is going to want to somehow get those workers over the exchange to make free health insurance, instead of taking half their wages and making this expensive plan. >> last one, somebody has to make these changes, secretary sebelius is out there hat in hand trying to get the corporations to pony up money. if that isn't an insider imor

cronyism, she isn't allowed to do that, i'm not sure it's legal. >> i'm not sure either. something is very wrong with. robert, i'll ask you about the sebelius thing. there are a lot of issues we talk about. that's one of them. the number of people displaced is going to be much larger. the state insurance exchanges the so-called markets are not ready. there is no infrastructure. miss sebelius is out there hat in hand asking the very people who john gadman said she is going to regulate to put out money. i never heard of such a thing. >> the question becomes whether she broke the law orbend benefitt the law. republicans have decidedly so to defund obamacare to the extent they can. the larger issue, quite frankly, that 49% of americans do not want this health care. they don't understand it. they're afraid that it very well could impact them in a negative way. have you small businesses out there, let's say for example a hardware store, a family-owned

business that maybe has five employees. do they now have to basically raise their prices to be able to pay for obamacare for those five employees? there is massive confusion out there, marl for the american worker. does it bheen they're going to have to bake amy say, you know what, look, i'm healthy. do i have to be forced into this obamacare or other care? it's massive confusion. >> they'll wait until they're sick. mark hannah, here's the president, time and again. i think he is going out on a speaking tour to rev up support, saying to everybody, you won't have to change your health care plan. but the country now are getting inform, that they realize they are going to change their health care plan. it's a dognytive dissidence. a cognitive dissidence. >> there is a real anxiety around the rollout of obamacare. the reason that is, is because both the administration and perhaps let's look in the mirror a bit, we in the media haven't

been doing a fantastic job of explaining. i think a lot of people don't know what the details are. you can look at any one of the policies -- i agree with your first ges who said this will affect everybody. it will affect everybody to the fact that nobody will have to have an insurance plan that discriminates against them, for example, they have a pre-existing imness or an insurance plan that doesn't have a patient's bill of rights. you know what i say to those insurance plans that will be booted is good riddence. now, this is a very small minority. let's be clear. only about 3%, 4% of the insurance plans are going to be -- >> let me get john to react to that. john, you can say good riddence to the plan. means will you have at the very least, much higher premiums for the newer plan because it has so many benefit in it. is that not right? >> 90% of all the people in the country are the already in a

plan that did not discriminate because they are in a preexisting condition. the prior preexisting condition is a small problem for 100,000 people that have joined the federal risk pools. all the rest of the country is going to be affected by oboom macare in big ways. >> john, in 90% of the people are covered, 90% or 80%? >> 90% of the people with health insurance got on a plan without any discrimination. >> they'll keep their plan. >> are they going to keep tear plan? >> no, no, millions of those people will lose their plans. the congressional budget office says it's 10 million. the chief actuary says it's 14 million. >> i want to ask, i object robert, we got to get out. robert, more people are going to go into these exchanges, the exchanges have no infrastructure and no money. guess who is going to pay for it? the taxpayer. this thing is going to bankrupt us. it is going to totally bankrupt us. >> there is no question it could bankrupt us. the other question is whether or

not republican and democratic governors will accept the exchanges. you have a band of governors out there who say under no slick, i take this money or buy into this exchange t. reason why is because at the state level, they had their own medicaid or medicare system in place. secondly, they can't simply afford it. they know in the future it could very well bankrupt us. >> there it is, john goodman, mark hannah, robert, we appreciate it. >> thanks, larry. now, the feds are trying to put the pieces together in the ricin-laced attacks on president obama and new york mayor bloomberg. we have the latest on that and the escalating situation in syria coming up next. 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...

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. we have new information tonight on two letters laced with ricin sent to new york mayor michael bloomberg. good evening, jonathan. >> good evening, larry. now there are three letters. one sent to the president that the secret service acknowledged intercepting today along with a letter addressed to the mayor that was revealed yesterday along with one of his chief lobbyists in washington. no one was sickened by these apparent ricin-tanlted letters. here is one with the apparent

stains of the orange and pinkish-type liquid in the letter. the letter contained threats against the mayor alleging that he was going to be targeted because of his positions on gun control. the fbi joint terrorism task force, nypd, secret service and postal inspectors working frantically to track who sent these letters. they were not signed. they were all sent from louisiana the same post office down in sleeves port, louisiana back on may 20th. so the investigation centering very much down there to who mailed the three letters at the same time, one to the president, one to the mayor and one to the mayor's lobbyists in washington. >> wasn't that nut case who started this a while back thrown into jail, the ricin guy? >> there is a gentleman in mississippi who was arrested and charged. that was a separate case. this is the third spate of

ricin-type letters. there is one on washington state. one in mississippi where a tai kwondo instructor has been charged. he denies any i don't thinkdoing. the hunt is on in this case because of the positive tests and the public threats made against the mayor and the president and lobbyists in washington who are working to control, to increase gun control. >> jonathan, last one, is this the first time somebody tried to slip a ricin letter through to president obama? i can't recall. >> no, there was one just weeks ago, the mississippi case was one of them. again, these letters, the one to the mayor and the president have been stopped at screening stations. since 9/11, since before that, the anthrax letters boved up security protocols. these letters were stopped at offsite screening locations well in advance. the secret service, fbi, all say no one was in any danger. although the lobbyist, he did

open the letter because it was sent to him at his private consulting office. the letter did get through. again, we are told he is not offering from any illness. >> many, many thanks. jonathan dietz. we appreciate it as always. >> larry, thank you. president bashar al-assad announced today syria received its first shipment of advanced missiles and said he was confident he would win the civil war. i centered out he would retaliate on his territory. so what is israeli's next move going to be? here now my great friend, john bachelor, first of all, reekd afternoon late accounts of this thing. do we know the russians shipped these s-300s? >> excellent, larry. there is no confirm. it looks as if the president of syria is boasting ahead of the facts. russia is very good at making

promises, not delivering. for example, i am told iran has paid $2 million for this same system. it hasn't shown up yet. we can only believe mr. assad is hoping because there are no facts to support his claim. >> can these missiles get to israeli? >> these missiles are extremely important for the whole region. they are a first rate system. they cannot defeat israeli if it chooses to strike against targets as it has recently. for example, ground-to-ground missiles shipped by iran into the hand of the terrorists hezbollah. israeli can take those missiles out despite the s-300. however, there are significant change in the battle space of the middle east. these weapons are a part of the deterioration of the whole region, larry. we are watching a destabilizing of all the states around syria. >> let me ask you this, the destabilizing of all the states around syria. get that. what was senator john mccain doing last weekend? what's his agenda?

is he trying to give weapons to the rebel, many of whom are jihadists or al qaeda? what is he up to? >> here's what i am told the eu recently said it was lifting the embargo on weapons to the syrian rebels, so-called the free syrian army. john mccain is there in support of that or consistent with arming the free certain army is in some way supporting democracy or the arab spring or the overthrowing of a reprehensible unacceptable dictatorship, assad. what i do know is that the european union decision and perhaps the demonstration of mr. mccain, who is a senior member of the united states senate, to support the free syrian army is what loosed this idea that russia will ship the s-300s. russia does not want us or the eu to harm the rebels. they do thought want the rebels to win. >> okay. why is mccain freelancing like that? >> a good question. i come right back at you, larry, this the presidential campaign

of 2008 again? are we reviewing, bomb, bomb, bomb, iran? i can't explain the senator. he's a hero, a famous senator. he's one man. the national policy of the united states is far more important. it's incoherent, larry, i want to emphasize that, what i am told waiting to speak to you tonight from sources is fa moscow and jerusalem are of iagreement. washington is the outlier here. moscow and walk want the assad regime weakened and survived. the alternative is unacceptable. it's the jihad. it is washington reading the headlines. there is the quandary of russia's threat to ship the s-300s. there is no evidence they have been shipped. >> all i can say is i'm an amateur at this i adore john mccain. he's a great american. i think senator mccain should be working with the state department or president obama to physical out what the american policy is going to be. it sounds like the european union has a policy. it sounds like russia has a

policy. it doesn't sound like we have a policy. i give you the last word. >> there is a free syrian army, larry, there is a free mccain army. it wanders the earth. >> okay. thank you john batchelor. present it. now, folks, we are going to the economy. bond interest rates are shooting umm. that has some investor, getting nervous. but i think, actually, higher rates could be a very bullish sign. we will debate the stockmarket and the economy next up on "kudlow."

stocks up a tad today. the dow rising 22 points. in dmik news, first quarter gdp revised slightly lower to 2.4%. while jobless claims edged up, the four-week average stayed below the 5500 mark for five straight weeks and could be a singling out of the 200 jobs game in next week's employment report for may. pending home sales up 13.9% above year ago levels. that is terrificst let's talk, here now is jeff klein, chief market strategist lpl financial and john crechefski. one point i want to talk about is japanese stocks and the second is u.s. bond stocks. ron, i'm an optimist, i'm a bull on our market. i want to get your opinion. japan stockmarket is in a nasty correct e correction. it's already down 15%. if it keeps dropping, 5, 6, 7%

on a daily basis, is that virus going to affect our market as well? >> i don't think it will be good for our market, look, larry that, market is up about 80% in the last year. this is a healthy correction. i think that market is going to go higher. i don't think it's a big concern for u.s. stocks. >> so you don't see. we haven't had our correction either. everybody is waiting for a correction run. you are saying if japan continues, let's say they correct another 15, 20%. it's quite possible. are you right. they rose 80%. you don't think that will be a correction here in the states? >> i don't think so, larry, look. 15, 20%. there will be other factors other than the fact that there is a huge money inflows into japan. it's a natural correction after up 80. i expect it to resume an increase after a correction here. >> i like it. i like their easy money policy. jeff, let me go to you. i don't know if you want to weigh in on japan. i'm more interested in bond rates. they're up 50 points i'm using

the ten-year treasury. now, i think rising bond yields at this stage of the game is actually a bullish sign for our economy. your take. >> yeah. i agree with you, larry, it's true in japan, too, as long as yields have moved up. as long as the yield curve has steepened. i'm not worried about it. if it starts tobull pull back, flatten, then it's a problem in japan. same thing here, as long as we see that yield curve steepening with rates moving higher, i think that's pro growth. i think it reflects less of deplation and reflects better economic growth. it also importantly brings in this whole issue of better profit margins for financials, right, as that yield curve steepens. it means that businesses holding a lot of cash can earn more on that cash. maybe that's a plus. it's not a bad thing if they're earning more on it. it basically, reflects, a better economic backdrop. that could be a real positive

renex. >> what you are saying is even a banker can make money if the difference between long rates and short rates keeps getting wide. even a banker can make money. in fact, i know you are right. i know that from my own experience. financials led the way 1.1% t.kbw index up 1.4%. banc of america up 2.5%. citigroup up. j.p. morgan up 1.7%. ron, you happen to run a bank. we'll calm eight bank. so you must be a happy camper. >> aagree larry. i think the market took a little bit of a pause when it thought the fed would have less accommodation. but the fact of the matter is when interest rates rise and continue to rise, it's going to be because the economy is improving. i believe the drag, that higher interest rates will have on corporate profits will be more than offset by gdp growth. this market is in an equillibrium rally. stocks are undervalued relative

to bonds by a wide margin. this rally has a fair amount more to go, larry. >> all right. i happen to agree with you. it looks like market expectations are for better gdp growth, let's say, in the second half, early 2014. you can see it in the dollar. the real exchange rate of the dollar is going up. that's a positive sign. gold prices are coming down. that's a positive sign. that's today's gdp report. let me ask you this. it's going to be clear and clear if the markets are right and the chi is strong, that the fed will slow down its bond purchases. i don't know, i'm not smart enough to know, it may be september. has the stockmarket fully digested a september move by the fed, ron? >> you know, i think, look, larry, i think the issue is, is that the market is overreacting, thinking that the only fuel to this rally is fed accommodative

policy. what it's missing is that the fed will lessen its accommodation. when the economy improves. and the economy improvement is going to offset rising interest rates by a wide margin, larry, so i think the market is actually misreading the fed a little bit here. i think that as the, you know, profits is the mother's milk of stock prices and profits can go higher. >> it is if state of the economy. i was going to say, larry, the key is the state of the economy at that point in time. here's the thing, despite the sequester hitting here, what we saw first quarter end the fiscal drag from what you saw in terms of the increases in q1. we bought the the first quarter gdp. it was a 3.4%. that's not bad. in q2, kwied widely expected to be slower. not if you add that 2% of gdp.

>> the government -- >> you got a private sector gdp. >> when you do that, you are talking about 80% or more of the economy. so the purchases may go down. government purchases may go down t. private economy is doing very well. so that's creating jobs, too. we want to change all that. i got to get out of here, are you both great. that's it for the show. i'm larry kudlow. thanks for watching, everybody. ? do you want the long or the short answer? long i guess. chevy is having a great-deal- on-the-2013-silverado- but-you-better-hurry- because-we-don't-want-to-see- a-grown-man-cry-spectacular! what's the short answer? nice. [ male announcer ] the chevy memorial day sale. during the chevy memorial day sale, current chevy owners trade up to this 2013 chevy silverado all-star edition with a total value of $9,250. plus get america's best pickup coverage including 2 years of scheduled maintenance. available out there. i knew devry university would give me the skills that i needed to make one of those tech jobs mine.

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