this remarkable transformation where they sell the canadian division for a huge amount of money. the stock went up too much. but i have been, you know, safely initially and we thought you ought to be in whole foods. there's always a bull market somewhere, i promise to try to find always a bull market somewhere. i promise to find find it for you right here on "mad money." i'm jim cramer. see you tomorrow! nsa leaker edward snowden resurfaced in hong kong today. and tonight i want to know when will he be charged? what will he be charged with? and why aren't american agents going in and snatching him up? the other big story on capitol hill is the immigration reform bill. democrats want immediate legalization. but republicans want border security first. and tonight our exclusive guest is at the center of both stories. south carolina senator lindsey graham joins us live. "the kudlow report" begins right now.

first up this evening, the director of the national security agency said today that its controversial surveillance programs have helped stop dozens of terrorist attacks. and tonight u.s. officials could be close to filing criminal charges against the 29-year-old behind the biggest intel leak in u.s. history. nbc's chief justice correspondent pete williams joins us now with all the details. good evening, pete. >> reporter: well, they are close, larry. what they're trying to do is thread a needle here because on the one hand they have to satisfy the terms of the treaty we have with hong kong, make sure that he can be extradited. that means we can only charge him with offenses that fit the treaty we have with hong kong. but on the other hand the government wants to make sure that the charges are basically all that the government wants to bring because there would be a problem if we file the charges there, then get him over here and lard on a bunch of other charges. that would be an abrogation of the treaty, could make it difficult to do extradition

cases there in the future. so they want to avoid all those problems, get the right charges filed, then get the police there to arrest him. he will then be brought into court there. that would start the process eventually to bring him back here to face the charges in the united states. but to answer the question in your headline tonight, the reason the agents can't just go there and arrest him themselves is they have no jurisdiction to do that any more than the hong kong police could have the jurisdiction to come here and arrest somebody on u.s. soil. >> but there's no question that he must have signed documents that classified everything he did and he broke those classified document arrangements. there can't be any question about that. >> oh, no. and that's i think the very minimum charge that could be brought. so they want to make sure, though, that they do more than that. i think they want to bring a bigger case than that. it's just making sure they get it right. and then the way these things work is the state department has to look at the charges to make sure they conform with the treaty. then they'll be filed. then the chinese will be notified. and that starts the process.

so it takes a little time. but it does seem to have a feeling of inevitability to it that he's going to be coming here to face charges. >> one last one, pete. democratic house member loretta sanchez walks out of an intel meeting of some kind and says that there's significantly more about the spy programs, there's significantly more than what is out in the media today. do you have any idea what she's talking about? is this going to be a second shoe to drop? >> well, snoweden has said he's got other documents out there that he's given. the "guardian" themselves say they've got more to run on. i'm sure she's right. i'm sure there's more to these programs than we know. general alexander said at the hearing they're working very hard to try to declassify this so there will be more of a legal discussion for the legal authorities for it. >> many thanks as always to nbc's pete williams. we appreciate it. let's get right to our special guest tonight. we're honored to be joined exclusively by south carolina republican senator lindsey

graham. senator graham, welcome back to the show, sir. >> thank you. >> let me just ask you. you know senator rand paul is very much against this nsa. he's saying it's a violation of personal liberty, it's a violation of the fourth amendment. he said big brother is spying on you or watching you. what is your response to what senator paul is saying? >> well, the fourth amendment protects americans from unreasonable searches and seizures. and how does it do that? you have to get a warrant. sno content, no phone call of yours or mine can be monitored by our government unless a federal judge authorizes the content to be monitored and the government would have to prove to the federal judge that the other person -- the person on the other end of the line is a terrorist. so we do have a warrant requirement and this is not an unreasonable search and seizure. and by the way, we're at war and we need to find out what these guys are up to because if you don't pre-empt them we're going to pay a heavy price. so i'm very comfortable with the legal basis of this program.

>> all right. you support the program. >> yes. >> the point about senator rand paul, he's getting a lot of ink about this as you know, and has a lot of supporters on this point. what you're saying is he's wrong because he's left out -- >> yes. >> -- the fisa warrant program. is that basically the essence of your disagreement with paul? >> yes. and unreasonable search and seizure is prohibited by the fourth amendment. and the warrant is the check and balance. to anyone who's listening, the government cannot monitor the content of your phone call unless a federal judge authorizes it and the people who are tracking the terrorists have to prove a connection between your phone number and a known terrorist's phone number. and i think most americans want us to try to figure out who the terrorists are talking to throughout the world. and like anwar awlaki was talking to major hans. you remember that guy, major hasan, who killed 19 people at fort hood? he was corresponding with anwash

awlaki, an american citizen al qaeda leader in yemen, through e-mail, and we missed that. so i would tell senator paul that i do respect civil liberties, we do have checks and balances, but i believe we're at war and it's a good thing to try to be finding out what terrorists are up to and who they're talking to. >> i don't want to be difficult about this, but you mentioned fort hood. we missed that. we also missed the boston marathon -- >> yes, we did. >> -- bombing. so senator, skeptics of this story, skeptics of the nsa are questioning, you know, clapper and the nsa are saying that it stopped dozens of terrorist attacks. and of course the second problem with that is clapper himself looks like he lied in front of a congressional committee. in other words, people just don't seem to -- let me say some people, many people don't seem to trust this story, senator graham. >> the major hasan and anwar awlaki was a communication through an e-mail conversation. and believe it or not, under this program, a known terrorist

like anwar awlaki because he's an american citizen, we can't monitor his e-mail. i want to fix that. but the boston situation wasn't about the phone surveillance program failing. it was a failure of dhs, the homeland security folks, not to notify the fbi and the cia that this guy had gone back to dagestan, to the terrorist safe haven. our system failed to talk to each other. so we need to up our game. and if we took this system out of play, and it may have been distorted already. if we lose the ability to monitor terrorist activity, phone calls and e-mails, we've got a warrant requirement protecting us, but if we do away with this then we're pretty much blind because we don't capture people anymore, larry. we don't gather intelligence. we read them their miranda rights. so to my critics, what would you do to make sure america can protect ourselves against terrorists who are trying to kill us all? >> i think it's all digital. i think it's all digital. >> you're right. >> i think as long as it's monitored properly, senator, as long as we have trust in the

people running it, trust is a commodity in short supply with this administration -- >> can i add something? you're dead right. i don't trust them on benghazi. i think what they told us about benghazi was completely fabricated politically. i don't trust them about the irs being limited to cincinnati. but here's where i tell you i like the program and trust, because you've got federal courts overseeing the program. >> all right. i get that. i get that. and thank you. i want to move on to another controversy. the immigration reform bill. there are going to be amendments and debates. republican party is also split on this, but it's also split with the democrats. let me just ask you this. is the basic argument right now democrats want legalization as soon as possible but republicans are saying no, it has to be border security as soon as possible, border security first and then legalization? is that the big debate? >> yeah, that's really the big debate. and the gang of eight came one a

compromise that says -- goes as following. before you can get on the pathway to citizenship, we have to have e-verify up and running to control jobs. you know, we've got 11 million illegal immigrants. we're not being overrun by canadians, larry. they come and go home. these people come from poor areas and try to get jobs. e-verify has to be up and running before you can get on a path to citizenship. substantial completion of the border plan, we're coming up here and entry-exit controls. those things have to be done before you can get on a pathway to citizenship. once you get on a pathway to citizenship, you have to pass two english exams, pay a fine, pay taxes, and get in the back of the line in the country where you came from. so it's an accommodation of border security and a pathway to citizenship linked together. >> all right. you took a whack at senator jon cornyn, fellow republican. he seems to want 10,000 more border agents. you estimated that would cost 20 million and you said because you're not a bashful senator, you said we just can't afford that during the sequester.

is that going to be a debate inside the gop? am i looking at a border security debate inside the republican party? >> well, i think -- and i respect senator cornyn, he's trying to improve border security, but here's one thing i want out of this bill. i want it to be deficit neutral. don't you? i don't want any more government programs that we borrow money from our kids and grandkids to pay for it. so right now i believe the bill is paid for. if you want to add more border security, fine. let's find a way to pay for. and if you want to add a new trigger that you can't adjust to citizenship until x is done, our democratic colleagues have to be convinced that republicans can't manipulate x and it's achievable. there's a lot of distrust. i would never grant legalization first and hope the afl-cio would give me more guest workers and a bigger legal immigration program and then border security. and they're not going to give us border security and hope we deal with pathway to citizenship later. but altogether, if senator

cornyn wants more border security, count me in. but it's got to be paid for. and if he wants a new trigger, it's got to be something that's not politically manipulated -- >> it sounds like this is very far from being resolved. >> yeah. but i'm hopeful. >> as you know, it's going to be tough in the house. let me ask you one more. if i'm not mistaken, you're in a white house meeting yesterday with the chief of staff and the omb director. >> yes. >> some of the reports, senator graham, said basically nothing happened. is that true? >> well, i think we're trying to define the problem. here's the challenge for you, larry, and i really respect you greatly. why don't you sit down with your staff and come up with a number of what the deficit will be in 30 years if we continue to collect revenue at an average pace and spend money at average pace. the 80 million baby boomers are retiring at $10,000 -- 10,000 a day. in 30 years 80 million are going to be in retirement. what does that do to the

deficit? please come up with a number if you could over the next 30 years and see how much we owe at the end of that 30-year period. it will blow your mind. >> it's going to be -- no, that number's going to be around $50 trillion if i'm not mistaken. and if i'm wrong, i'm too low. but i guess are you all as far apart as these reports indicate? now, the debt ceiling's not coming into play until, i don't know, october or november. but is anything possibly going to happen between now and then? >> for me to raise the debt ceiling to borrow a bunch more money, we're already $17 trillion in debt and climbing, i want to fix the reason we're so much in debt. that's entitlement reform. we're going to have to adjust the age of retirement for medicare to harmonize it with social security, adjust the inflation rate, inflation calculations because we overpay and means test benefits. people like you and i are going to have to pay more and take a little less out to get this program in a good spot. what do we have to do as republicans? flatten the tax code, take some money out of the tax code that

goes to exemptions and deductions, pay down some debt and lower rates. that's the grand bargain. i think that's the best way to raise the debt ceiling, address why you're in debt, and i'm somewhat optimistic. but if we fail on immigration, there's no chance of a big budget deal. if we pass immigration reform, maybe the congress can do two things at once and go to the budget. >> senator, you pass tax reform and i will give you a 3% to 4% economic growth rate instead of this anemic 2%. >> you're dead right. >> that's how important it is. >> yes. you're dead right. as always. >> i've got to get out of here. many thanks. south carolina republican senator lindsey graham. thank you, sir. now, folks, prepare for some opposing views. former congressman dick armey and "national review" bureau chief robert costa are about to join us. and later in the show imagine you're a medical student, you owe hundreds of thousands of dollars in student loans, and now obama care may drastically cut your future pay. well, we are going to talk to a

med student about how the playing field has been changed. and don't forget, folks, free market capitalism is the best path to prosperity, but obama care is not. i'll be right back. i'm kudlow. and we'll have our guests to talk about lindsey graham. [ male announcer ] let's say you pay your guy around 2% to manage your money. that's not much, you think. except it's 2% every year. go to e-trade and find out how much our advice and guidance costs. spoiler alert: it's low. it's guidance on your terms, not ours. e-trade. less for us. more for you. it's guidance on your terms, not ours.

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all right. so we just heard from senator lindsey graham, who is a senior and pivotal republican in almost all the controversial issues of the time. here now to react to mr. graham's positions, we have former republican house majority leader dick armey and ace political reporter, cnbc contributor robert costa of the "national review." dick armey, welcome back. you heard lindsey graham basically really disagree with senator rand paul. mr. graham supports the nsa surveillance. where do you come out on this, dick? >> well, there's no doubt that rand paul has it correct. even when i was there when we were work on the patriot act, we were alarmed and worried about any administration running amok in violation of privacy rights of the american citizens. this administration is proving that they will do it on several fronts at the same time. and it's time we make a stand for our freedom and our privacy

and our liberty against the idea that there is no right of the american citizen that can't be violated by a government if they just holler national security. i don't trust these guys in washington. it's a bad gang up there. and i certainly don't think they should be allowed to get away with what they're doing. >> just one follow-up on this particular point. because i asked senator graham basically what you've just said. his response, and you've heard this before, dick, his response is look, you can't look at the content of the e-mails. you can't hear the content of any of the cell phone calls and so forth, unless the federal court, fisa, issues a warrant and that's your safeguard. do you not accept that? >> no, i don't accept that because quite frankly they're now issuing warrants that cover hundreds of thousands of people at the same time. we fought this war over

carnivore and the intrusion against our e-mail rights in the patriot act. it was a bitter fight. and one of the things that i saw in that was the lust of the justice department to have a blank slate to go in and violate the privacy rights of the american people. i think you have to be very, very careful here. err on the side of personal liberty, personal privacy and the constitution, not a panic over our national security needs. >> robert costa, obviously this is dividing the republican party, significantly in some sense. rand paul, ted cruz. there are going to be a lot of others. but i guess, robert, my question to you is will anything change? will there be any legislation that will change i'm just going to call it the fisa act? >> general keith alexander, the nsa chief, i think his senate testimony today is a real microcosm of the congressional divide over this issue. you saw a lot of democrats today, barbara mikulski, jeff

merkley. they were asking tough questions about the safeguards for privacy, safeguards over the surveillance programs. republicans were asking the same questions. a lot of republicans and democrats both believe that these programs do thwart terrorist attacks, so there's not an overthrow of the nsa. but i think there's a real concern. this is going to lead to some more legislation to try to protect those taxpayers who are paying for the nsa and who are worried about their own privacy. >> more legislation is possible. will clapper have to resign, bob? >> clapper is really going to be under fire. you saw keith alexander today. he was getting tough questions. but clapper, the question for him is did he lie to congress? did he tell congress the truth about these programs? that's where the real anger is in congress. not so much the nsa as a bureaucracy but about clapper, dni, whether they were telling him the story. >> he made terrible, terrible mistakes in that hearing. dick armey, let's go to immigration. that splits the congress. it splits the republican party too. you heard senator graham talk about the issues of border security versus legalization. where do you come out on that?

>> well, first of all, we have to deal with this issue and the republicans have to catch up with the issue. they've done themselves so much harm on that. we've got good leadership with people like marco rubio and jeff flake from arizona with good conservative credentials. and if in fact they can make the democrats stand and deliver on border security, if in fact it increases costs, then go cut costs someplace else. there are many trivial ways in the budget to cut low-priority nonsense in order to fund the necessary business of making our borders secure. after the borders are secure, this nation should be able to move forward on this issue and it must do so. >> robert costa, as i see it, and dick said it, after the borders are secure, then we can get through into the legalization and the english speaking and all the other hoops. but it just sounds like the democrats at the end are going to walk out on this, that they want legalization first, robert, and border security manana.

my question to you is a very simple one. can immigration reform even pass the senate? >> i think 60 votes are there right now in the senate to pass immigration reform. but here's why democrats may cave on border security. they want 70 votes because they're going to need to get to that 70-vote threshold in the senate if the house republicans are going to have any kind of pressure to pass immigration reform. >> that's a very interesting, very interesting point. dick armey, last one for you. not much is going on in the fiscal front as senator graham suggested. they met yesterday in the white house. basically, nothing happened. he did talk about a flat tax, or flat tax reform, dick armey. so that's something. >> well, that is in fact the correct answer, has been ever since holman bush created the flat tax in '64. but you have to understand about this obama crowd. numbers hurt their heads. and they're not going to be able to work it out very well.

they have no will to do so. and it's going to be a difficult thing. it isn't like the days when we could work with president clinton. he understood the budget. he had a real interest in getting to a place of resolution. he's so far beyond what president obama is even capable of that i just don't have much optimism for this administration. i look at the white house. i look at the administration. i ask myself, is there anybody who understands the budget whatsoever? used to be panetta. they sent him over to defense. that was the interdisciplinary approach. get anybody out of the white house who might understand the budget. they've accomplished that. >> thank you very much. appreciate it, gentlemen. dick armey, former house majority leader, and bob costa. we appreciate it. now, check out this dramatic scene in midtown manhattan just a few hours ago. some window washers were stranded very high above the city. we're going to show you how that

story ended next up on "kudlow."

will turkey find a compromise before violent protest erupts again? and after 16 years on the run a boston mobster finally gets his day in court. cnbc's seema modi joins us now with those stories and much more. good evening. >> good evening, larry. that's right. well, after nearly two weeks of mass protests, turkey's ruling party says it's now willing to hold a referendum over the

istanbul development plan that started the recent protests. now, despite the apparent progress, larry, prime minister erdogan again ordered protesters out of the park today. and the trifle legendary gangster james "whitey" bulger began in boston today. the 82-year-old faces a 32-count federal indictment. prosecutors say the mobster participated in 19 murders during the 1970s and '80s, but defense attorneys say the prosecution's witnesses are not credible. bulger was arrested in california in 2011 after more than 16 years as a fugitive. and finally, it was a frightening scene out a 46-story hearst tower in new york city today. two windows washers stranded near the top when the scaffolding they were standing on broke in the middle. the workers were left dangling for about two hours. but larry, i'm happy to report they were both safely rescued. but can you imagine? what a scary scene. that's something you see in a movie. >> unimaginable.

>> so were those fire trucks i saw that rescued them? >> yeah. >> unbelievable story. >> many thanks to seema mody. the tech giants like google are pushing back against the nsa surveillance program. they may even sue the government over this. but will they get anywhere? we're going to talk to some tech and legal experts about all that next up on "kudlow." vo: traveling you definitely end up meeting a lot more people but a friend under water is something completely different. i met a turtle friend today. avo: whatever you're looking for, expedia has more ways to help you find yours. (announcer) scottrade knows our and invest their own way.

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welcome back to "the kudlow report." silicon valley's tech giants are pushing back against washington. google, facebook, microsoft and twitter. they're all urging the nsa to disclose the secret number and scope of the agency's data requests. but is there really any chance the nsa will declassify secret material? i say no. but it is a clever attempt by these big tech companies to cover their backs. let's get some expert opinion on this. we have google's former director of u.s. public policy. that's alan davidson. he's now a visiting scholar at m.i.t. and we welcome back former u.s. attorney joe digeneva. joining me on set, michael favre, favre miller and washington and "forbes" executive editor michael ozanian. alan davidson, thank you for joining me.

joe digenova may cut my nosa, but i can't imagine the fisa court declassifying secret stuff to help google and apple and microsoft. i can't believe that. >> it's not just about helping google and microsoft and facebook. it's about helping people work through this process and ultimately do something useful for the nsa because the risk here is that we are doing something very bad for american business. surveillance isn't just a civil liberties issue. it's a business issue. if people don't trust these services they won't use them. that's especially true internationally. if you look at the top ten internet properties in the world, 81% of their users are from outs of the united states. the companies are in the united states but the users are outside the united states. what do those users think when they read these reports? what you're seeing now is the internet companies working very hard to reassure those users that they can trust them. >> i understand. so joe, you've heard the google

side of the argument. what about protecting against terrorism? what about the fisa warrants? what about the -- you think fisa's going to give up stuff so that google can save its rear end? >> no, i don't think so. the fisa court doesn't respond to those requests because those people are not before that court. it's a very special and different type of court where there's usually only one party. that's the united states government. but the issue here goes really beyond all this. these companies are trying to actually help themselves. they're trying to change the subject. it's a very obamaesque move, what they did. they're trying to make it look like they're not responsible for any of this, that they don't want to do any of this, that they're not interested in it. i was reminded by the remarks, i believe it was a google executive the other day, who was asked, you know, whether or not he thought it was really somewhat unusual that people were worried about things that they were writing in their e-mails being disclosed and he gave a snarky remark. he said listen, if people are worried about that, they shouldn't be putting it in

writing. if the guy had been in the room with me, i'd have slapped him in the face. >> why can't google -- why can't google and these other companies say look, there are few -- there are really few of these warrants, there are few times that we have to go in and do digital mining and go to the content and we, google, and we facebook and we apple are happy to help defend america? why can't they take that point of view? >> i think that's always been their point of view. >> but they're not saying it now and you're not saying it now. >> i said it when i worked for google. and i can tell you that google has teams of people just like all the big internet companies do, teams of people who work 24/7, holidays, weekends, to respond to these requests. they work very hard to do it. i think the question is how do you come up with the right balance? and the difficulty here is because all of this is secret there's no way to reassure people that the balance has been struck in the right way. >> but i've got to believe, joe di genova, it's a relatively --

these warrants that open up the content of the e-mails and so forth and whatever are relatively few compared to the daily traffic. it's not like millions of warrants are being put out, giving the government access to this stuff. this is relatively small. >> well, it is in comparison to the total amount of traffic. but the number of these requests is actually growing in number. and it's a big deal. these companies do have to respond. they're under legal duty to respond. they have people dedicated to it just as was said. this incident, which as a result of these disclosures by snowden is now presenting us with an opportunity to make a very large public policy decision about how much security we want, how much privacy we want, and whether or not we're happy with the system that exists. congress likes to stay away from this stuff. it doesn't want to touch it because it gets very, very

complicated. but they're not going to be able to avoid it now. this is a big deal. and the american people are concerned about it. the latest polling data shows the very, very serious concern. and of course the other scandals that are going on where the administration and people who work for it are lying to people in congressional hearings under oath is not helping this situation at all. >> i think that's absolutely the worst part of it. >> i thought alan had a really good point when he started to say it's not a privacy issue, it's an issue of trust. and trust is so fundamental to our economy and our economic growth. and i think these guys have to show us something to earn some of that trust back. i think they've done to undermine politicians and a lot of the regulators have done a lot to undermine americans' sense of trust that you're there in washington to do the right thing for us. >> well, then they should just -- >> and represent us. >> they should just go out and bust this guy snowden as quick -- joe digenova, i read a

great article today in the "new york post" by our friend seth lipski. and he argued that you know, what we could send agents into hong kong and snatch this guy snowden, that it's been done before and the supreme court has upheld it. in other words, what are they waiting for, joe? why haven't they put the charges on the table and why aren't we going after this guy? >> well, we have done this before, and in fact i and my wife, victoria, were involved in a snatch of a terrorist in the mediterranean under a ruse. but they're not going to go into hong kong and snatch somebody who in all likelihood in a very short period of time is going to be in somebody's embassy. first of all, the chinese would go ballistic. we'd have an international incident. they are going to try to extradite him. i'm not sure that's ever going to happen because the chinese control that system in toto. even though they're in the background. this is going to be very interesting to watch, to see whether or not this administration, which prides itself on its relationship with the chinese. you know, reset button. you remember that reset button with the entire world.

i just don't know if we will ever see mr. snowden back in the united states. >> well, that would be most unfortunate. alan davidson, what do you want ideally to happen here from your perspective? give me a solution, please. >> i think -- look, people would like the government to have the tools it needs to go after bad guys, and they always want to have their privacy protected. you can have -- we can have it all. and the way to start with nas by ending the secrecy or some of the secrecy around this. allow people to know how many people are really being the subject of these orders. let's talk a little bit more about what the standards are for giving people -- giving nsa access and others. and i would say -- >> just -- >> i would say there's an opportunity here. there's an opportunity for the administration and for our intelligence -- >> joe hit the nail on the head. there's no trust with this administration right now given benghazi, given with the a.p. story on the reporters, and you're not going to get that result until you get the next administration in here. >> we've got to get out in a second. i'll tell you, oddly enough, the

worst thing, or one of the worst things to happen to the nsa besides this crazy kid who's done what he's done is the irs story where they got up and lied. not only did they stick it to the conservative groups but they lied about it in full public view and a lot of them are going to wind up going to jail. but that was really the one -- >> that's another reason. all this together is why there is no trust right now. it's a bigger problem than it should be. >> alan davidson, thank you very much, sir. we appreciate it. joe digenova, as always. michael farr and michael ozanian, don't go anywhere. i want to hair guys on the stock market angle for google and these companies. we're going to put our focus squarely on the rattled markets and the federal reserve and the ups and downs. what's wrong with the world? nothing a few smart guys can't fix. i'm kudlow. we'll be right back. out there owning it.

the ones getting involved and staying engaged. they're not afraid to question the path they're on. because the one question they never want to ask is "how did i end up here?" i started schwab for those people. people who want to take ownership of their investments, like they do in every other aspect of their lives.

volatile day in the markets. stocks started strong but they faded almost immediately. with the major indices ending right near the lows for the day. the culprits here, there's two of them. first more uncertainty about

interest rates. since ben bernanke's testimony on may 22nd, the yield on the ten-year has moved 35 basis points to 2.23%. that sent the global markets into a tizzy for the last 2 1/2 weeks. and it was another day when the yen strengthened against the dollar. if you think the markets have been a lot more volatile recently, you're absolutely right. and it can be traced mostly to ben bernanke's may 22nd testimony. prior to that the dow moved in an average range of about 109 points in a day this year. since may 22nd it's moved at an average 184-point range and it did even more than that today. back to you, larry. >> all right. many thanks, bob pisani. so what's behind all this red on wall street? we're back with our two michaels tonight, michael farr and michael ozanian. before we jump into the market at large, just follow through on this google internet story regarding the fisa court and the warrants. is there any real damage here?

are stock investors going to walk away from all these companies or what? >> no, i don't think -- there may be in the short term some damage, certainly not in the long term. i'd be a little more invested in tech than i was in the past. i'd go with an etf like vanguard's etf on infotech stocks, very low expense ratio. google and some of these other tech companies, microsoft, they're going to grow better. i'd be a buyer. >> just common sense. investors in those stocks and onlookers, they know now that this has been going on for a while, that like it didn't just start two days ago. and so it has not affected the performance of these tech companies. i don't see why it should affect it in the future. >> i don't see why it should either. i own google. i've owned it a long time. a little more pullback, i may add. i don't see a fundamental problem with the operations of the business, the advertising, the revenues. that's not there. we know that government has concerns about terrorism and as well they should have and protecting us. these are separate issues i

think from a business interest. >> talk about new google business. i'm using google. you can use any one of these places like china, india. are you kidding me? china just close downs the internet when they feel like it. people aren't going to walk away from our internet companies. i don't believe it. i don't believe it for one minute. >> not only, that but technology, internet, but also other tech, they're one of the reasons why productivity in this country has been so great and the gains in productivity. and it's basically the main reason why the economy's growing as fast as it is. >> story late this afternoon, "wall street journal," u.s. notched biggest oil output gain in 2012. unbelievable. oil production, this is mostly about fracking, oil production jumped 14% last year to 8.9 million barrels a day. okay? now, the saudis are producing 11 1/2 million barrels a day. we're close to nine. if you add that to canada, we're basically already going to be

beating the saudi arabians and we're going to be energy independent. this is my opinion. this oil fracking energy story is the single most bullish thing going on in an otherwise drab economy. >> i think it's a terrific point. i mean, our energy independence is absolutely key. and it will give us such great control over cost and commodities and production and productivity. if you can add the productivity michael was talking about along with lower fuel costs and at least control of our own future desti destiny, i agree with you. >> but energy can't carry the whole economy, can it? >> no. but if you get a stronger stable dollar, then with this added supply it's going to be great for consumers and great for the economy because the price of gasoline, the price of oil is going to go down and -- but no one knows day to day. that's one of the big volatility problems. >> the inflation rate, personal consumption deflator. the feds' favorite rate, 1% year on year. 1% year on year.

i don't see it as an issue. i don't see the fed's liquidity as an issue. >> you have the fear if the fed stops easing on money and tightens and the market's going to collapse i think that's a misplaced fear. i think perhaps very short term. but i think it's just like the sequester fear. remember everyone said the sequester's coming, the economy's going to collapse. it actually hemmed the economy. more money port private sector. i think if the fed actually stops easing so much it'll be good for the economy. >> i just want to make another statistic. i hate to be too wonkish. last five or six months since they've been doing qe infinity. m-2, which is the real money supply, growing at 4% at an annual rate with the turnover of velocity falling at 3%. in other words, yes, the fed is buying bonds. and they are injecting reserves. those reserves are not circulating through the economy. they're going back on the positive, the fed in the main. for the most part. that's why i don't think the fed's -- >> but it still hurts business,

right? because it hurts the repo market, which uses treasuries to make loans. it's still creating distortions, this great fed activity. >> i don't like interest rates. i don't like that at all. i actually don't like the process. but at some point in time you want nominal gdp to be faster than 3 1/2%. you want m-2 to be faster. i mean, look at these other countries. europe, the money supply's actually falling, for god's sake. japan's trying to reignite. i don't want deflation. i'm still concerned about that. >> no. but you're protecting. what they're doing is protecting their bonfire with full cans of gasoline. i mean, as long as the wind continues to howl at the right degree, we don't have a huge major explosion. >> are you buying stocks now? >> i'm always buying stocks. >> seriously, are you buying stocks? >> i'm buying stocks. i trimmed a little of some stuff that's gone up a good deal and i'm buying m other stocks -- >> did you trim google, get rid of the tech stocks? >> no, i love my tech stocks. >> soon as you saw the nsa. >> i'm buying one that's a

little bit closer to a commodity stock. people are thinking commodities are hot now. i need to see real economic growth before i jump on the -- >> mike ozanian, i've seen some very bright people give newsletters out, buy cyclical stocks. that means they expect the world economy to grow. do you? >> at a very modest rate. maybe 1 1/2% to 2%. we're not going to get the type of growth we should have, 4%, 5%. you get lower marginal tax rates, a simpler tax code and a broader tax rate. and you get back up to where we were during the reagan and clinton years. >> supply-side incentives. >> small businesses right now are so afraid to hire because of obama care. if you could get rid of that, it would do so much for the economy. >> fed can't stop that. michael farr and michael ozanian, appreciate it. now, imagine you're a med student, you're straddled with big student debt, and thanks to the new health care law we were just talking about, you're suddenly unsure if you're going to be able to get a good enough job to pay back those loans. we're going to talk to a real

medical student and a doctor fighting for free market medicine. up next, me too. free market medicine. ♪

[ roars ] ♪ [ roars ] ♪ [ roars ] ♪ [ roars ] ♪ [ male announcer ] universal studios summer of survival.

♪ we've been very clear on this free market capitalist program "the kudlow report" about the problems obama care creates for hospitals, doctors, patients, and businesses. but for medical students taking on six-figure debt to go to school, even greater problems loom. here now we have dr. beth

haines, executive director of the benjamin rush society, and we have third-year med student at the university of north carolina brian blank. thank you for coming on. brian, i want to begin with you. just a little list of what bothers me about obama care. controls. >> okay. >> they're going to control your pay. they're going to control your profits. they're going to control your procedures. and they're going to control your paperwork. honestly, how are you going to make a buck as a private practice doctor? >> i think that's a great question. i think, you know, one of the things that i think is worrying me the most at the moment is just getting a job. you know, one of the problems with the current system that we have here is that a lot of the medical students who are getting ready to graduate like myself in a couple years, there's no guarantee that there will be residency slots for us. and so we're not going to -- you know, the problem is you need those residencies to be able to, you know, get through that and be able to practice medicine. so i'm sort of worried that i'll get done with this medical school experience and not necessarily have a chance to

practice medicine. >> beth, what's your take on this? because you know, i think the idea of a private doctor's practice may go out the window with obama care. in fact, i wouldn't be surprised if that was one of the intentions of obama care. what's your feeling about this? >> well, it's a definite big problem. students are coming out with $170,000 on average medical debt, school debt. and then maybe they'll get a residency, maybe they won't. the cuts -- a lot of the financial support for these residencies come through medicare. and of course we know $500 billion has been cut from medicare through obama care. so there's going to be greater and greater pressure on the lucky residents that do complete a residency to become employed rather than open up a small business. if you've got $170,000 worth of debt, how are you going to be able to take out the loans to start your small business? so then the answer ends up being to become an employee.

not that there's anything wrong with an employee. >> right. but it's a different game altogether. i mean, brian, you can get your job in the hospital, but again -- >> right. >> -- obama care and/or medicare, they're going to limit your reimbursements. they're going to limit your pay. i think part of this, they want to turn you into a gs-16 or something, like a government employee. and all the training you've had and the chance to make that back and wealth creation and entrepreneurship goes out the window. >> yeah, it's difficult. you know, i've spent times with doctors this last year who are trying to fit in 15 to 20 patients in a morning and we're trying to figure out, so what's this going to look like when 32 million more people have insurance and we're trying to take care of those? especially if you're practicing something like primary care, which is what i think i want to go into. so are you going to have to bump that up in order to be able to pay your bills? are you going to have to see 25, 30, 40 patients in a morning just to be able to, you know, afford to practice medicine? >> you know, beth --

>> these are big questions. >> they are huge questions. and beth, last one. as you just pointed out, the cutbacks for hospitals are going to be substantial over a period of time. whether it's obama care or medicare. and they're already doing it. they call it health care providers. that's hospitals. it also includes doctors. it also includes patients. in other words, more people are going to get more subsidized insurances to use more medical providers, and the providers are not going to get paid. i'll give you the last word, beth haynes. >> well, i think one of the things that's really important to understand is that this mismatch of how many medical students and how many residents that we're seeing here is just one small item of a problem that is going to continue to pop up in many different areas. how many specialists versus primary care. how many procedures and pills versus actually doctors spending time with patients. all of these are the result of legislatures and regulatory

bureaucrats trying to do what really the market should be doing, making economic decisions. and they're going to get it wrong every single time. >> yep. all right. sorry we don't have more time to pursue this because i think this is a real tough story. anyway, brian, i hope you graduate. i hope you get your residency. thanks to dr. beth haynes. >> thank you. >> thanks to brian blank. that's it for this evening's show. thanks for watching. i'm larry kudlow. i believe in free markets, including health care. we'll see you tomorrow night. 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 your medical conditions and medications, and ask if your heart is healthy enough for sexual activity. do not take cialis if you take nitrates for chest pain, as this may cause an unsafe drop in blood pressure. do not drink alcohol in excess with cialis. side effects may include headache, upset stomach, delayed backache or muscle ache.

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