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good evening, everyone. and welcome to the "kudlow report." i'm larry kudlow. we begin tonight with some breaking news. late today, the obama administration decided to delay a key requirement of the signature health care reform plan. let's get right to cnbc's own bertha coombs for all the details. good evening, bertha. >> talk about some prefourth of

july fireworks. applauding the decision to delay penalties associated with the affordable care act employer mandate until 2015. the national retail federation among those who pushed for that delay calling it a wise move. employers with 50 or more full-time workers face fines ranging from $2,000 to $3,000 per employee if they did not provide affordable coverage. the treasury tonight admitting in a statement they had been listening to the feedback they'd been getting from business groups and they are taking action as a result. they hope to provide an additional year for all of these mandatory employer reporting requirements to begin. they say it's going to allow them to simplify the recording requirements and also allow them time to adapt to the new health care coverage and reporting system that employers are using as they move toward providing more affordable coverage. restaurants and retailers are the ones that are feeling the pressure on this and face the biggest burden of the mandate.

the benefit council says this delay is going to cause breathing room and help minimize disruption. the big question is whether the government as it begins its push to engage individuals to sign up for coverage on healthcare.gov later this fall will look at the individual mandate, the nrf says he doesn't think that's necessarily going to be delayed and c.c. connolly with pwc says you're going to see a lot of workers who are going to want to sign up for coverage either through their employers or through the exchanges. so even if it is delayed, that may not delay people's pent up demand for coverage. larry? >> very good. thanks, bertha coombs, we appreciate it. let's hash through this. joining us now is cnbc's chief washington correspondent john harwood. co-anchor of "squawk on the street," we have kelly evans. and with us on the telephone is health care expert grace marie turner. she is president of the galen

institute. i want to go to you first because, yeah, yeah, yeah, i'm sure the reporting requirements are a problem. but my view in at least 30 states, there was never any infrastructure to do this. and i wonder whether they shouldn't delay the entire program, not just the businesses, but also the individuals for at least a year, what's your take? >> well, you know, larry, this really is a house of cards. and once they start to pull one piece out, then you start to look at all the other things that can go wrong. individuals still have to purchase coverage. so they're not delaying that even though that's the most unpopular part of obama care. and here you have this fiction that postponing this law for a year and the employer mandate for a year is somehow going to change employers' hiring practices. they're already laying off people. they're already putting people on part-time work. gallup had a poll last week that showed 40% are holding back on hiring. there's a hiring freeze.

so if they think delaying this for a year is going to fix that? >> john harwood, i want to go to you. besides the reporting requirement, the infrastructure problem, there's a funding problem, a financing problem. hhs secretary sebelius going around with hat in her hand trying to raise money for 30 plus states. this thing is falling of its own weight. >> i wouldn't say that, larry. i do think that the administration is trying to narrow and fix its battles. remember, they've got multiple things they've got to do. they've got to get the exchanges going, they've got to get individuals signed up, uninsured individuals, especially. they've got a target of something like 7 million people to be enrolled in these exchanges. they need young, healthy people in to try to make the law work, keep premiums down for everybody else. and i think if you add on top of that the complaints, the difficulty of getting businesses to both understand what they have to do and then comply, pay money $2,000 per worker if they

don't offer insurance, i think they decided that the better part of valor was to set this one aside, try to focus on some other things they can get done. it doesn't mean the law itself is going to be implemented. the most important thing, larry, to the success of the law is the implementation of the individual mandate, not this employer mandate because most large employers already offer coverage to their workers. >> i understand that. let me go to both points. on the point of the individual mandate, a lot of young people do not want to sign up for one reason or another. and that was a big source of funding for the subsidies. on the issue of the employer mandate, a lot of the retailers, let's say, that have low-end workers never intended to sign up. so with the year's waver, they're not going to pay anything and they're not going to have money to set this up the following year. >> there'll be people who say why not grab the individual mandate at this point? the problem is the individual mandate and the hinge of the success of this program of the

idea of obama care. and what happens is, there's a carrot and a stick problem to some extent. the individual mandate, the requirement for people to sign up is the stick as john was saying, to get the healthier, younger people in to lower cost for everyone. they don't want to go. and we're finding out -- >> if they want to buy a chevrolet instead of a cadillac, that was the issue here. >> exactly. and the problem is, the marketing budgets, there's an educational problem not just an operational one as you put it. and so the cost of trying to educate everyone about these plans and, by the way, the penalties for those people who don't sign up in the first year are very low. the question now is if you give it another year when the penalties are higher, does that provide more incentive to push -- >> we're going to talk about the educational issues in another segment. grace marie, let me go back to you, and this whole issue of the lack of infrastructure which we've been reading about. there's a good solid 30 states that never had solid infrastructure. how are they going to get around that? and the financing issues if you keep waiving the day of

reckoning, grace-marie, that's what i don't understand. >> you're right, larry, the federal government has to set up exchanges and about 30 states, now almost 35 states. either on its own or in partnership with other states. they are waiting until the middle of september to let us know the details of those exchanges. and they're supposed to take effect on october 1st. that only gives us two weeks to find out what the federal government is up to. and also, larry, to this point about employers not providing coverage, among the phony budget numbers for obama care pretending you could create this vast new entitlement and not have it cost the federal government any more money. that was partially contention on most employers continuing to offer coverage. this gives employers another year to figure out how to get out of this business and it is going to dramatically increase the cost of this law. some of these subsidies are

$13,000 a year for the families to get coverage and you're going to have millions more people now. >> that's why you have this odd and in my opinion rather unseemly situation where the secretary of hhs had to go around hat in hand, literally raising money for a government program, which is a dubious legality. go ahead, john. >> that funding issue is pretty secondary. grace marie, i think, has put her finger on the correct funding issue. the one that's the most important as a potential result of this change. if businesses haven't done so in the past, we're going to because of the requirement. if we don't, if we go for a year with the exchanges which will get set up. i believe that's less of a barrier than grace-marie thinks. but if the exchanges get set up and people want to buy coverage, they're going to go into the exchanges and get the subsidies. some of those players may not ever offer coverage.

they would still have to kick in some money when the requirement kicked in, but it would also increase the cost of taxpayers because of the subsidies that would go to the people who got their insurance from the exchanges rather than from their employer. >> and i think very importantly, the delay is going to be expensive. this is in effect another year's waiver. kelly, one more point. grace-marie talked about it beginning of the show. the issue of hiring and employment, federal reserve is focusing on jobs to change their qe and all the rest of it, you're not going to see anybody hire. you might see some temps hire less than 30 hours a week. you're not going to hire people that are -- make the staff more than 50 people. that's all going to be put on hold. >> we can -- a couple of things that are happening. we are seeing more contract-style temporary work. what we also -- when we ask economists about this repeatedly and you see this in surveys of small business sentiment, macro is more important. as long as the economy is improving, the trend is still

intact, it will sweep some of these changes along into the current with it. >> and larry, larry one other point. >> a structural problem you pointed out. >> one other point on hiring, though, the economists i talked to from -- economists who advise mitt romney in the campaign to people like austan goolsbee, say they are likely to be pretty small. the number of employers right around the 50 employee threshold is not that great. there's not that many jobs at stake. >> with all due respect to my paul austan goolsbee, and i have the greatest regard for him. we don't know that. that's a very static view. in an economy that wants to grow and expand, whether it's a brand new business or it's a smaller business that's hot and wants to go, we don't know. there may be dozens of them, hundreds of them, this thing takes its toll. you're talking about maybe 160,000, 170,000 jobs a month,

how do we know that won't get cut back? we don't know that. >> one other point to make on this is the political point. and that is that the administration in part, i think, hopes to get some benefit from delaying these penalties until after the 2014 elections. they've been getting a lot of incoming from the republicans. on the flip side, so that's a positive for democrats. on the positive for republicans, they're going to use this decision as evidence that the administration itself doesn't have confidence in the law and try to push harder against some of the things that they can affect. john boehner put out a statement saying this law is a train wreck and the obama administration just said so. >> larry, can i make one more quick point? >> i've got to jump out, grace-marie, i'm awful sorry, we'll get you back later in the week, next week, but we're flat out of time. john harwood, thank you. we appreciate it very much. and once again, be sure to watch kelly tomorrow morning on cnbc "squawk on the street," that's 9:00 a.m. eastern. you're going to see how the

market opens tomorrow. now, tonight, the economic report's pretty good today. question, is the economy looking better than we think? that is coming up. but also, look at these live pictures from central cairo. the latest news from there is that president morsi is not stepping down. he says he's the only legitimate leader of egypt. he says this may cost him his life. this could get really messy and we will follow it. and, folks, please don't forget, free market capitalism is the best path to prosperity. they could use some in egypt. that's for sure. 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.

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well, is the u.s. economy better than you think? three bullish data points out earlier today. here's what you need to know. u.s. home prices jumped 12% in may from over a year ago. that according to real estate data provider core logic. also, signs of strength in manufacturing factory orders jumped more than 2% for the month of may. and finally, car sales rose to their strongest rate in more than five years. all right. let's talk. we have frank sorrentino, chairman and ceo of connect one bank, steve is the chief u.s. economist from mizzaho securities, managing director of kcg holdings. i think that just happened. and my great pal bob lutz is the

former general motors vice chairman. i want to go to you, car sales are booming. 16 million units at an annual rate in june. that beats everything we've seen for years. and you're exporting a lot of cars. what's going on, sir? >> well, as i said a number of times. you know, the low dollar compared to other exchange rates makes the u.s. a highly competitive place to build cars. the japanese are transferring production capacity to the u.s. and the u.s. companies themselves are exporting a lot of cars to china and so forth. but what it is is, yeah, we do have a generally improving economy. first of all, we got pent up demand. a lot of the cars out there were getting older, consumer confidence is on the rise, gasoline prices are stable, the housing industry is up, which has fueled pickup truck sales. and frankly, this comes as no surprise to me. i think we're going to have a very strong second half. with a lot of new introductions, gm's got the new pickups coming

out, got the new crossovers, and everything is just booming. and the used car market is strong. i really see very -- a very robust automotive industry for the remainder of the year. >> just one quick one, bob, because we're going to be short on time. it's a leaner and meaner industry. i was looking at some of the wage and benefit numbers and, boy, have they all come down. so we are very competitive in this country. >> we're very competitive and we've gotten rid of all of the excess capacity, and you'll notice that when you said the industry five years ago, that was artificially inflated with a lot of bad daily rattle sales, heavy discounting and everything. nobody's doing that anymore. so now everybody is making money on the cars and trucks that they sell which is a very positive thing. >> indeed. frank sorrentino, are you making the loans for people to buy these cars? and other loans and mortgage loans and, by the way, how do you see the economy? >> yes, and i absolutely agree

with everything bob said. as a matter of fact, i'm glad he's making those pickup trucks because we need them for our home builders. >> you're making construction loans. >> more construction loans today than -- >> making home purchase loans. >> in the last five years, home purchase loans are up. we're seeing a real estate market today where there are bidding wars taking place and that realtors -- the biggest complaint that realtors have there's not enough inventory. >> are you making business loans? particularly to small local businesses, the heart of the economy. >> we're actually seeing confidence returning to the small and medium sized business market. >> all right. >> we're seeing it in the housing industry, in the small business -- >> steve, you've got two bulls, these guys know you've got a car guy who knows what he's talking about, a banker who knows what he's talking about, you know so darn much, new name for his bank. lord knows what he's doing. are you ready to concede this economy is really on its hair? >> no. when you look at this economy, the reality check is this. with all this great stuff going on, average growth between october and march was what?

1.4%. all the economists are paring back the growth numbers. it's going to come in between 1 1/2 and 2%. we have an energy industry that's booming, housing industry up 20%, and auto sales back to the pre-recession high. this is the best you can do? it's all being done. >> i'm not a roaring boom myself. not least of which is my first segment discussion regarding obama care. but putting all that aside, if, for example, businesses start making longer term investments and the jobs numbers pick up accordingly, would that turn your view around? >> without a doubt, it would. companies are coming off bad top line earnings growth. and the upcoming data is showing another disappointing top line revenue. >> fair enough. let me go to peter kenny. if the top line revenue numbers

aren't that good and the earnings aren't that good, and the federal reserve, i think, is changing policy, some people disagree with me. but unless it's a disaster, i think they're going to wind down their bond purchases. how do investors play this? or is it just caveat? >> i think there's no question investors have to expect more volatility. every major index has put in a stellar performance. >> yes, indeed. >> i think that this tapering policy shift that you've referred to is definitely going to start taking place in the fourth quarter. but i don't think it's going to take place unless there's real sustainable signs of growth within the economy whether it's housing, autos, finance. clearly pmi is suggesting -- >> good news is bad news? that's what i hear from you. i've heard this before. you're not alone. good news becomes bad news. >> temporarily. >> the federal reserve is going to tighten. >> absolutely. >> they're going to tighten for the next three to four years. that's what you're looking at. how do you make money in that environment?

it's very difficult. >> it's difficult but if the u.s. is the economy that is really the fastest growing in the world relatively speaking and we are definitely growing manufacturing and you're looking to put money to work in hard assets in real estate and things of that nature, there's plenty -- >> well, strong currency, which is very important. bob lutz, do you have any concerns that if all your optimistic prognostications and analytic analytical practicianing takes place. are you worried that the fed might snuff it out? >> yeah, obviously interest rates go up, that makes car loans more expensive and so forth. that could put a damper on it. my real fear is that with the fed tightening, it's going to increase the value of the dollar and once again the u.s. car industry would lose some of the -- >> already happening -- >> versus -- >> already happening. i'm going to lose you in about 20 seconds, but i'm going to say, it's already happening, mr.

lutz. >> yeah, and that is -- if you will, i think, that fear is keeping some u.s. manufacturing executives awake at night. >> all right. >> larry, let's keep things in perspective. >> in perspective. >> even if rates were to go up another 100 basis points, we'd still be talking about all-time lows. >> no, this is very important. >> home buyers shouldn't be scared today that their 30-year mortgage went from 385 two weeks ago to 415 today or even approaching 5%. >> are the re-fis slowing down? have they slowed down? but the purchases, the actual purchases are still strong? >> if anything, i think it's actually caused the purchase market to increase. people are concerned about that rise of interest rates, they shouldn't be. it's not a big deal. >> i've got to go. i'm sorry i'm so tight for time. if he's making loans to home buyers and he's making loans to small business and bob lutz is

seeing the tremendous boom in automobiles, i don't know how to turn you around here. >> well, the reality is, the income growth doesn't bear any of this out. income growth is not particularly strong and what's going to happen it's going to cause a problem for the consumer. they're not going to be able to be there to spend the money. and that's the problem. >> there's 100 basis points. >> cutting costs. companies are making money by cutting costs. >> what's your job estimate? >> i think the number is 175,000. i think a lot of it is part-time workers and people doing what is being done to delay the health care movement. >> is 175,000, let's use that number, is that sufficient to get the fed to cut back on their bond purchases and so forth and so on? >> the markets will assume that and we will price it in for september. >> there's a de facto tightening going on already? >> yes, already. >> we'll have to leave it there. thank you, gentlemen. frank sorrentino, great stuff,

thank you very much. look at these live pictures from cairo. this is a tough story. president morsi has just addressed the nation and clearly rejected the military's ultimatum. so is a coupe imminent? we're following this story closely, we'll keep you updated throughout the hour. and on this july 4th holiday week, we continue our made in america series. we'll look at three more companies who make their products right here in the usa including sneaker company new balance which has a big ad campaign. check this out. tell me it doesn't make you proud to be an american. what do you drive?

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where the situation in egypt is becoming more and more violent and less clear all the time. will the military really remove president morsi? morsi himself has just finished a national address where he says he will not step down. he says this may cost him his life. question, what will president obama do about all this? the other breaking news story tonight, the obama administration is forced to call an emergency time-out on obama care. that's right. it delays by one year the mandatory health coverage laws for employers. team obama is sending money to the l.a. public schools to get teachers to indoctrinate students in favor of obama care. we're going to explain the details of that one in a couple of moments. but more and more american companies making their products here at home instead of turning to cheaper labor overseas. last night, we talked to three ceos about the benefits and challenges of being made in america. this evening, we have a new

panel of companies. here with me onset, ceo of union wear, it's a sportswear company. and joining me now from boston is matt lebretton for new balance. a new campaign promoting the made in america. and many of the rivals make their sneakers overseas. all right. >> -- they know if your aim is true and your pursuit relentless, chances are what you make will be excellent. >> all right. there you go. i knew we'd get it in. i want to begin with you, sir. these are great advertisements and made in america, buy america is a great theme. i happen to wear your tennis shoes. i think they're the best in the business. but i want to ask you, i want to ask you, are the ads enough? all right. there was a time when you made 70% of your shoes in the u.s., that was back in the middle 90s. now you're down to 25%. what's been the problem?

>> well, it's actually been a change in the industry in our desire to keep up. if we made all of our shoes in the u.s., we simply couldn't compete. but i think a more important number than the percentage of number of shoes we make here, the amount of people we emplo e in the u.s. so our overall growth as a brand has grown as has our domestic capacity and domestic production. >> all right. lisa, i'll go to you on this. you're making what, you're 70%. >> that's right. >> talk to me about the jewelry business and the diamond cutting business. first of all, where's the other 30%? >> it's overseas in mainland china and i've been to those factories myself and i feel great about my partnership with them. but we do both find jewelry and costume jewelry. it's done in my own studio space with 11 employees. we also work with great contractors in the diamond district who are old-school third generation and the best in

the world at what they do. >> in this business. this is a little different kind of business. but we talk about wages and costs. you're looking just for expertise it seems to me. you're looking for seasoned hands that can cut you the kind of jewelry you want. >> of course margins matter tremendously and we pay attention to that. but fortunately, there's a great margin to be had in costume jewelry and fine jewelry i've been finding. we're a fashion brand and i think we can charge a premium for our designs. and therefore, it kind of doesn't really take too much out of us to pay a little bit more for that great labor and keep it in-house and under control. >> all right. mitch, you're 100%. tell me about that. that is the golden ring. 100% made in america. >> yeah, we make 100% of our products in newark, new jersey. we manufacture baseball caps, manufacture hats, all sorts of bags. and for the last 20 years, we've been focusing on markets that

would be willing to pay a premium for made in usa, that includes the u.s. government, the military. and for the last two years we've seen a surge in business from corporations, from nonprofits and from the garment industry who is now looking to -- >> are you unionized? you mentioned the garment workers destroyed that industry at one time. are you unionized now? >> we are. >> and how are those costs? >> the costs are comparable. we're competitive with nonunion shops in our products. >> where are they? in the usa or overseas? >> well, most of the shops overseas are nonunion, but there are nonunion shops in right to work states. we're able to be competitive through our use of techniques like lean manufacturing, which brings unit and labor costs down by focusing on creating value and adding value to the product and not paying employees for nonvalue-added work. >> so just last one on this, i don't want you monopolized, but

in terms of hats and garments, traditionally that stuff comes out of china or more recently bangladesh and low-cost companies, how do you beat them? >> we don't have to beat them because there are a lot of people who will pay 20% to 25% for a domestic product. a lot more than would've paid 200% -- >> a made in america premium, in other words. >> there's a premium. >> you find the same thing, you're nodding your head. >> i would agree with you, mitch. i think especially our clientele in the states and our clientele in japan and overseas in europe, they love it's made in our studio in new york and has that handmade feel to it. >> and does it say made in america? >> it doesn't. we don't promote that too much in our marketing. we like people discover as they get to know our brand. it's just our motto is kind of modernizing the traditional. so when people try to get into that, they see that we're very hands on and creating it in our own studio space. >> where are your biggest competitors? and do you advertise made in

america? you know, it's funny, i'm thinking of my tennis shoes, which are terrific. and i don't recall seeing made in america. it's probably on there some place. anyway, do you get a premium for making it in america? or are you just as cut throat in competition with everybody else around the world? >> larry, we couldn't -- we couldn't be the brand we are in the u.s. if we were charging a premium here for our athletic shoes. there are competitors out in oregon and other places are much bigger than we are. they set the market pr price so we have to work harder, faster, leaner to achieve a market price that's co-equal with them. like one of the other panelists said, we can't overseas charge a premium. there's a premium in japan, france and other places for goods made in the u.s. and we actually have a new initiative where we're trying to export 1 million pairs of shoes into those countries that are made right here in the united states which is pretty great if you go up to northwest of portland, you see people making a pair of shoes that end up in paris, france h.

>> i like that very much. what are the obstacles? are there tax problems, health care problems or regulatory problems? in other words, made in america is made in america helping you or hurting you on balance? >> well, helps us with a certain segment of consumers. and for us, it's more about a pride piece for who we are and our brand is. we like to see regulation and tax policy and there's a big push by the president about making things in the u.s., congressional leaders have done the same thing. we'd like the policy to match the rhetoric and come up with common sense regulatory schemes and tax burdens that make sense for companies like ours and the other panelists to continue to grow. >> you started in 2004, is that right? so you're an entrepreneur. made in america entrepreneur, why did you start it in 2004? what was it? >> i was a senior at dartmouth and didn't want to get a job.

and decided i would try for my own job, you know, and nine years later, here we are i employ 11 people and other contractors in the city. i consider it a family. we do offer health care for my entire staff. of course, we're under 25 people and our company so we're not mandated and we may not be in the next few years, but it's something we want to do to make everyone feel like they want to stay there. >> you're going to stay with it, aren't you? >> absolutely. ais i'm in it for the long haul. >> thank you. mitch cahn, appreciate all your stories. now, the breaking news on the decision to delay the key provision of obama care for an entire year. and also, this story sounds too outrageous to be true. but it is. team obama is giving public school teachers in los angeles extra money so they can push obama care on their own students. and wait, it gets worse, we have that story about political brainwashing in our schools.

it's incredible thing next up on "kudlow." part about this country is that we get to create our future. you get to take ownership of the choices you make. the person you become. i've been around long enough to recognize the people who are out there owning it. the ones getting involved and staying engaged. they're not sitting by as their life unfolds. and 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.

with public support for obama care standing at new lows, it seems the white house obama care pr push is also stooping to new lows. get this, the l.a. public schools are now reportedly using additional taxpayer money to take time away from teaching things like math and english and instead teaching kids the benefits of obama care. in order to help sell it to

their parents, friends and relatives. is this america or the soviet union? what's going on here? joining me now, cnbc contributor howard dean and republican strategist noelle nickpor. what is this all about? teachers ought to teach. it's unbalanced. help me out on this. this is the dumbest thing you ever heard. >> this is a terrific idea. as you know, we have universal health care for kids through an expansion of medicaid 20 years ago in vermont for people under 18. and we reach -- we think it's in the best interest of the united states and vermont to cover everybody. so the way to get people who are low-income, maybe not paying attention, not understanding is to get -- educate their kids, do everything you can to get them signed up for this. this is a really good idea that universal health care is -- >> this is so propaganda.

there's no public health. let me ask it this way, okay. my friend howard dean has this great riff out there. do they have offsetting equal discussions of, let's say, pro-market, pro-competition health care? things of that sort? in other words, there was a debate in this country about health care, the state versus the free market. do you think those l.a. teachers are getting $1 million are teaching those kids there's two sides to the story? >> larry, why do you they they picked l.a.? why do you think they chose that as their test market. it's indoctrination. it's not informing them on things they need to know. and they tried the nfl, they didn't want to play. and they've also, you know, they tried the baseball teams, they've tried hockey. so what's the best thing to do? is to go and get the children whose minds are like sponges so they can soak this in and go back and clamber to the parents. >> and not even-handed, not

two-sided, not objective. that's really -- if there's anything that galls me more than putting the $1 million in, is that. there's only one side to this story and that free market discussion which is -- >> larry -- >> and true, and howard, i've got -- howard, i must ask you this. the legislature did not even read obama care. it's like two huge war and peace novels. do you think these teachers are that educated on this to give this to our children? >> larry, look, you know i think you're a good guy. you guys are living in a parallel universe. this has nothing to do with the debate between free market principles and obama care. >> why not? >> excuse me, this is about getting children and their parents signed up for health care that they don't have. >> then go to -- >> this has nothing to do with indoctrinated people about anything. >> of course it is. >> this is about getting people signed up to have health care. >> this is one-sided. >> you would understand this.

>> howard, guys, i didn't make it to the l.a. public school system, maybe that's still in front of me. but look, i want to ask you this. you saw today the announcement. they are now waiving obama care for large businesses for another year. and there's a lot of people around, howard, that think this thing's never going to get off the ground, there's no infrastructure in the states and they'll never finance it and therefore it'll die of its own way. why would you want to teach kids in schools as noelle said impressionable young kids, a system that didn't work? why would you want to do that? >> first of all, what you want to do is get -- sign people up for health care, that's what they're doing. secondly, this news is very good news in the long run. it's probably good for businesses in the short run. the reason it's so good, it begins the process of divorcing people from employer-based health care, which is a bad thing. which john mccain said in 2004 when he was running. this is -- this is a step -- excuse me 2008 when he was running. this is a step forward. i don't know what the

administration's reasoning is doing this is, but i think it's going to a be a good thing. >> howard's right about john mccain. but what john mccain argued as did a lot of republicans, give the tax credit not to the business, but to the individual the family, let them shop around in the open market. >> that's what obama care does. that's what it does. >> throw tort reform in there too. that was the private sector, not the government. >> yeah, and you know what, larry, if this was such a great deal, then why do you have to shove it down children's throats? if this is such a win/win for everyone, then why, i worked for senator john bozeman because she was a deciding vote on health care. why if this is such a great deal -- and you know the timing of delaying this, the 2014 elections, we have prior seats there, we have leandro seats. the timing they delayed this, they probably want the publicity from all of these employers clambering around. >> well, everybody wanted this thing delayed. and it may be delayed and

delayed. delayed at least one year according to the information we have. >> that's the mandate. that's not obama care. obama care goes into effect on october 1st, but the mandate gets delayed. that's a good thing. >> but as you know, the mandate is the heart of it. you can't fund without the mandate. >> you've heard me say a million times the mandate is a bad idea. you know i never supported that. >> well, i do recall that. i've got to give you credit for that. but what did you want in place of a mandate? >> i don't think you need one. i think we'll see a huge influx of people who do get voucher support who do get to help if they're low income making their own decisions in the private market. and that's something you ought to like. >> you know what i'd like -- i'd like to make the statement that nancy pelosi did when this thing was passed. she goes, you know, we really won't know what's in it until it's implemented. how insane is that? >> i tell you, i've got to say to both of you, i appreciate you coming on and kicking and chewing on this. this business about getting it in the schools and teaching it to the kids as though it's the

only solution in order to have the kids carry it home to their parents and their relatives, i think that's nuts. i think that kind of propaganda does not work in this country. >> the other solution is no health care. what do you expect? >> do it in the political sphere, the editorial pages, but in school, have them do math. have them read. have them do science, have them learn history and civics. anyway, i've got to get out of here. howard dean as always, thank you. >> thank you. >> now, let's switch gears to the middle east. question is tonight, egypt president morsi's last night in power? millions of protesters in tahrir square tonight. an ultimatum from the egyptian army. morsi is saying he will not honor that ultimatum. here now is michael ruben. and i'm not joined onset, but i

do see him, ahmad shihan. let me begin with you. how do you see this morsi thing playing out? >> well, i'll tell you, president morsi is about as credible leader or president as i am a nuclear physicist and that doesn't bode well for him. you saw in his 45-minute speech he reacted to the ultimatum made. and in doing so, the military had already questioned and i would argue taken away his legitimacy, which is really the only point he made in the speech other than blaming, not just the unrest, the protests and unprecedented show of support in terms of the opposition, challenging his very rule. you have to understand that this is for as much as he argued that his presidency and his election was unprecedented in the sense it was the first free and fair elections in egypt's history. what we saw two days ago was

unprecedented, 20 million people in the streets challenging his rule. and so if you want to -- >> must be doing something wrong. he's got to listen to some. michael ruben, welcome back to the show. what should happen here? should we let morsi fail? is that the united states policy? should we just let him fail and let the army at least temporary come in and take over? >> mohammed morsi managed to do in a single year what it took him 30 years to do, to antagonize an entire country. it's no surprise that he swept to power. the brotherhood in opposition for 80 years, they could promise people the world. the best thing we can do, larry, is let him fail because that would show that one of the opposition leaders said, we can finally get past this political islamism as a panacea and get down to the hard business of governing egypt. that said, i don't think the

military wants to take direct role. because egypt is a mess financially right now. what they want to do is have a caretaker government led by the chief justice of the supreme court, handle things as egypt gets back on its feet but the military doesn't want to be tarnished with the hard decisions that come next. >> is that realistic? or are there other options? >> well, of course there are other options. you could see a prime minister coming from the military and military man. but to your guest's other point, essentially this is a conundrum for morsi and literally the egyptian people have to choose between the lesser of two evils. the military right after the revolution of 18 days played a role in the transitional government ruling for 15 months. but we have to remember that they too even though they are claiming that they're going to, you know, deliver a road map in order to securely transfer power to a future government. i mean, they their hands are bloody, as well. they committed massacre, killing

upwards of 24 people, christians challenging the then rulers. it doesn't bode well for them. you remember the virginity tests, that happened at the hands of the military. so morsi, i think, has no credibility, but what's likely to happen, the ultimatum is going to come on wednesday. and i don't think any of the opposition group leaders and especially if you look at the actual political movements, the fact that people are still on the street today. they're not going anywhere tomorrow and i think, unfortunately, for morsi, he's marginalized too many people. >> that's what i want to go to. michael, worst case, as ahmed described, they're going to continue to protest until something changes, namely morsi gets out. but i want to ask you, worst case, michael, what kind of military strength -- maybe this is an odd question, what kind of military strength forcive arms does the muslim brotherhood have? >> well, the muslim brotherhood has been one of the best

organized groups in egypt. certainly, there's been some shady groups associated with the muslim brotherhood. you have the united states considers a terrorist group, the blind sheikh was a member of that group and mohammed morsi appointed a governor from that group to be governor of a province. right now, looks like the muslim brotherhood is starting to organize a militia. what we don't want to see is what happened in algeria 20 years ago where you had a canceled election, it turned out to be because the islamic government that had won wanted to have one man, one vote, one time. it seems morsi is going down that playbook. somehow i don't think the people in the street of egypt want to go that route. and i suspect we'll have something in between. >> that's right. it seems to me morsi abused democratic power sharing and that is much part of the

problem. the economy is in shambles. there's inflation, you can't get wheat, the currency is collapsing. it mean, he's made a complete hash of it. >> of course. he's made political miscalculations, but even worse, he hasn't been able to save the economy or move it in the right direction. there are also fuel shortages. and the real take away should be here he's isolated himself. even the party arguably more conservative than the muslim brotherhood is now supporting a call for reelections. and as you know, the obama administration you asked earlier what the u.s. should do. there is an economic crisis. it's in the u.s. -- the u.s.'s interest -- >> i don't mean to be rude -- >> no worries. >> i've got breaking news here. let's go right to nbc's eamon live for the latest in cairo. >> reporter: that's right. mohammed morsi addressed the nation in which he sounded very

defiant. in fact, he rejected the military's ultimatum issued to him yesterday. he will not, at this point, at least, addressing that ultimatum in the sense he'll not be stepping down from power and more importantly did not give his own vision as to how he plans on meeting the demands as stipulated by that ultimatum. for the time being right now, it seems president morsi is holding steadfast in remaining in office and pitting the two sides of this political showdown to really the final hours of this ultimatum. we're just a few hours away from that 48-hour deadline that the military gave the two sides to reach a political solution to this stalemate does not look like that is going to be happening any time soon. the president has not even met with the opposition as we understand it. so the divisions that are happening on the political level are also playing out on the street. the sides are encamped on two different parts of cairo and already has been some violence between supporters and opponents of president morsi. >> all right. thank you very much, ayman.

i appreciate it. many thanks to ahmed and michael. that's it for tonight's show. we're off until monday. please, everybody, have a great independence day. thank you for watching us. god bless america. i'm larry kudlow and we will see you next week. hmm...fifteen minutes could save you fifteen percent or more on car insurance. yep, everybody knows that. well, did you know some owls aren't that wise? don't forget i'm having brunch with meghan tomorrow. who? meghan, my coworker. who? seriously? you've met her like three times. who? (sighs) geico. fifteen minutes could save you...well, you know. wi drive a ford fusion. who is healthier, you or your car? i would say my car. probably the car. cause as you get older you start breaking down.

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