was said. they said this basin, he confirmed it. second largest oil field in the world. paradox. doing work on that. charitable trust. big position on that one. that will be the next one. always more.somewhere. i promise to try to find it right here on "mad money." i'm jim cramer and i will see you tomorrow. we have a deal. the senate leaders made a deal earlier today to end the government shutdown and raise the debt ceiling, at least for a few more months. house and senate republicans have vowed not to block it. the impasse is over. but remember, folks, whether it's debt or spending, we may have to go through this entire exercise all over again this winter. we have all the angles covered on this story this evening. first up ace reporter robert costa has the latest on the budget votes and what the next step is for congressional republicans. the mark soared on the news and

closed with their highs of the day. cnbc's bob pisani has all the details from wall street. and we'll be hearing live from several members of the senate and the house throughout this pivotal hour. where do they stand on the budget negotiations that are about to begin as we get ready for the next deadline? "the kudlow report" begins right now. good evening, everyone. i'm larry kudlow. this is "the kudlow report." we are live here at 7:00 p.m. eastern and 4:00 p.m. pacific. breaking news tonight. the senate expected to vote this evening on a compromise deal to temporarily reopen the government and raise the debt limit. that sets the stage for broader budget negotiations later on. house leader have vowed not to block the bill. the chamber expected to vote later this evening. we're going to talk with members from both parties. both houses of congress throughout the evening. but first let's get the very latest details from ace

political reporter and cnbc contributor robert costa who joins us live from washington tonight. robert, has the senate started voting yet? >> not yet, larry, but they will start soon. >> and after that, boom? >> right to the house. this impasse ends tonight. >> this thing will be over this evening. that possible finally? >> it is very much possible, because house republicans decided this afternoon to not block it, they're going to allow democrats to vote with republicans to pass it. >> so let me get this right. the gop won't block it. they decided to finally stop digging the ditch deeper and deeper and would not like to climb out of it. can i assume that? >> it's not an assumption, larry, it's the fact. it's what is happening and my reporting backs it up. today ted cruz decided he won't block the vote in the senate. so did rand paul, marco rubio. and when speaker boehner met with his troops tonight, he said we fought a good fight been it's time to move on. >> a lot of speculation about

boehner's road. how do you see boehner's position right now? >> boehner is safe, and i can back it up by talking to over 50 members of the house conference this afternoon right before i got here to the studio. they say boehner actually got a standing ovation today when he went before his conference because they believe though the strategy was ultimately flawed and didn't work, he fought the fight with them and he didn't break with the right. >> what happens now? let me ask you this. it's a question i'm going to ask a lot of our guests this evening from the house in the senate. will the republicans continue to go after obama care for a variety of reasons we'll discuss? >> yes. >> but having not done the defunding, having a not won on the delay, where do they go, robert costa? what is the next tactic? >> the real hope is that this deal tonight reopens the government until january and it extends the debt ceiling until early february. they hope maybe not going to have such a dramatic standoff come january. but to reopen the government in january, they want some kind of

concession. that's why uthough they laid down their arms tonight, they'll pick them up again in december. >> we are in fact, or we may, i should say, go back and do this whole thing all over again in about 90 days? i mean, this is really a stopgap, short-term solution. >> yes and no. yes, are we going to have a standoff in january, i predict we will. but a lot of house republicans are very wary of the poll numbers. they see 74% of americans seemed to have turned against them. they don't want to feel that political pain there will be a different strategy, a different approach come december. >> we don't know what that will be yet do, we? >> not yet. one big factor as part of the deal is a future budget conference later this year led by paul ryan and patty murray. they want to see what comes out of that before they start making plans for a december fight. >> what if nothing comes out of that? >> right. >> we've been here before. this is like two years ago. this is like 2011. this is like 2012. am i to assume -- this is a little unfair, but you're a

great reporter. am i to assume that in three months, three months, patty murray and paul ryan are going to knock out a deal on entitlements, on the sequestration, and on tax reform. am i to assume that in the next 90 days? >> no, you should not assume that i think any great expectations for tax reform are unrealistic. anything that could happen will boil down to a small deal, and the most likely deal is trading some kind of sequestration changes for chained cpi or another type of entitlement. >> i hope they keep the sequester. the only reason i like this deal is they kept the sequestration in. the budget caps are in. in my humble opinion, that's good for the economy. robert costa, thank you as always. we'll see you later. the question now is this rally sustainable? let's go down to the new york stock exchange where bob pisani joins us now with the details. good evening, robert. >> hello, robert. we're having a party down here right now, though it's not to celebrate the shutdown.

the stock market rally, a little sell on the news as the deal was announced midday. but stocks closed at their high. the dow jones industrial average, you see that here, now only about 2% from the historic highs. it was a broad rally. financials were strong. health care, consumer discretionary, all of them up about 1%. the big issue, larry, is what is next for stocks? traders are trying to assess how much damage has been done to consumer confidence by the shutdown, the concern is that companies may use the shutdown as an excuse to lower fourth quarter earnings more aggressively than they might normally do. now there is considerable concern that reliving the entire debt and government spending issue in january like we just talked about, that's in this deal, will cause some to hold back in christmas spending, for example, particularly those who might rely on tax refunds in january to pay those bills. and it's already starting to show up in the earnings report, larry. did you see ebay after the close? they said earnings would be lower than expected during the christmas season, citing in part anxiety around the newspaper headlines. do you see that drop after the close?

and earlier in the day, tool maker, black and stanley lowered, they cited the government shutdown as one of the factors for lowered sales. the biggest disappointment for me and everybody else down here is we have gone through all this drama to get a deal that essentially is the status quo. something you were just talking about, larry. we would like to see a little more progress. >> me too. >> robert, one other stock. after the bell, ibm revenues down six straight quarters, if my memory serves me. the stock got hammered 6%. and after market-trading. is that apocryphal? ibm great company. a little different from the ones you mentioned before. what does that mean, the ibm story? >> there is two parts to ibm. obviously they have two things like servers. price competition very strong. sales a little slower too. even in the software area where they do services, sales are also a little bit slow there. i think that's indicative of a slight reticence on the part of

people. >> bob pisani, appreciate it very much. now, folks, a new rasmussen poll shows 78% of those surveyed want to change all members of congress, ie, throw the bums out. so let me ask our two distinguished guests what they can do to redeem themselves. they are both good friends, and they're not bums. here now are house members peter welch. he is the chief deputy whip of the democratic caucus and brad winthrop, republican from ohio. what can you do now? the numbers are pretty bad. "the wall street journal" numbers were 60%. what can you do to redeem yourself? 90 days is not a lot of time to get through a lot of complex fiscal legislation. >> well, i would agree with you there. it's not a whole lot of time. but it is some time. and i'm glad that we're going to have opportunity to sit down and talk about things like budget. after any type of a fight, as you know, i'm a soldier, it's

time for an after action review. and it's time to set what we want to do next. and i think we're going continue have the same discussions, many of the same discussions we had through this period, but hopefully we'll be sitting down at a table. the president said he would sit down and negotiate after we passed something like this. after that happens tonight, i hope that's the case and we can move america forward. >> peter welch, i think it was a huge mistake, by the way, to only lift the debt ceiling for a couple of months. i think that debt ceiling should have been raised at least a year because i worry than the most, frankly. i worry about the dollar. i worry about our sovereign currency and our debt rankings and all the rest. but that didn't happen. and the shutdown last now, that is deferred until january 15th. so that's coming right up. and you have this budget committee that is supposed to report this new fiscal commission, patty murray and paul ryan. what is -- seriously, do you believe that in the next three months, you are going to get all of this done? >> it's going to be really

tough, because we're now actually that we've got this fight behind us, starting to talk about the real legitimate policy differences of how much we should cut, how much revenues we should have. that's been an ongoing debate. it was stalled when we got into really what i think was the last-ditch effort to repeal the obama health care bill. and then the use of these tactics that i think are really dangerous, whether they're used as they were in this case by the anti-health care folks or they're used in the future by say a democratic fashion, we've got to pay our bills, and we shouldn't be holding the government hostage and inflicting unnecessary pain on innocent people as a tactic, rather than have the real discussions where brad and i probably disagree. but we're not going to get to yes unless we have a real conversation about it. that's where we're at now. >> brad, these polls are bad enough. the fact that you've only got about three months makes it even worse. let me just ask you this. will the republican party continue to go after major changes in obama care? the defunding did not work.

the delay did not work. essentially, this was a clean bill. i think that's fair to say, with only some tiny, tiny modifications. what's your next step on obama care? >> well, i think we're going to continue to make changes and gear towards patient-centered solution. i've said all along ever since i decided to run for office, as a physician, that we address this whole process in the wrong way, we should have been addressing who is uncared for in this country, and the uninsured would fall under that. that's what we have to look at. we're looking at a program that is still going have a large number of uninsured, and we're also going to have a large number of people going to medicaid. and people under medicaid know today that they have a very difficult time getting access besides the emergency room. and we need more primary care doctors and more access. so the problems are still going to exist that we need to address if we're serious about really getting care to the american people. and also, what you're seeing right now with the implementation and the effect on businesses, that's going to continue to loom as an issue for america. >> well, guys like me think that

whole story is bad for the economy. not everybody agrees with me. i understand that. but peter welch, let me go back to you. i'm getting e-mails and i'm getting tweets that basically say you know what? leave obama care alone because it's going to drop of its own weight, that the launch was so incredibly bad, it is in fact a train wreck and will never work. what is your reaction to that? >> well, listening to brad, as long as we're talking about improving it, and it's going to need improvements, then we're all ears. we want to sit down and do it. in fact, in my state, i'm going to go around and talk to providers and business companies how is this working? how is it not working how can eimprove it. >> pardon me for interrupting. what would you change? >> number one, the computer system. i mean, we've got glitches. it's tough to get on. it's tough to get in. and this has got to be simple. and when we're talking about how do we improve it, how do we make it work better, how do we get the costs down, that's where we can make some progress. we've been having this endless battle through the house, the

senate, the presidential elections, the supreme court about whether it would be the law or not. that's established. so now when brad, whose got a lot of experience as a doctor, comes up with some suggestions and it's about not repealing the obama health care bill, but making it work, making it more affordab affordable, we've got to work with him. we're in a place where we can make progress rather than have this knife fight which has been going on the last couple of weeks. >> just last one, brad. i've only got 15 seconds. have you and the republican caucus given up on repealing obama care? >> well, it may be difficult to repeal it in its entirety, but we certainly want to implement things that we feel are logical solutions are going to provide care for the american people that are affordable and where they really have access. so you can call it what you want, but change needs to take place if we're going to really accomplish our goal. >> thank you, gentlemen. i appreciate it very much. peter welch, brad whenstrup.

jared bernstein, cnbc contributor, he is a former chief economist to vice president biden. doug holtz aikin and former cbo director, and dan holler of heritage action for america. dan, let me begin you. neither of our representative representatives that we had on the show seem to be willing to go for a total repeal of obama care. what is your take on is that. >> the fight is going to continue. i think the american people kmpt expect their lawmakers to continue pushing this. we know it's a bad law. we know it's hurting people. the question is what do we do next? and i think from here over the next few months, you're going to see the people who are responsible for passing that law, they're going to own this. and people like kay hagan and mark pryor and mark begich, they're going to have to explain to their consistents why they stood in the way of efforts, legislative efforts that would have spared their constituents. >> and you advise -- you advise members this was a key tonight in the house. probably in the senate too.

but i know now, you advise them to vote no on this package, could you not? could you tell us why? >> yeah we did. fundamentally this whole debate has been about obama care. until you do something that addresses obama care in a way that protects the american people, that's not a solution there is no doubt this makes politicians in washington happy, and that's fine. it punts it down the road. this does nothing for the american people who are seeing their premiums go up. is it helping the american people? and the answer definitively is no. >> jared bernstein, time for your rebuttal. >> well, first of all, i thought the republican representative we were just talking to gave a pretty good rebuttal. because when you hit them right up, repeal, he didn't go there at all. and i would say with respect to our friend from heritage action, they've really kind of got on the short end of the stick today. i wrote it down. patient-centered solutions, covering the uninsured, more doctors. that's all pretty consistent with what obama care is trying to accomplish.

i will say one factual correction. in fact, premiums in many areas where these exchanges are being implemented, the growth in premiums has come down a lot. and, in fact, i always think of you in this case, larry, because it's larry kudlow style competition. well actually have much more transparent competition between insurers in these exchanges. and it is lowering price. >> but -- do you hear that? i hear this. >> larry kudlow style competition. >> if premiums are coming down. >> they're grow mortgage slowly. >> what i'm reading about, most recently in the chicago tribune that premiums are blowing up sky-high. that's point number one. and point number two, deductibles are blowing up sky-high. and in some cases now, the providers are going to want you to play the deductible up-front. the deductibles could run up to 12,500 for a family of four. that does not sound like the economies that jared is talking about. >> i think in terms of what we're seeing the exchanges, number one, the deductibles are

very high. families of four were looking at $4,000 and $6,000 as the smallest deductible. we're looking at the key grouping, the young invincibles. and there 30-year-old male nonsmoker, average increase before and after 260%. they don't show up, this doesn't function. >> are you including the stubbs days? >> yeah. >> that's very surprising. that's quite different than the numbers i've seen. >> a lot are going to have zeros. >> if the incomes are too high. >> this is an issue. and we'll see how it plays out. the second issue is the policy fight. the policy fight is a good policy fight. and if you have looked at any of the polling, lots of people have concerned about it. >> people don't like obama care. >> they don't. >> the polls show. they don't like congress either. and they don't like republicans the most. but they don't like obama care. >> they also don't like repeal and refund and all that. >> the tactics they don't like. >> exactly. >> they don't want you to shut

the government. in the polling before the shutdown said don't use it as a tactic. it's a policy fight. they want the fight, but don't shut the government. and the republicans are paying for using it as a tactic. they're right on the policy. the public disgrise with them on the tactic. >> you're all going to come back in just a couple of minutes to continue this conversation. but now let's focus on your money. the market celebrated the budget deal in a big way today. the dow gaining 205 point. but the question is where do we go from here? we're going to ask two top investors who know wall street and washington. folks, don't forget. free market capitalism is the best path to prosperity. that's why i do not believe obama care fits the bill. i'm kudlow and we'll be right back. i was made to work. make my mark with pride.

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welcome back to "the kudlow report." i'm larry kudlow. all right. we're waiting for a vote on the budget deal. that's the floor of the senate. you can see that. that vote is going to come in this hour. we'll let you know as soon as that happens. first up, wall street watching every move out of washington. stocks really cheered at the deal that was finally put together today. the dow popped a whopping 205 points. my question is can the rally be sustained, first of all by a stopgap 90-day deal, and second

of all, by the whole profit story, which is now beginning to circulate. here now we welcome back dan clifton head of policy research at stregis and dan. the market is euphoric about this deal. we kind of knew they would be. regarding politics, does it sink this three months is all they have to fix this? or what? >> larry, it's the number one question we're getting from our clients. i think this deal changed the dynamic going into 90 days. february 7th is the day the debt ceiling needs to be raised. that's also the beginning of tax refund season. we had the same problem earlier this year, and the republicans had agreed to raise the debt ceiling out to may 19th to get through the tax refund system season. we're expecting a less controversial fight in february. we slightly disagree with robert costa in what we said before. the polling data is very, very bad. the fiscal cliff hurt the republicans. this hurt the republicans.

they don't want to have another dried down brinksmanship. >> that's what they said two months ago before ted cruz went out, and don't get me wrong, he is a smart guy. >> sure. >> i agree with him about getting rid of obama care. i would have done it differently. what you just said is what republicans told me on this show and elsewhere time and again, we don't want a government shutdown. we know it will be unpopular. and they did it anyway. >> yeah, you know, if cruz had been successful, he would have been 2016 presidential candidate number one. but now we'll have to wait to see what happens in the mid terms. obviously the polling data looks really bad at this point. so i'm in agreement with dan. as far as the markets go, we're going to be on this extended period where people just -- don't know what is happening in the economy. whatever data does come out, it's going to be skewed. you're not going to be able to trust it probably into december. so by the time the supposed budget committee that comes out with something will start to get true data. >> this is a really important point. let me just stay here. bob pisani was talking about

damage to consumer confidence with some of these stocks reporting today. the fed's beige book, which is the fed is not shut down. you'll get industrial production, they said moderate. blah blah blah blah blah, moderate. i read that as 2% economic growth. and my question to you is there a shock enough from all the goings on in washington and the likelihood that it's going happen again in three months to knock down confidence, to knock down christmas spending, and to knock down stocks? >> yeah. i think the overriding mojo for the markets is janet yellin. that's really it. and that's the one thing that has mitigated a lot of the issues that have gone on in d.c., that nomination by the president obviously is really key for the markets. because if we get past the budget and the cr, then we're right back to where we were prior to it, which is hey, janet yellin, continuation of fed policies, foot's on the gas and she's the biggest dove. that's the interpretation by the stock market. >> and she won't tighten in my

life? is that fair? you're younger than i am. in my lifetime, i'll never see her tighten. >> no, you won't see her tighten. consumer confidence. when you look at the internals, you ask people what is the biggest problem with the economy. they're not saying economy or jobs. they're saying the politicians. so that suggests that maybe this dump in confidence could actually be temporary, which would be consistent with the '95-'96 government shutdown. >> stocks continue to rally. actually, just a final one. i got to go because we have someone waiting. shouldn't people really focus on what data they can get and what the earnings look like? profits are the mother's milk of stocks. in other words, i know everybody in washington obsesses about everybody in washington. but i sometimes think everybody on wall street and main street obsess too bloody much about washington too. >> there is great underlying stories, energy, housing, cars, wonderful stories there that have propelled the stock market to these levels. >> you're both great. thanks.

andy busch and dan clifton. now, we're still waiting on congress to vote on this temporary budget deal. we're to be go back live to washington, d.c. for an update from ace reporter robert costa. all of washington and wall street is going to hang on this guy's words. so please stay with us. revolutionizing an industry can be a tough act to follow, but at xerox we've embraced a new role. working behind the scenes to provide companies with services... like helping hr departments manage benefits and pensions for over 11 million employees. reducing document costs by up to 30%...

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that means the immediate debt default and government shutdown concerns may be over for the time being. but it's only a three-month stopgap deal. don't forget that. the next huge question, therefore, is whether congress can patch together entitlement and tax reform measures that will grow the economy and rein in big government spending. as one house republican said today, we've just kicked the can down the road. take a listen. january 15th and february 7th, we could be right here again. and what i would love to see is the president come and say let's do something about spending and change the spending curve. >> all right. so question. will democrats and republicans be able to agree on spending cuts and entitlement reforms for the longer run in 90 days? all right. let's ask west virginia democratic senator joe manchin. mr. manchin, as always, welcome back to "the kudlow report." you've got tough deadlines

coming up, as you well know. in early february for the debt ceiling. in mid-january for the entire budget. and then the paul ryan budget commission, which sounds like the fiscal cliff all over again. that's in mid-december. how are we going to get that done? >> larry, basically, for the first time since i've been here, we're at least going to make the budget conference get together. we have a democrat budget and we have a republican budget. we haven't had that happen since 2009. and they're going to have to sit down and see if they can work through their differences. the $967 billion spending level that goes into effect january 15th should be a stimulus for all of them. if you care about the military and defense, if you care about the programs we have throughout this country, then we've got to get a way that we can adequately fund them, but start moving and continue to move our finances in the proper direction. you've got to get a long-term balanced budget. and you know what? i think if someone said listen, i'm going to vote to shut this government down, unless we're

serious about fixing long-term debt of the nation, they would have been accepted more by the american public than picking social issues, whether it be obama care or energy or whatever. and i think that's what the public is telling us, larry. fix the finances of the country. >> okay. i basically agree with you. we just saw a new poll this evening, senator, from the rasmussen shop. 78% of the people want everybody in congress replaced. that was worse than "the wall street journal" poll which said 60% wanted everybody replaced. but with respect, i want to ask you this question. you talk about loosening up the budget caps in the sequester, which i happen to think were a very good idea. but if you loosen them up, your party generally has wanted to raise taxes big-time by as much as a trillion dollars, and also, the spokespeople for the democratic party have refused up to now to even consider entitlement reform parties. what is your reaction to that? this is the blockage that tells me we're not going get a deal in 90 days. >> larry, i'm talking to my

friends, my colleagues on the republican side. first of all we have to basically agree on the definition of revenue. do we consider revenue basically if you raise tax, that's revenue? i agree, we shouldn't do that, larry. don't need to do that. if we reduce the taxes and we have more of a dynamic growth, and we have more efficiencies, and we spin off a new trillion of revenue. that shouldn't be new revenue. that should be revenue that should be dedicated toward paying down the debt and spent only for infrastructure. >> i think that's great. look, that is supply-side stuff. i love that stuff. you create incentives. people go out and invest and spend. i love that. >> sure. >> but that's not what i hear. democrats are not saying that. democrats say they want to toughen up the deductions and exemptions for upper income people without offsetting marginal rate reductions on the other side. and also, senator manchin, i think you know this, because you've been a moderate the whole time. >> right. >> in your tenure.

there has been no enthusiasm for entitlement cuts, non, zero. i don't think they even buy into -- the president has said he would go for a chained cpi cost of living. i don't think they would even go for that. it seems like an impossible task. >> well, larry, it's a reality. you know what? we found out that you can only govern from the middle. you can't govern from the right or the left or the fringes. so the american people, most of this country is in the middle. that's how they run their lives, their families, their businesses. and we're going to have to get in tune with them. i can only say to my colleagues on the democrat side and republican side we have got to get our financial house in order. you can't spend more than you take in. we can't balance our budget the next year or two, but we can have a long-term projection and start the downward glide. i have not talked to a person of means who said i don't mind paying my fair share of taxes. i just don't like how you spend in washington. well, if we said for every new dollar we get in washington, we take care of our debt and put 60 or 70% of that towards debt, and the other 30% to infrastructure

and rebuild america, we have no complaints there. the republicans can protect themselves. the democrats basically aren't able to expand these programs. you have to run them more efficiently. >> right. they're going to gavel the vote, senator. let me ask you one quick one. are you going to be on this super commission, this super budget commission? >> oh, i would like to be. but, you know, i'm going to be working with what i call a responsible group that we have put together 14 of us. we're not going to quit. we're able to make some something. when you have seven democrats and seven republicans that are willing to work together for the sake of this country and quit worrying about our democratic or republican party and worry about our country. >> right. >> we're going to make something happen. we're going to be a force to be rec continue with. >> how can i be helpful? if you think i should come out against you, maybe that should be the greatest help possible. >> my uncle used to say that all the time. i want to help you. should i be against or for you? what would help the most?

>> thank you, senator joe manchin, we appreciate it, as always. now week, still waiting for the senate to vote on the budget deal. we're going bring you all that news as it happens. please stay with us. we're "the kudlow report." be right back. (vo) you are a business pro. maestro of project management. baron of the build-out. you need a permit... to be this awesome. and you...rent from national. because only national lets you choose any car in the aisle... and go. you can even take a full-size or above, and still pay the mid-size price. (aaron) purrrfect. (vo) meee-ow, business pro. meee-ow. go national. go like a pro.

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welcome back to "the kudlow report." let's go back to washington,

where the senate vote has begun on this whole budget deal. let's get the latest from our ace political reporter robert costa. robert, one thing interests me is the republicans vote against this. i don't know how many in the senate. but we know rubio is going to vote against it. we know ted cruz, i guess rand paul is going to vote against it. mike lee is going to vote against it. but none of them wanted to stop the progress on this. no filibuster, no stalling out. why is that? >> because they're tired, larry. i've been up at the capitol for the last couple of weeks, and they're exhausted by this impasse. they're ready to move on. it's as simple as that. they know they can't win any concessions either from the white house or the senate democrats. >> i'm sorry. all right. robert, what did you -- all right. we're going back to the senate floor. they're voting primarily or is this a final vote? >> this is part of the preliminary process. they have to go through a few procedural votes in the senate. but it's expected to pass

tonight and pass with a heavy margin. with it passes with 70 to 80 votes, that's a big margin for republicans in the house who are paying attention to that senate whip count. >> that's all i really care about. that puts the pressure on its house to do its work. will you get a resounding win in the house? >> a resounding win with democratic votes. there will probably about 80 to 100 conservatives who oppose. boehner can count on 100 to 120 republicans to back him. >> let me go back to this other issue that people like cruz and so forth, rubio are exhausted, as you put it is. that also true among the house conservatives? >> it is. and we saw that today when speaker boehner met with a lot of his colleagues. they think that because they went through the defund strategy, they went through the repeal strategy, they've done all these different votes over the past few weeks that they have done everything they can from the right, and it hasn't yielded much. they just want to pick the next battlefield and start fighting there. >> but are the tough-minded conservative interest groups and we a chap, dan holler from

heritage action and the club for growth today came out against this bill also. aren't they going to keep pushing as hard as they can to keep the enthusiasm up, to go after obama care, and to cut spending and taxing? >> undoubtedly, larry. and as much as the impasse ends tonight, and this package will likely pass the senate and the house, we're looking at december and january as another big fight between both parties as they try to win some kind of fiscal reforms or revenue for the democrats. >> see, that's the part. to be honest with you, that's the part i don't get. after going through all this thing, and i agree with you there is a lot of exhaustion, a lot of political exhaustion, probably a lot of mental fatigue going on and physically they're probably really tired. i just don't know why they didn't cut themselves a little more slack, okay. i went through some of these things years ago with reagan. i mean just the simple one-year extension on the debt court of appealing to me would have made a lot more sense than 90 days or something like that.

why? i just don't get that? >> when i spoke to a lot of house republicans tonight, we weren't talking about the whip count. we were talking about the broader political question facing republicans, and that's the limitations of divided government. and you nailed it, larry. within divided government, what is achievable? that's what republicans are asking tonight as they look ahead. what is really achievable? what should they be trying to strategize to get? >> that's a very question. bob costa, thanks very much. we appreciate it. folks, we're still waiting on a senate vote on the budget deal to end the shutdown. please stay with us. lots more coming on "the kudlow report." at a ford dealer with a little q and a for fiona. tell me fiona, who's having a big tire event? your ford dealer. who has 11 major brands to choose from? your ford dealer. who's offering a rebate? your ford dealer. who has the low price tire guarantee,

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with 7 antioxidants to support cell health. make my mark i wawith pride.ork. create moments of value. build character through quality. and earn the right to be called a classic. the lands' end no iron dress shirt. starting at 49 dollars. welcome back to "the kudlow report." senate is holding a procedural vote right now on the debt and government funding deal. the final vote is going to take place later this hour. here now we welcome back to the show georgia republican senator saxby chambliss. mr. chambliss, it's been way too long. thanks for coming on. i know this is a busy night. >> thanks, larry. >> it's a theme. i want to get your take on it. the public is real unhappy with congress, okay. and i include the senate and the house. new polls today from rasmussen, some like 78% want to throw everybody out. before this, as you probably

know, "the wall street journal" poll said 60%. now, here is my question, sir. as the former member of the gang of eight, trying to work out a grand design budget deal a couple of years ago, do you think now in 90 days roughly that can be done? because that is what they're voting on tonight. they're voting to get a report on the budget in the middle of december, and keep the government open until the middle of january. that's nothing. that's hardly any time at all. >> well, larry, what the gang of six, gang of eight was pointing to was this now $17 trillion debt that is staring america in the face. and there is no plan out there to repay that. and it doesn't take a rocket scientist to figure out that bowles/simpson had the right today. we have to cut spending, reform entitlements, and we've got to get revenues back to a level where they need to be. so, you know, if we grow the economy through the right kind of tax reform, revenues will take care of themselves. can we do that in the next 90

days? absolutely not. but here is what we can do. if the budget committee will be willing to tackle the tough issues and make the hard and tough decisions, we can put a process in place to dictate to the finance committee and the ways and means committee that they need to work on reforming entitlements. i e medicare, social security, medicaid. well can do it without harming those programs. and then secondly, we need to totally reform the tax code, larry. the code we operate under now is a disaster. and with the right kind of reforms in the tax code, we will see an investment by american companies in america. it will create jobs, thus create more taxpayers. that's the way we can get revenue. so i hope we can see that process put in place. >> as much as i happen to agree with your economic analysis as an old reagan supply-sider, i'm also interested in what you said before that. there is no way you're going to get tax reform in 90 days. and you're saying you want to put a process in also to deal with entitlement reform.

but sir, we're budgetless. we're budgetless for 2014. and i thought that the mandate of this budget report due in what, december 13th or december 15th was to have a budget for 2014. >> yeah. >> otherwise, as you know better than i, we go back to the continuing resolution, and that means another fight, 30 day, 60 days, 90 days, we go through this whole thing all over again. >> and that's a poor way to run a government, poor way to run a business, and certainly poor way to run a government. 10 what the charge to the budget committee is that they're to go to conference, the house passed a budget. we finally passed a budget after five years over here, larry, as you well know, they need to go out and try to go together and try to iron out their differences so that we can in fact have a budget. and let's get back to regular order. ie, going through the appropriation process. otherwise, we're going to be back in the cr fight come january 15th. and i can tell you, nobody here now wants to go through what

we've been through the last three weeks again in january. >> but i want to ask you, nobody wants to go through those last few weeks. i agree with that too. i think your accurate assessment. on the other hand, sir, aren't some people in the republican party going to continue the assault and the attack on obama care, one way or the other? and is that a diversion in your opinion from the budget matters, or is it -- is that integrated with the budget matters? >> well, you know, obama care deserves an attack being made on it by those of us that disagree with the plan. obama care is going to collapse under its own weight if it ever does get implemented, as we're seeing right now with folks who are trying to sign up for it and can't even sign up for it, for gosh sakes. i think the attacks on it will continue. but at the same time, we need to focus, larry, on the fiscal issues that are so troubling to this country. again, we're $17 trillion in debt, and there is no plan out there to pay it back.

we nt continue down that path. it's just simply unsustainable. >> i also think, senator, we can't continue to have 2% less or economic growth for the next ten years. we've had it for the last ten years. another ten years -- economic growth would solve a lot of these deficit problems, a lot of these spending problems. but unfortunately, people aren't talking growth. my last question to you. >> yeah. well, if the we had the right kind of tax reform, you would see economic growth like we had back in the '90s. and it would even surpass that. because american companies are sitting on the sidelines. there is so much uncertainty out there right now, they're not willing to invest the cash they have, and our companies have an awful lot of cash in their pockets right now. but they're not putting them in the manufacturing facilities and distribution facilities that will create the jobs that we need. but if we put some certainty in the tax code, you better believe those folks will start investing in america. >> right. >> and we'll see real economic growth. >> all right.

great stuff. senator saxby chambliss of georgia. best of luck. >> thanks, larry. our expert panel is coming back to critique all of this stuff. we're still waiting on the senate bill to end the government shutdown and raise the debt ceiling. i'm kudlow. we'll be right back. create mome. build character through quality. and earn the right to be called a classic. the lands' end no iron dress shirt. starting at 49 dollars. ♪ ♪ so she could take her dream to the next level. so we talked about her options. her valuable assets were staying. and selling her car wouldn't fly. we helped sydney manage her debt and prioritize her goals, so she could really turn up the volume on her dreams today...

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welcome back to "the kudlow report." again, you're looking live at the senate floor as we await the final vote to approve the budget

deal, all expected to pass and go on over to the house for another vote later this evening. it will pass the house too. now, we bring back our expert panel, jared bernstein, doug holtz-eakin and dan holler. dan, i want you to rejoin our coffee klatsch. i'm sorry we left you hanging out there in washington, d.c., but you are always welcome. you heard senator chambliss. you heard senator manchin. are they going to go after budget reform, entitlement reform, tax reform, or, in your opinion, should they stay on much more the obama care reform or repeal? in other words, how will you advise the politicians that you talked to? >> look, our country is facing a lot of problems. i don't think anybody disagrees with that so we need to continue to litigate the case against obama care to the extent there are opportunities where we can relieve some of the pain the american people are feeling. we need to seize those. we also have a huge debt problem. and to the extent that congress actually wants to come together and do something about that, and

the president will actually engage in good faith negotiations without a timeline there, i'm dubious of that. but if he wants to, that can be productive. i don't know how this all plays out, but the last thing i think anybody should expect that folks will be too easy swayed from litigating obama care. that's still going to be the major thing we're looking at in the weeks and months ahead. >> and will you still encourage -- just quickly, i want the others to get in. will you still encourage defund or delay? and what is your principle push there going to be, dan? >> well, look, the house got the message. their constituents said hey, you got to fight to defund obama care. they listened, they fought, and they did a really good job. they stuck together through thick and thin. that support wasn't there in the senate. so we need to find a way to get the senate to a place where senate republicans stop sniping at one another, stop sniping at strategy and stop sniping at their house colleagues. and we'll go on from here. >> it's a very divided, very divided party. jared bernstein, if you were king for a day, where would you

launch this process? all right. tonight ends one phase of this. they're finally going to get out from under the shutdown and the debt ceiling. so now now go to phase two. where would you go? >> be very clear. with respect to dan and his organization, i would be very clear that nobody is talking about the kind of tactics that really blew up here. and there are a lot of republicans who are kind of from the mainstream who don't want to go there either. the first thing, forget about delay, defund, the whole obama care thing dan was talking about. and then i would start to have a question about sequestration. i know you like sequestration, but there are lots of people on the democrat and republican side who are all for the spending cuts, but don't want them to be so indiscriminate across the board. >> it's all i could get. if i could have done it differently, if i could have designed it differently. >> the idea is to do that. replace it. >> if i were working for doug, i would have done it differently. but the point is we have gotten spending control. and when you look at the numbers, when this is why i like it. we may disagree on the economics, spending has come

down substantially. >> we actually have a fiscal drag on the economy right now. that's not a good thing. >> i think that's a fiscal growth. >> you were just talking about gdp two minutes ago. >> i know. and i think the less government, the more gdp. i think that's the whole history -- >> not when you're at a period like this where you're way below employment with full out gaps. >> on the gdp front, one of the costs of this whole episode is the things we didn't do. we didn't make progress on tax reform. we aren't doing trade deals. we aren't doing immigration reform that could power the economy. those are missed opportunities. and going forward, we're not going to get the big things. we are to be realistic about that. the main thing that has been missing in all this discussion is president obama. >> right. >> he hasn't engaged to date in any real way. he is not going to be in this commission. we're going to see little stuff. >> hold that thought. hold that thought. the final vote on the senate floor is beginning right now. i don't know whether we're going give you a scorecard or not. you can see in the lower screen, senate voting on final passage

of debt court of appeal. house to vote later tonight. i think as costa and others have said, this is going to be a big vote. andy busch, you agree. this is going to be 70 or 80 votes? >> how many are -- >> it's about easy one. >> that will propel it obviously through the house. so that will show unification of the government. everybody is behind this, this is a great thing. but to doug's point, the really sad thing that just drives me crazy is that one peach that is out there to get grabbed a tax reform. that's the thing that is going to drive growth. and we're just going fumble it completely. >> are we? now, it's interesting. saxby chambliss said how much in favor of tax reform he was. >> everybody is for tax reform. >> supply-sider. on the other hand, he also said, he was very honest, we are not going to get that done in 90 days. >> right. >> the best we can hope to do is set up something called a process. i don't know what that means. go ahead, doug. >> that's the so-called reconciliation instrungzs for fast track authority to do tax reform. to get that, you have to agree in advance how much revenue it will raise, revenue newt troll

or more revenue? they won't get that agreement. >> they won't get that agreement. dan, let me go back to you. tax reform. where do you all stand on tax reform? and should that be a priority from the heritage action standpoint? >> yeah. we think tax reform is hugely important. it's one of the things that we absolutely have to do if we want to get the company back on track. the question and i think doug answered it properly is where is president obama in all of this. and you're not going to get him to say that he will forgo a tax increase. president obama wants to increase taxes. and republicans aren't going to be on board with that. as much as we need tax reform, that future looks very much in jeopardy. >> the reason it was on cnbc. it was john harwood interviewing president obama about two weeks ago. and he said we are not interested in raising tax rates. we're interested in closing loop holes. so that's something i hear you, i hear art laffer, all the fly supply siders talking about. maybe you guys would agree with that a well there are lots of loopholes to be closed. president obama himself said that. >> if i may, real tax reform,

whether it's individual or corporate, yes, get rid of the inflexible and unnecessary -- >> spending through the tax cut. >> but you're supposed to lower marginal tax rates on the other side. >> that's right. >> not only to use the revenues properly, but to create more incentives to save and invest. this economy, doug holtz-eakin -- >> there is not going to be tax cut. >> this economy is not producing long-lived business investment. >> that's true. >> the old-fashioned way. >> it's not. >> in factories and warehouses and stuff that is -- maybe there were. [ overlapping dialog ] >> gentlemen, gentlemen. wait a minute. >> were put in the code to fix it. >> you like the tax expenditures? >> no. i hate the income tax code. that's the problem. expenditures are fixable. >> and the business side too. don't forget the business tax code. >> the business tax code is terrible in the united states.

>> agreed. >> and it is a problem for investment. it's not just taxes there is no silver bullet. it's also the regulatory environment, and an energy company has no idea what the rules are 20 years out, 30 years out. they can't do that. and that's our biggest growth factor right now. let me finish, let me finish. and i just want to point out that three years ago, i debated jared. and he redefined tax reform from broaden the base to lower the rates to broaden the base, raise the rates. >> i know it's a brilliant thought. just hold it. we're moving through the 8:00 hour, and we have to do a station check. our panel is going to be back, jared bernstein, doug holtz-eakin and larry holler. i'm larry kudlow. we're going to stay right here. we're watching the senate take its final vote of reforms. you have to reset. that's one of the things you have to do on tv and radio.

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