well, netflix did it. we put out a couple of barriers there, told you what they hado i try tosomewhere. i promise to try to find it for you right here on "mad money." i'm jim cramer. i'll see you tomorrow! president obama speaking in the rose garden today, acknowledged that obama care website is off to a terrible start, and he pledged that help is on the way. but then he vigorously defended the new health care law, failing to admit that premiums are going sky-high, patient-doctor relationships will be busted. he particularly cited phony numbers on falling premiums and other costs. not true. and he failed to mention the job losses stemming from this massive tax and regulated approach. he really had no explanation for why his health secretary, kathleen sebelius, entertained only one bid for the whole obama care website, poured about $650

million into that abject failure. now the question is whether sebelius will be forced out, or whether she will testify before congress. but the overriding point is that a highly centralized government health care just won't work. it is the opposite of free market policies that would if given a chance. and then, the government's $13 billion fine for jpmorgan a shutdown? and oh, by the way, is jamie dimon being punished for his outspoken anti-regulatory reviews in his general criticism of obamanomics? all those stories and much more coming up on "the kudlow report," beginning right now. good evening. i'm larry kudlow. this is "the kudlow report." we're live here. it's 7:00 p.m. eastern and 4:00 p.m. pacific. earlier today, what should have been a mea culpa sometimes

sounded more like a pep rally as president obama acknowledged the catastrophic roll-out of obama care. take a listen. >> the product of the affordable care act for people without health insurance is quality health insurance that is affordable. and that product is working. it's really good. and it turns out there is a massive demand for it. so far the national website, healthcare.gov has been visited nearly 20 million times. 20 million times. >> all right. the president's glossy sales pitch, however, failed to acknowledge dismally low number of enrollees to date, reports of sky-high insurance premiums and deductibles that threatens to make his signature affordable care act largely unaffordable. people are being misled about the true costs of the law. nor did he offer any explanation for what went wrong. well, perhaps health and human

services secretary kathleen sebelius will be more forthcoming when she testifies before a congressional committee, now slated for october 30th. if she makes it that far before she is let go. let's bring in our distinguished guests to talk about this. dr. zeke emanuel, former omb special adviser for health policy. dr. scott gottlieb, american enterprise institute resident fellow. dr. gottlieb, i want to begin with you. let me know. tell me about your latest worry, these hidden costs that you call the next wave of woes. >> well, the next shoe to drop here really is the subsidies that people think they're going get to help offset the cost of the insurance and the premiums aren't going to materialize. a lot of what is hanging up the website right now is its inability to calculate the subsidies that people get to offset the costs of the premiums. so you can rest assured the people who get through that process are probably having incorrect calculations made. there soothe set supposed to offset the coinsurance and the copays for people who try to go

to use the health insurance and maybe hit a catastrophic limit that coinsurance, those subsidies are subject to a sequester. so the subsidies that people think they're getting when they go to the website, they're blatantly wrong. we know they're wrong. and there is probably little chance that the republicans are going to give targeted relief from the sequester just for obama care. >> all right. so let's get this straight right at the top and we'll get zeke's response. you're saying the subsidies for the premiums are going to come in lower than people expect, and you're also saying that other cost-sharing subsidies to pay out out-of-pocket expenses are themselves are going to come in lower. those are your two basic points? >> the more likely scenario is people are going to get subsidies right now that they're not entitled to and those are going to have to get clawed back from them on subsequent years tax return. so the money people think they're getting in many cases it's not going to materialize. the calculations will just have been wrong. >> all right. zeke emanuel, welcome back to the show. i want to get your take on what scott gottlieb is saying.

also, zeke, i'll just say one small thing. the whole verification process for income and subsidies is on the blink. >> first of all, let's be clear that the premiums people see and you don't have to go to the federal website. you can go to california, are very good premiums and very enticing for people the sign up for. now, there is an income verification step, and that is we want to be sure that people are claiming their income as accurately as they prove -- as they claim. and this will require the irs to verify with tax returns what they are getting. now, you might imagine that the income in 2014, the income tax you have for calculating it now is going to be a 2012 income tax. and so there will be a delay, and there will have to be a reconciliation. now scott says it's always going to be in the wrong direction. that's probably not true. and as long as people are accurate about predicting their income or nearly accurate, those subsidies won't be clawed back

as he claims. >> but scott -- >> wait a second. it's going to go both directions. some people are going to overestimate how much they earn and will get a difference in the subsidy. some people will underestimate. and part of the question is how much that fudge factor is. it's an estimate at this point because people haven't started 2014 and started earning income. but there is no other way of doing it if you're going to have a subsidy schedule. >> what i don't see, scott, just? response to zeke's point, there may be errors above. you're saying most of the errors are going to be below. >> probably. >> the whole verification thing is broken down. that was postponed. and you have said many times that the hub of this, the hub of this system, which reaches out to the irs, it reaches out to hhs, it reaches out to homeland security, it reaches out to different states, it reaches out to medicaid programs, you have often said that that hub system is not going to work. so why should we believe that the irs, which is part of that hub, is going to work? >> right. and that hub is designed to calculate the subsidies.

this is a program that told aetna that one individual had seven wives, i think, or something of that sort. aetna is getting all kinds of wrong information. there is no reason to believe that the subsidies are going to calculate correctly. you're right. zeke is right. some people might input the wrong income and then be subject to the clawback. but i think there is going to be problems with how this software calculates the subsidies, even for people who try to put this stuff in correctly, because that's where the breakdown. if you look at where this website is failing, it's failing in the hub that is used to try to verify income and do the verification and calculations across these different agencies. >> zeke? >> first of all, we have about five weeks until thanksgiving week, and i think that's the time when these glitches are going to have to be ironed out. and i do think we have this five-week window. most people are going to do their shopping. they're going to go window-shopping now and real shopping beginning around the thanksgiving period for starting their insurance coverage on january 1, 2014.

>> can they do it, zeke? a serious question. in other words, can the tech surge work? because if it doesn't work in the next couple months, i think you would agree, it may bring the whole individual mandate system down. >> look, i agree with you if in five weeks they don't get it working smoothly and easily, that will be a big disaster. but -- and, you know, i think i'm not in there, so i don't know exactly the scale of problems. i have talked to people who have been very close and they think that they can do it. i would say it's very important to recognize this is more blocking and tackling and solving problems. >> right. >> than big rocket science and trying to get a man on the moon. and therefore i do think it's something where it's a manpower issue, and they know they have to get it. and i certainly -- >> i agree with you. i basically agree. >> and i agree with you. we shouldn't have had a bad roll-out. this is something that could have been anticipated. >> right. >> and should have been managed well. i agree with that. >> here's what i don't get. >> there is larger issue here.

it's not just the website that is failing. this marketplace is failing. this was never really market. if you look at what is happening, providers aren't contracting with the exchange to offer coverage to patient. only 38% of hospitals have contracted with any managed care plan that is on the exchanges. and most of those hospitals have only contracted with one. and most of them are in rural parts of the country. and if you look at the exchanges, the plans themselves have been very selective what markets they go into try the game around the regulations. the regulations are so onerous that providers and plans aren't getting into it and it's a failed market. >> scott, that's not true. the easiest place to shop is california. go to california where you can do a lot of window-shopping, and you can see in l.a. you can get 53 plans at the silver level. 53 different plans at the silver level. >> but they're all the same plan, zeke. >> wait. let me finish. i agree with you. aetna went into 16 states only. and the reason that they're doing selectively is they don't know who is going to come in and buy. and so they want to protect their downside.

that's reasonable. once a year or two in, once they see who is going into the exchanges, they're going to offer in more places. there are plenty of insurers in big places like los angeles that has a very large number of the uninsured. >> what about the providers? in california i'm not sure that's a representative example. what about -- >> california is important because it's the biggest state and it has the third largest number of uninsured. >> it is a state that was regulated the same way the federal government is now trying to regulate the entire country before this legislation. what about the providers? you yourself have written about the consolidation that is taking place. aren't you concerned that the providers aren't getting into this market aren't discounting to try to capture the exchange? they're not discounting off of medicare. they're actually charging premiums. >>tt providers are pulling out or not coming in yet because they fear they are not ever going to get properly compensated for one budgetary reason or another. is that the issue for the doctors and the hospitals and the other providers? >> that's right. >> no. >> this will be a bad risk pool and they're not going to get paid adequately for the patients

who do enter this market. >> zeke, that's an issue. young people not signing up. elderly people will. young people are not going to wait 25 minutes for a phone call. the people who have existing illnesses may, but you're going to have a very unbalanced selection process here. >> again, i agree if by thanksgiving they have not fixed the glitches, and it's not easier and more smooth to go in and buy insurance. you're right. young people are note going to go through the rigmarole that is there now. they have to focus on the customer experience. they have to make it easy to window-shop and easy to purchase. and that's what they're going to have to do over the next five weeks. >> scott, just last one. why did that make it so hard to set up an account? i don't even mean the tech problem of getting in. let's just assume that they open up the websites and there is better accessibility. they make it so hard to begin to sign up, asking for personal information that people don't want to necessarily give. a whole lot of information. in other words, the original

shopping is so difficult. did they do that so people wouldn't get to stage 2 and 3 and understand what the prices are going to be? is that why they did that? >> well, they did that because they didn't want to show the prices without the subsidies that people would get. when we designed the part d website, we allowed the people to go online and see the plans and see the prices before they knew the full cost of the subsidies and what it would actually cost them. in this case, they wanted people to only see the prices once the subsidies were applied, because they were worried people might not come back if they saw the sticker price and didn't know how much they would get subsidized. >> but look, again, you could have done that without having to enroll first. i think that was a strategic mistake. california allows you to do a lot of window-shopping just by saying look, what your number is and then calculating what the subsidy would be. >> right. >> and you don't have to enroll in california just to window-shop. >> no, i know. >> welcome to california. >> the enrollment process is so difficult. i think it's -- besides the technological stuff, i think in content people just don't want

to do it. they didn't know what they were getting into it. they don't want to give up everything. and there is not enough information at the top. i got to get out of here. this debate is going to go on. dr. scott gottlieb, thank you. dr. zeke emanuel, thank you for coming back. stocks took a bit of a breather today, but the big delayed jobs report is due out tomorrow. we have a slew of new data during the week coming up. let me just say with the fiscal crisis on pause, rising profits and a very easy money fed, i think all that bodes pretty well for stocks. we'll talk it over with two top investor just ahead. and later on we have two new developments in the story behind this video of a boy scout leader vandalizing a landmark in utah park. this will make you mad. and once again i say don't forget free market capitalism. it's the best path to prosperity. it would work on the health economy just like ever place else if we just gave it a chance. i'm kudlow. we'll be right back.

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welcome back to "the kudlow report." i'm dominic chu with this news alert. stocks are starting the week off with a flat session. the dow is down about 7 points. the nasdaq up 5. and the s&p 500 getting less than a point, but technically that is a new record high.

and we want to show you the price of oil, falling under $100 a barrel for the first time in more than three months. this is weird to say on a monday. tomorrow is the jobs report day. labor department will release the september employment situation report tomorrow. that, of course, larry, means nonforeign payrolls and of course the unemployment rate. back over to you. >> the street talk, dominic. what's the consensus? >> it could be a decent one, but it's the first since the government shutdown. all eyes on that for sure. >> many things. cnbc's dominic chu. a full week of data and earnings reports. what the markets be focused on? we bring in scott naigss, chief investment officer at nations shares. scott nations, are profits so far coming in a little better than people might have thought. bob pisani, google, ge, ingersoll, rand, a couple of banks, the netflix story was pretty good. as once again people underestimated profits?

>> i think they have underestimated profits. if you look at a company like mcdonald's, kind of going the other way. mcdonald's beats on the top line and doesn't do real well on the bottom line. that's a problem. on the other hand, a company like ge that really knocks it out of the park and has had a great run over the last few days, i think that is really the story going forward. so right now in our stock market, if you make stuff, you're generally going to do well. if you make it out of metal, you're going to do really well. and if you make it out of metal and then you send it overseas, if you export it, then i think you're going to be in great shape. >> larry glaser, as we go through this metals making process and send it overseas, let me get your quick take on the drop in oil, below $100. >> i like that theme. i think when you look at the overseas market, when you look at the multinationals and the weaker dollar, initially the market is going to do that as a pause and the industrials and cyclical names. it's good for industrials. domestic manufacturing comes back in that environment there

is no doubt that's a positive ahead of the holiday shopping season that was looking kind of tepid. so we need that boost. that's probably the most bullish story that i see out there right now is the drop in oil makes everybody feel better, just like higher home prices make consumers feel more confident. >> you need another 10 bucks. you need another 10 bucks. >> it's coming, it's coming. >> all right, if it's coming, it's coming. >> it's coming, larry. >> let me ask you, scott, if oil is coming down another 10 bucks, what larry glazer is saying, don't you need a stronger dollar to do that? and isn't the new janet yellin dollar a bit on the soft side? >> well, the way that the dollar has been weak, oil has been weak today, that's really unusual. they don't usually move in the same direction like that. you would think that a stronger dollar would be a problem for oil. but the dollar is get stronger here, larry. it can get stronger. >> sure. >> and not really get into new grounds. so it can get a little bit stronger. bring oil down a little bit, and the dollar doesn't have to make new highs to do that.

it can get back to where it was a couple of days ago, say 30 days ago. >> go ahead, larry. >> well, i think the risk in this story is actually the weaker dollar. look, initially this market wants to look at everything as a positive. ultimately, the feds' dovish policies may not be quite in agreement with the global economy. if other aren't quite so dovish as we are, they may start to hit the dollar. i think that would certainly frighten the market a little bit. the dysfunction is one thing. i don't like a weak dollar. i don't like it in the story. i think that would give a chill to the market that is not priced in yet. obviously it's good for profits initially, but that's very shortsighted an not long last. you can buy ge on a weaker dollar, it's great for industrials, but you pay for it in the long run. the fed easy money has long-term consequences, and we'll see that. >> scott nations, what are your picks? what your favorite investment picks right now? >> i like anything that is made -- any company that makes stuff out of metal and sends it overseas that would be ge. you mentioned some of them. ge has had a great run.

ingersoll-rand. caterpillar because the china story is turning around. and probably my best pick would be deere. they make stuff out of metal. they send it overseas. p/e is ridiculously low, below ten. and the fact that farmers are going to have a bumper crop this year whether it's corn or beans is going to do really well for deere. >> larry glazer, what are your top investment picks? >> the industrial names i think make a lot of sense. actually with that weaker dollar concept looking overseas, looking at the multinational names, what would scare me in this market where you start to rotate out of some of the momentum names. netflix, earnings, we look at going earnings. that's kind of shades of 1999. what a great time to rotate into more evergreen companies with long-lasting earnings that are not going to be quite the multiple expansion story. the social immediate where, the teslas of the world, if you're wrong, you're really going to get hurt. and that's not the game people really want to be in. we need to get people back into the market. lots of solid ways to do that on the industrial front. november not so much in the

social media front. i don't know if it's even an industry. i think it's a subsect. >> appreciate it very much. now we have two new developments in this story of a boy scout leader caught on tape vandalizing an ancient landmark in a utah park. you won't believe what this guy is claiming about his physical condition. dominic chu is going to be back with that story and much more market flash, next up on "kudlow." ♪ ♪ ♪

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after-hours trading. cnbc's dominic chu joins us now with that story and other headlines. but dom, you're saying the ceo reed hastings put out a little warning? he made comments about it, speaking about how far the stock has come in the time it has. it's interesting there. but let's talk about this, larry. what we have is a stock that is up about 38 or so dollars in the after hours. that's 11% in the after-hours move. so here are the headline numbers. 52 cents a share. really, $1.1 billion in sales. both of those numbers are better than expectations. be the key number for netflix here is subscribers. it added 1.3 million domestic streaming subscribers in the quarter, and 1.4 million international ones in the quarter. so the street seems to like those particular numbers. and larry, you talked earlier about the president's speech. remember that this morning? we wanted to give you an update on this woman who was standing behind the president. you can see her in the red dress. she starts to wobble. then the president and the man

behind her catches her like she seems like she is about to faint. her name is carmel allison. she has diabetes. she is pregnant, and she is okay. that is the key operative thing there. just got a little light headed there. >> glad to hear that. lastly, larry, this is a very controversial video that came out over the weekend. it's a boy scout leader pushing over an ancient rock at a state park in utah. now, the boy scouts fired both men in the video saying they should not have interfered with nature. now, though, one of the men in this video is facing additional scrutiny. glenn taylor is the guy. the man who pushed the boulder filed a lawsuit last month claiming he is permanently disabled after a car accident in 2009. he is suing the other driver in the accident saying he has endured great pain and suffering, impairment, and loss of joy of life. but larry, a video of you of course pushing over massive boulder may not, and again, may not help your case in trying to say that you're permanently

disabled. >> you know, people are taking too much advantage of all the disability benefits coming out of the government. that's where i classify this. i think that the government needs to tighten up its eligibility. we are paying out too many disability benefits. maybe this guy has it. okay. i don't want to judge him. i'm just saying with this pushing the rock over -- >> that's not a small feat right there. that's a very large rock. >> all right. dominic chu, as always, great stuff. you can come back and join us in a couple of minutes. but now, what is up with this incredible $13 billion shakedown of jpmorgan? cnbc's kate kelly asks ceo jamie dimon about it today, and she will join us, next up on "kudlow." the american dream is of a better future,

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jpmorgan in the process of making a huge settlement with the federal government. but criminal charges are still possible. cnbc's own kate kelly has all the details. good evening, kate. >> larry, jpmorgan appears to be just days away from a settlement with federal prosecutors that would bring a close to the vast majority of the mortgage-backed securities litigation it has been facing in recent weeks. the latest agreement which would be for a landmark $13 billion

pact break downs in a couple of ways. about $4 billion would go to the fhfa. about $5 billion to the justice department as well as to the new york ag, and then a $4 billion consumer relief fund that would also be created. if all the i's can be dotted and t's crossed, we could see this announced as early as the end of this week, although final details are still being finalized. however, the settlement does not as envisioned encompass an end to the potential criminal litigation that jpmorgan is facing, which could result in suits against individuals or even potentially a corporate indictment of the firm. as part of its talks with doj's attorney general, eric holder, jamie dimon, jpmorgan's ceo sought a nonprosecution agreement. but we're told he was unable to reach it, at least as of friday night when the current deal was struck. i button holed dimon this morning on his way to work and asked him how he felt about the ongoing talks. here is what he had to say.

>> you've been staying more how people have been coming in bright eyed and bushy tailed. >> and they're not happy to do it. >> 260,000 people around the world do a great job for our clients. >> we'll see if he can get investorress focused on his company's really solid performance this year and the fact that they've been at more than decade highs as recently as the middle of the summer, larry once this thing is resolved and we see really what is to come, if anything, on the criminal front. back to you. >> all right. many thanks. cnbc's kate kelly. so is jpmorgan getting a government shakedown or not? let's talk. here now is josh rosner, managing director of grand fisher and company, and larry mcdonald of new edge usa, author of "a colossal failure of common sense: the inside story of the collapse of lehman brothers." let me begin with larry mcdonald. the government asked jpmorgan during the crisis of 2008 buy up

bear stearns and then come back and buy washington mutual, wamu. jpmorgan did. now they're getting blamed in an arbitrary, incredible $13 billion sanction. i don't get this at all. you got to explain it to me. >> well, that's part of my point, larry. in my book, i go after a lot of bad guy. so i want the viewers to know that you're looking at someone that actually went a lot of the bad guys, exposed a lot of the bad guys. i would say above all what upsets me is the business practices between 2000 and 2006 of jpmorgan, the bank, and the leadership of jamie dimon back then were much cleaner than the lehmans, the bear stearns of the world, the washington mutuals, the countrywides. and it's a shame they're getting such blame. they essentially had the best business practices, and as you said in the case of bear stearns, the government was begging them to buy bear stearns. they only had two and a half days to make the decision. so i think overall it's unfair

based on those criteria. >> and i think the government was pushing them towards wamu, towards washington mutual. josh rosner, i'm not making a case that no mistakes were made in creating these mortgage securities. >> it's more than mistakes, larry. >> i'm not making that case. but i'm making a two-point case, and then i'll let you respond. number one, i think jpmorgan did the government a favor during a financial crisis period. that's point number one. all right. point number two, this $13 billion number, particularly when you break it down as kate kelly did, some of it is going to fannie and freddie. some of it is going to wacko obama housing policies, and some kind of new consumer relief fund. this is an arbitrary and political hosing of jpmorgan. there is no objective reason for this number. >> well, okay. so i'll respond to that in a few ways. first of all, the $4 billion consumer relief fund i think is deeply problematic. remember, even in the allegations, consumers weren't

harmed by the origination problems. investors were. and it's no help here for investors. >> right. >> in mortgage-backed securities. >> so why did they do that? let's just stop there. >> that's political. >> totally political. >> if you remember, larry, you didn't even pitch reckless endangerment, my book with gretchen morganson. >> we should have. a great book. >> we know the whole washington-wall street connection in that regard. now, let's go to your points. first of all, in the case of bear stearns, the fed took most of the troubled assets of bear stearns. that is what became maiden lane. so the government did help them out in bear stearns. but even beyond that, the problem isn't even the acquisition. it's that since 2008, jpmorgan has done everything it can to stymie investor efforts to get loan files and find out the offenses in origination that they've been exposed to. on washington mutual, jpmorgan was one of four bidders. the government did not twist their arm to be the highest bidder, and as hank paulson said

on cnbc a week ago, jamie dimon knew he wasn't indemnified on the washington mutual acquisition. so he knew what he was buying. in fact, between 2008, september 2008 when he acquired washington mutual and the end of 2009, jpmorgan was reserving for washington mutual putbacks. >> okay. but my point here again is this number $13 billion. i just don't understand the number. and you know, you talked about this consumer relief fund. here is something else i don't get. in your book, in your excellent book with gretchen morganson, you finger fannie mae. you also finger freddie mac. so why should jpmorgan put up, what is it, $4 billion to fannie and freddie as though fannie and freddie were not culpable for their own mistakes? i mean this smacks of politics. and i want to add this point. you can respond. i want you both to respond. jamie dimon, i know he has made mistakes. i'm not arguing that. i know the bank made mistakes. but dimon was a critic of

obamanomics. dimon was a big critic of the glass -- of the dodd/frank regulatory bill. and dimon has been a big critic of overregulation of business now for several years. is this payback to dimon as well as these other trumped up charges? >> i don't think so. >> i think when you look at the consumer relief fund, it clearly has very serious political aspects to it that don't have anything to do with the fundamentals of the allegations. but i don't think that it's targeted at jpmorgan. first of all, you know, jamie dimon i think it was in 2010, when asked what his biggest regret was, his biggest regret was almost 40% of their originations, not wamu, not bear, but jpmorgan's were through third party originators, and those were problematic loans. those were the worst of jpmorgan's. >> okay. i buy that. i'm not disagreeing with any of your facts. but larry mcdonald, put those facts into context. in other words, mistakes were made. this was many years ago. we're in the healing process

now, at least that's what i thought. to me, this kind of extremely punitive penalty, which is still open-ended in terms of criminal charges, is a political settlement. it's like we didn't put anybody in jail. now we're going to go and get the bad guys. it's a war on banks, and i think it's part of obama's war on business. >> but, larry, you don't seem to -- >> i want larry mcdonald to jump in on this. >> okay. i would say going forward, larry, think about the next financial crisis. think about the next problem. businesses and business owners, banking leaders have to know the terms and the deals. and the problem is going forward, i think there will be some -- the next jamie dimon maybe ten years from now, five years from now, maybe next year maybe doesn't take an active role. >> right. >> and i think at the end of the day, here is my big point. what i really am disgusted with since 2008 is all around the world politicians are picking winner and losers. they picked winners and losers in greece.

they picked winners and losers in cypress. they picked winners and losers at general motors and chrysler. capitalism is changing. you've got political people and dictator and all kinds of people. >> yes, for the worse. >> picking winners and losers. >> you both agree with me. i can see josh shaking his head. >> i absolutely agree. >> i think that's so important. again, josh, i am not making the case that no mistakes were made. >> larry, my only point -- >> i'm not peking the case. what i am saying is how you get $13 billion, how you divide it up the way you divide it up with this phony consumer relief fan and fannie and freddie for heaven's sakes. and this thing looks so political. to go to larry mcdonald's point, it's some kind of political payback or some kind of crony capitalism in reverse. ate in some way, you know, helped. and we keep allowing settlements to occur to the disadvantage of institutional investors. >> look, i'd like to talk more than. i think that's a sensible point. and i think there has to be a

set of rules, gentlemen. if we do this with investors and so forth, there's got to be a set of rules so these banks, now we know what happened in the past. but what is going to happen in the future. anyway, thank you, gentlemen. josh rosner and larry mcdonald, we appreciate it. now, up next, we're going to talk to professor alan dershowitz. this is a real treat, about his new book. we're going ask him the principle, well meaning liberalism of his youth is dead. please stay with us. we'll be right back. what's your function? ♪lk sn hooking up the country helping business run ♪ ♪ trains! they haul everything, safely and on time. ♪ tracks! they connect the factories built along the lines. and that means jobs, lots of people, making lots and lots of things. let's get your business rolling now, everybody sing. ♪ norfolk southern what's your function? ♪ ♪ helping this big country move ahead as one ♪ ♪ norfolk southern how's that function? ♪

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welcome back to "the kudlow report." i'm dominic chu. some federal workers who were furloughed during the shutdown are going to get double pay for their time off. and that's because the length of the furlough was uncertain and some workers filed for unemployment benefits. even though they're going to get fullback pay for those missed days, some states will allow them to keep their unemployment checks as well. it's hard to get an exact number of how many workers did this and how much it will cost, but this certainly has some americans, larry, pretty angry. >> you know, dominic, i won't get angry. i'll just say america is just such a great country. i'll leave it at that.

anyway, let's move on. great fun now. great honor. he has earned the reputation as perhaps the winningest and most combative criminal defense lawyer in the country. and he has defended some of the most high profile clients in recent memory. o.j. simpson, mike tyson, bill clinton to name just a few. joining me now on set famed attorney alan dershowitz who after 50 years is now in his final semester of teaching law at the harvard law school. he has written a new book, taking the stand, my life in the law. it's a great pleasure, mr. dershowitz. i appreciate it. i don't want to go deep on this, but you heard the jpmorgan story. >> yes. >> the government is taking $13 billion and god knows what. would you defend jpmorgan? >> absolutely. the problem is you can't defend large corporations that have thousands and thousands of employees against an indictment. once they've been indicted, they can be put out of business. so the presumption of innocence doesn't operate in these large cases. a the government, basically

dictates the terms of the settlement because you're terrified to litigate even cases you can win. >> right. that's just -- that's the arthur andersen syndrome. >> right. >> puts the whole thing out of business. >> they won and look what happened. they were out of business. >> let's go to some interesting things. my thesis, having you as a guest on our show from time to time which is a great pleasure. my thesis is alan dershowitz is not as liberal as people think he is. now, i just want to begin with this. you're a great defend other telephone first amendment, freedom of speech of all times. so am i i'm a reagan conservative. i completely agree with you. >> i almost wrote a book called "why i left the left but couldn't join the right." if i were living in england today, coy be a member of the conservative party. the conservative party in england opposes the death penalty, favors a woman's rights to choose abortion, is in favor of gay rights. they just differ on foreign policy. they have a tougher foreign policy. they differ on economic issues systems of i am a civil libertarian liberal, but i still

call myself a liberal. and i'm proud of it. >> all right. well, be proud of it. one of the things i read, for example, an issue, abortion. very contentious issue. you said you felt it should be in the political -- the legislative political arena. >> absolutely. >> state by state rather than the federal government. heck, i'm pro-life, and agree with you. >> i can't find anything in the constitution that says you prefer the life of the mother or the convenience of the mother if it's an abortion by choice over the potential life of the fetus. look, i think women if they're required to not have abortions could die and could -- so i favor a woman's right to choose. but i can't find it in the constitution. and everything i favor i don't think is necessarily constitutionally based. >> all right. let's go to another one. you've been at harvard all these years. the issue of diversity and discrimination on campuses and so forth and so on. from what i gathered, you once said you want diversity at harvard, but you don't want it by race, and you are going to

defend or you want evangelical christians to be on the faculty to give it diversity. >> absolutely. i want more gunowners, evangelical christians, people in the right. look, one of the best students ever in my class was ted cruz. he came to my class, put his right hand up and never put it down the whole semester. and he had added tremendous diversity to the class. i think diversity is a function of many things. also race. race matters. and i think the fact that we have had so many prominent african american leaders come out of harvard law school is a testament to that. but it should be class-based. it should be based on how tar you have come and the opportunities that you have taken advantage of. >> just one brief jump into foreign policy. you are a strong backer of israel. >> but i am -- >> that makes you a conservative too. >> well, that's interesting. >> i think the liberal left, if i may, the liberal left has drifted away from israel and towards palestinian and just being soft on israeli defense. >> i agree with that. in the last chapter of my book, i talk about how for seven

decades of my life i have always been identified as a liberal. i haven't changed my ideas on any of these issues, but because i support israel, i want to see it move towards a solution. because of that i'm now called a neo fascist, a right winger. you ask young people on college campuses they think i'm a conservative because of my views on israel. i support israel from a liberal and civil liberties and human rights perspective. and i throw out the following challenge to anybody in the world. nobody has ever answered this. name a country in the world faced with comparable threats that has ever had a better human rights record than israel. you can't do it. >> let's pursue that one more point. in this global terror war in which israel is clearly a part and your support of israel, what do you make of the nsa controversy? is the nsa in violation of individual rights and freedoms, or is it necessary national security tool? >> it's both. in my book i have a chapter on how hard it is to balance national security, freedom of speech, freedom of privacy.

there are no simple-minded answers to this question. we need to know that a lot of what we talk about today as classified shouldn't be classified. we have too many secrets. on the other hand, young people today don't seem to care about privacy. everything is on facebook. and privacy is defined constitutionalally as reasonable expectation of privacy. and i think the next generation won't expect as much privacy. and that's going to be a tragedy. >> would you stay with the nsa? >> i would stay with the nsa, definitely. >> tweak it? >> i would tweak it. and make sure there is a real court, not kind of fake court we have now where both sides can present issues where you have lawyers presenting the other side. >> so i read some place -- i read some place that your most famous football halfback defender is going to get out of jail, okay. and he's going to start up a television talk show of some kind or another. talk to me about your most famous football defendant. >> first of all, you don't have

to like your lients. you don't have to approve of anything that they do. when i won the klaus van bulow case, i said klaus, get out of america. nobody wants to see you. i said the same thing to o.j. simpson. didn't listen. got in trouble in florida. got in trouble in nevada. i'm not responsible for how he lives the rest of his life. i'll tell you a funny story that is in my book. bibinetanyahu when he first got elected called me into his office. did o.j. do it? i said does israel have nuclear weapons? i can't tell you that! >> many thanks, professor alan dershowitz. new book, "taking the stand." it's available now. go out and buy. it's going to be great stuff. thanks for coming on the show. now, budget negotiations haven't really started, but democrats already digging in on one of the most crucial issues. you're to be layer how one union leader is threatening the whole process in congress. that's next up on "kudlow." she's always been able to brighten your day.

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welcome back to "the kudlow report." okay. we have a couple of union stories we want to talk about this evening. but first, let me bring in dominic chu to give us all the details. >> well, larry, it was a messy commute in the bay area this morning as far as today, four of the strikes in the mass transportation workers out there in the bay area. now, today union leaders and officials for bart, which is the

bay area rapid transit train system, if you will, are meeting with federal mediators to try to end the strike. one of the issue here is work rules. bart says the rules prevent technological improvements. the union has agreed to make some changes in those rules. now moving on. in the next few months, we're going to hear a lot about entitlements. republicans are going to ask for entitlement reform, but it's going to be very difficult to get democrats to go along with this. listen to what damon silvers of the afl-cio told cnbc. >> we're being really clear. we are not going to give cover to democrats who think it's a good idea to take away economic security from our most vulnerable citizens. we're extremely clear about that. and we're not embarrassed about it whatsoever. >> so larry, unions are still very powerful in this country. and it really guess to show how difficult the path forward this particular issue is going to be. >> you're dead right, dom. thanks very much. and i just want to give you my take from a column i just wrote. it's posted up on cnbc.com and elsewhere. listen to this.

congressional republicans, wise up. because the democrats do not want any entitlement reforms whatsoever. here is what the dems do want. they want a trillion dollar tax hike. and the gop has got to stick to its guns on the budget-cutting sequester, cutting spending, good for the economy. and that is their leverage to stop a hard-charging president obama after his alleged shutdown victory. president obama angling for 2014. now, the republicans have leverage because under current law, the sequester stays in place, and the government slims down. and i think the economy benefits. but the gop can't kid itself about the entitlement. >> it's interesting, because as much as we have seen the spending picture go done and down because of the sequester, it's not like our economy has gone down the tubes with it. >> right, right. >> maybe that's a good sign overall. >> it is. i've always been a believer supply-side, free market.

smaller government gets better growth. look at all the big countries around the world. bigger government gets lower growth. and i think we have to be cognizant of that. but all i'm saying is to budget chairman paul ryan, for example, and others who want to make a deal, i have nothing against deals. but don't think for one minute you're going to get real entitlement reform to give up the budget-cutting sequester. ain't going to happen. democrats don't want entitlement reform. and if there is any, it will be completely phony. so republicans better wise up. just stick to their guns. cut spending. they do it well. dominic chu, as always, thanks very much. that's it for this show. thanks for watching. i'm larry kudlow. back on monday. my mantra?

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