overheated. we want them to die down. we don't want them to take the rest of the market with them. though. i like to say, there's always a bull market somewhere and i promise to try to find it just for you a bad day for gm just got a lot worse. first it was news of the senate probe into its delayed decision to recall 1.6 million cars, but now we have a report of a full blown federal criminal investigation. gm shares slaughtered today, down over 5% as a result. plus, has the cia been spying on congress? senator dianne feinstein, chair of the intelligence committee, says yes. and if that's true, it is unconstitutional and illegal. and since when in america can the government just shut down a business without any due process? that's what new york mayor bill de blasio is trying to do to the horse carriage industry in the city. it's become a national story,

and we're going to talk to former mayor rudy giuliani about that and the closing of charter schools and whether president obama is tough enough on russia. all that and more coming up on "the kudlow report" beginning right now. good evening, everyone. i'm larry kudlow. this is "the kudlow report." it's 7:00 p.m. eastern, four pacific. we're live. our first big story tonight is a criminal investigation into general motors' handling of a recall. that news sent gm shares down 5% today. phil lebeau joins us now on the phone to give us the full story. good evening, phil. >> good evening, larry. this is a tough day for general motors. you mentioned there are now two more investigations the company has to deal with, the latest coming late this afternoon. word that the new york office of the u.s. attorney's office is investigating a criminal probe

into how general motors handled the recall of 1.6 million vehicles. we don't know all the questions that will be involved in the investigation, but it basically comes down to this, what did general motors know, when did they know it, and when did they not disclose sooner what was behind this recall of 1.6 million vehicles. remember, that has to do with a faulty ignition key that was linked with 31 accidents, 13 deaths in those accidents between the years 2004 and 2014. remember, gm did the recall earlier this year, and a lot of people are saying you knew about this ten years ago, why didn't you hear something sooner than this? right now you look at the investigation related to this recall, larry, you're looking at u.s. department of justice, two congressional hearings that are going to be coming up in the next few weeks, and then you also have the national highway traffic safety administration asking its own questions of general motors, 107 to be

specific, about the handling of this recall. there is no doubt this is a huge challenge for new gm ceo as she launches her own internal investigation as to how the company investigates this recall. now, ukraine's new prime minister is coming to the u.s. for a meeting with president obama tomorrow to discuss the crimea story. but as that happens, russia's grip on crimea seems to be tightening. ian williams is in crimea for us this evening. good evening, ian. >> reporter: good day to you, larry. russia continuing to tighten its grip on this peninsula. just days ahead of a referendum which will determine whether crimea becomes part of russia. today, we travel to a small ukrainian naval base, which is being blockaded by the russians. now, the ukrainians there, the

morale was good. they have four ships and a submarine, but those vessels aren't going anywhere because the russians have put an underwater fence across the mouth of the bay. they also have a couple of tug style boats to block any exit from the bay, and a rather menacing looking corvette was cruising back and forth a little bit further out at sea. the guys there said they were still loyal to kiev, but they still had enough supplies, but they were very nervous. that does follow a certain pattern of the blockading of ukrainian bases right across crimea and the beefing of up of check points. former president yanukovych said he was still the rightful ruler of ukraine and said that he'd be going back soon. well, that's not likely, because even those who aren't particularly friendly with the new government here regard him as a pretty discredited figure. also, the eu said they were going to come up with a package

of trade liberalization measures. another much-needed help that will be for the ukrainian economy. at the same time, as part of the tightening russian grip, the only flight that was allowed into the airport today here was from moscow. all other domestic and international flights were cancelled. a pretty clear signal from the new rulers here as to where they see their future. back to you, larry. >> all right, as always, many thanks to ian williams. now, got another one. this story is outrageous. it's everywhere. the latest bombshell dropped in the ongoing who's spying on whom narrative that is playing out under the obama administration. this time, it's senator dianne feinstein, she's a democrat. she's accusing the cia of spying on congress. that's right. here now to discuss, my very good friend john baxler, syndicated talk show host. i'm going to see you later on

radio tonight. what do you make of this story? the cia seems to have hacked into senate intelligence committee files or blocked off files. what's going on here? >> i asked immediately, i told them kudlow wanted to know, and here's what i got, a mixed message. from overseas, i was told yes, absolutely. and much worse. that the cia must be held accountable for its conduct, especially towards the two intelligence select committees. from this side, i've got doubts raised because the people speaking out now are liberal democrats. and that makes my source very anxious about how trustworthy liberal democrats are when they come to blowing the whistle on the obama administration. so it's a mixed message, larry. i think as we go forward, we'll have more information because there are other committees that have raised questions about the cia and interference. and let's put it this way. people have been questioned recently about some scandals that are floating around in the obama administration, and there are doubts raised about how the cia has presented all the

information. >> a lot of this stuff is about something called the panetta review. leon panetta, former cia director before he became defense secretary under president obama. okay, so, the panetta review is apparently a chronicle of all the interrogations that went on during the iraq and afghanistan war, in various places, guantanamo and various places. from what i'm hearing and surmising, a lot of people in the cia do not want that panetta review, they do not want any chronicle of those interrogations to get out. and they may be right back. >> they may be right, but i want to press this, larry. things have happened since 2009 that raise large questions about the cia's conduct and whether it's been transparent to the intelligence committees. these are behind closed doors. that is of concern as well, larry. the cia didn't stop with the panetta review or the interrogations during the iraq war or at guantanamo. the cia is an active hand in

shaping american intelligence. and that's what i'm hearing from overseas, that the cia has pushed too hard and now congress is pushing back. >> right. >> larry, dianne feinstein is a major democrat. this is a major voice in the democratic party. >> i know she is. and she's usually very positive towards the intelligence committee. let me switch gears real fast. there is much talk today, as you well know, by the french and others that the time for tough sanctions on russia is coming. these are trade sanctions, these are economic sanctions, these are banking sanctions, these are visa sanctions. let me ask you this. in your opinion, will president obama go along with these sanctions? >> no, he will not. the european union is at risk if there are sanctions levelled on russia. this is not just about russia. this is about the eurasian su r

supercontinent. it is wrong-headed to punish russia because you will also punish the eu. that's our trading partner. i'm aware of the fact that state to state there are irrational decisions made in the heat of the moment, but at this point, i think russia is within bounds for its claims of its neighbor ukraine and i don't think sanctions will stop or reverse history. >> all right, we'll leave it there. john batchelor, thank you. now we've got e-mails to and from lois learner that was released today.rner that was released today. they also depict lerner as a very desperate liberal political zealot. talk radio fire brand tony katz is about to join us. he's going to give us the rundown. we're starting to see real pushback against a blatant government move against free enterprise. we're talking about new york's mayor trying to unilaterally ban horse carriages.

new york's great former mayor rudy giuliani, i call him america's mayor. he's going to join us, he's going to talk about that, he's going to talk about charter schools, he's going to talk about whether mr. obama is playing his cards right in ukraine. let me just remind, don't forget, free market capitalism, always the best path to prosperity. that includes the horse carriage business in new york city, which i love. we'll be right back. but first, first, have you seen president obama's appearance today on the comedy video "between two ferns"? here's a special highlight. >> let's get this out of the way. what did you come here to plug? >> first of all, i think it's fair to say i wouldn't be with you here today if i didn't have something to plug. have you heard of the affordable care act? >> yeah, i heard about that. that's the thing that doesn't work. why would you get the guy who created the zune to make your website? >> healthcare.gov works great now. ♪

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my counsel has advised me that i have not waived my constitutional rights under the fifth amendment and i will decline to answer any questions on the subject matter of this hearing. >> so you're not going to tell us who wanted to fix the problem caused by citizens united. >> on the advice of my counsel,

i exercise my fifth amendment right and decline to answer that question. >> lois lerner, who was responsible for blocking non-profit tax exempt tea party groups, in my humble opinion, she may be headed for a congressional vote of contempt and possibly criminal charges after a scathing few report is out today as well as a flood of newly released e-mails. joining us to critique this whole process, we welcome back tea party supporter and radio talk show host tony katz. how are you? let me just ask you, what do you know about -- is there any new news on this congressional report and the e-mails? i know they believe that lerner is going to be held in contempt. they can vote on that. but is there anything new? was there a smoking gun today? >> i think the only thing new is that the people who thought that this was some kind of republican attack on lois lerner, the most surprised man in america is probably congressman elijah cummings, democrat of maryland, who thought this whole thing was

a joke. asked darrell issa the other day what he was hiding when he decided enough of this hearing when he was asked if lois lerner isn't going to talk. the real thing is that this wasn't something that came out of the blue. this was long. this was creative. this was a willing desire to go after these groups, because of a crew ideological dislike of these groups. you take a look at lois lerner's history. she was if the fac, losing the case -- >> she's a big liberal. you're quite right. she's a big liberal. she runs this tax exempt division and she doesn't like it one bit that she has to grant the legal status to these tea party groups. she wants citizens united repealed. she wants congress to vote. she wants the fec to give her help. here's the deal, though. i believe, okay, i believe political strategy here, lois lerner as the head of this in

the irs, basically shut down the tea groups, the tea party groups during the 2012 election. that was her goal. >> without question. >> and unfortunately, she succeeded. now here's the thing, tony. here's the bullish side of me. this is kudlow the optimist. now the tea party groups are mostly getting certified, okay? finally. and they are going to be back with a vengeance this november. so lerner ultimately is going to fail. that's my take. >> you can talk about the fact that reports of the tea party's death has been greatly exaggerated all to the horror of harry reid. but we can't talk about this and say all right, they're now getting certified. that's like saying i got shot but at least you're at a hospital. we have to discuss that the irs was used against the american people. lois lerner was on some kind of martyrdom mission. was directed in a group of

people who really thought that was important to not allow the citizens united decision to stand. one of the quotes was somebody has to do something about it. created this multi-tier approach. carter hull, 48 years at the irs, carter hull says he has never had to send anything to counsel in order to get it approved. this step on step on step. this is sick stuff that we're witnessing. >> a lot of tea party groups -- the irs is being embarrassed. >> it's not enough. >> now, i think they should make an example of lois lerner, but that assumes that -- a contempt vote is one thing. criminal charges are another. but yes, i want them to go afflalo wafte afflaafte after lois lerner. my point, though, is this. the tea party will be back, tony. it's a very important political point. lois lerner notwithstanding. i talked to rick santelli about

this. the tea party will be back. they were muzzled in 2012. they'll be back in 2014. and they'll make a huge difference. this is what the mainstream media will not accept. they're going to make a huge difference in these elections in 2014. >> there is no doubt. absolutely no doubt about it. of course they're going to speak strongly. when these things happen, they're going to speak even stronger. if you want to know where this really has an impact, it has an impact on the 2014 race and specifically those senate races. yes, you still have to go afflaafte after lois lerner, but it was president obama who said there was not a smidgen of corruption in the irs. this is what happens when you talk to zack galifianakis rather than looking into the irs. this will be a story for the 2014 midterms. and it will be more people running for president obama like they should. >> it's going to be the same thing about 2010, it was about obama care.

in 2012, it should have been about obamacare, but the tea party was muzzled. in 2014, it is going to be about obamacare and other issues. it's very ironic that the irs is supposed to enforce obamacare. and i don't believe they ever will. tony katz, great to see you, buddy. >> great to see you. now, folks, it's 2014, but some states think you can't be trusted to buy a new car without an authorized dealer. that includes the state of new jersey, which just banned direct tesla sales. we're about to take you live to a tesla store front that will have you closed down in about two weeks. don't forget, america's mayor rudy giuliani on his way to join us in just a couple minutes. we're going to talk about the new push to ban horse carriages in new york city. and the ukraine and charter schools. i'm kudlow. please stay with us. about business internet?

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[ shirley ] edward jones. this is shirley speaking. how may i help you? oh hey, neill, how are you? how was the trip? [ male announcer ] with nearly 7 million investors... [ shirley ] he's right here. hold on one sec. [ male announcer ] ...you'd expect us to have a highly skilled call center. kevin, neill holley's on line one. ok, great. [ male announcer ] and we do. it's how edward jones makes sense of investing. ♪ welcome back to "the kudlow report." so, the state of new jersey today passed a law to prevent car manufacturers from selling right to customers without the middle man of an auto dealer. doesn't really seem very free market to me. it's going to have a huge impact on tesla, which may have to close two stores because they don't meet those standards. the stocks down nearly 2% in today's session. bertha coombs is live at the

tesla store in short hills, new jersey. good evening, bertha. >> reporter: good evening, larry. this is one of two showrooms tesla has here in new jersey. today, the garden state becomes the third state to ban direct sales to customers by manufacturers. in a hearing in trenton, a lot of dealers speaking up against the tesla business model and the department of motor vehicles voting in favor of the rules change. you hear a young kid in here crying. a lot of tesla customers who came to the showroom this afternoon also upset about the rule change. a number of them saying it's just not right. >> this is not fair. this is not fair at all. i mean, what makes this not a dealership, that you can't come in here and get an oil change? i don't think so. you know, it's a dealership. >> reporter: well, effectively,

the rule says that in order to sell cars in new jersey, you have to have a franchise deal with a manufacturer as dealers do, and the dealers, no surprise, praise the decision, saying that ultimately, this is better for consumers. >> the tesla business model crushes competition, it ensures that there's a vertical monopoly on the sales process, and it restricts consumer access to very valuable and very important public safety considerations, warranty and safety services. >> reporter: now again, new jersey becomes the third state to ban direct sales. there is a measure under consideration in ohio as well. one tesla official speaking to reporters this afternoon saying new jersey definitely has given them the death penalty on this. they do plan to close those two stores here in the garden state by april 1st. larry? >> all right, many thanks,

bertha coombs. that is certainly no free market approach, in my judgment. now, let us move on. the federal government, one big redistributionist machine. you know, taking from peter and giving to paul. only now, this money transfer is up to 70% of total spending. and incredibly, it doesn't even really help poor people. our big government economic experts jared bernstein and jimmy are going to debate this next up on "kudlow."

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welcome back to "the kudlow report." we're broadcasting live from cnbc headquarters. so, are you ready for this eye-opening fact? checks to americans, that's entitlement, welfare, other transfer payments, all that's going to make up about 70% of all the money the government spends this year. it is a massive redistributionist money transfer machine. it's stealing from peter, robbing peter to pay paul. investors business daily crunched some numbers. if all these federal payments went only to the poorest americans, each of them would get an annual check for $56,000. how about that? here now is cnbc contributor jared bernstein, and jim

bethacou kbrve bethacougas. i'll just give the poor people about 55,000, we could take them down to 40,000, it would be a whole lot cheaper than where we're going. >> i mean, what that number illustrates is that we do have this giant wealth transfer machine that really isn't just directed at the poor. it's also directed at the middle class, a lot of wealthy people get checks. we could have a much better safety net. we'd have far fewer people in poverty if we target our efforts toward the bottom rather than try to create some universal grand welfare state of the sort jared bernstein dreams about. >> and that includes obamacare. for the administration to worry so much about inequality, as jimmy p said, that budget doesn't do anything for inequality. the poorest among us are getting less and less, all right? they used to get close to 30%. they're down to 20%.

and if you look at the budget, they're going down to 17%. now, that is not helping the poor. >> there's been many, many inaccuracies stated so far. let me see how far i can get with this. first of all, the idea that the budget doesn't help the poor or help to diminish inequality. let me just talk about social security. because by the way, when jimmy and you talk about getting rid of all this stuff, a large part of what you're talking about getting rid of -- >> i don't remember saying getting rid of social security. >> social security and medicare. so listen, social security, without social security, 44% of seniors are poor. with social security, 9% of seniors are poor. this number, by the way, is being driven almost exclusively -- that is in terms of its growth, it's being driven almost exclusively by health care. now, health care in this country happens to be delivered by the private sector, but the government definitely ensures lots of elderly and poor people. and by the way, it does so more efficiently than the private sector. >> jared, why are you against

means testing? >> well, actually -- >> don't -- they want mitt romney to get that check. they don't want a means test. why? >> let me agree with you on a point, jimmy. while i wouldn't means test social security, i would change some of the formulas so that more wealthy people would get smaller benefits. so, you know, we would agree on that. and by the way, president obama actually has, not on social security, but on medicare, has 400 billion of savings in medicare in his budget. the problem with social security in this regard, jimmy, is that if you tried to means test or if you tried to take back some from the very top, you actually wouldn't save all that much money because the average social security beneficiary, the median, their income is like 24,000. >> you don't think all these programs could be more directed right at the poor rather than trying to create these sort of grand universal programs, which by the way, we're not going to be able to afford long-term without a value added tax.

unless, of course, that's your ultimate goal. >> no, i disagree. i think what's really driving the budget and this statistic that you guys are all wound up about, which frankly i don't find all that surprising, is the rise of health care costs. i mean, there is no path to fiscal rectitude sustainability without slowing the growth of health care costs. and frankly, we've actually been making some progress on that front. >> make sure you say government health care costs, thank you very much. >> private sector as well. >> i beg your pardon. private sector experiments. by the way, like medicare part d, like medicare advantage have brought down costs. that's the magic of the marketplace. but jimmy p, there's another thing that troubles me in here. if you take out social security and medicare, you're still left with this hardcore group of 20% that's below the poverty line. and i fear, as we've discussed before, that we're creating a poverty trap with this budget. that in fact, anybody who climbs the ladder of opportunity one

way or the other loses the benefits, goes into a higher tax bracket, things of that sort. they're just kind of stuck down there. and the omb bureaucrats, heaven forbid i was one many years ago, and the policymakers are not helping them. we're spending a lot of money and not helping poor people. and i'll tell you, you talk about wage subsidies. you were the guy that really helped the wage subsidies. i just give them $25,000 a year if that's what it took. pretty soon, it's going to be 90% of the budget. >> right now we're spending a trillion dollars a year on programs for low-income and poor people. but yet, the mobility out of that bottom 20% is only, like, half of what it is in a lot of european countries. that money is not being spent properly. i don't care we're going to be cutting a lot from that money. but certainly needs to be restructured, and increasing the benefits of working is one way

out. >> jared, you've gone from 40% -- just looking at this chart. investors business daily, they do their homework. gone from 40% to 70% of the budget, and that's just in the last couple decades. that's a lot of movement. so we're going to go bankrupt sooner than i thought, jared. >> a social insurance company with an army and pretty soon we won't be able to afford the army. >> obamacare, unless we stop it, obamacare is going to be the tipping point of bankruptcy. >> i don't understand all the hand wringing here, i really don't. this is about the composition of the federal budget. demographically, of course we're spending more on people. your whole redistributionist thing is a little bit wacko when you think of the fact that much of this spending is through the health care system. so it's going to hospitals and insurers and doctors. i don't know why that's redistribution. >> i'll tell you why -- >> also, one other point. >> jared, my friend -- >> we're spending less on war.

>> jared, my friend -- >> we're spending less on war. that's a good thing. >> i'm not sure that's a good idea. >> i'm glad we're spending less on wars. i hope that's the right thing to do. i'm not smart enough to know. but jared, my love, i've got to say there, too. the top 38%, 40%, the top 1%, rather pay 38% or 40% of that income that gets redistributed, so you are robbing peter to pay paul. i'm not even against that, if the payment to paul was done efficiently, as jimmy p is suggesting, or if we knew that we could stop this poverty trap. i'll give you the last word. >> that's a great point. and i think what we ought to be doing is instead of this broad assassination of every poverty program -- >> no! >> which i think is patently wrong. >> right. >> for example, we probably all agree that the earned income tax credit is an efficient, very positive program, which by the way is now 60 billion a year. so i'd be happy to have a discussion about how you'd want to deliver poverty relief more

efficiently, sure. that's a good talk to have. >> all right. another segment. >> throwing the baby out with the bath. >> i like babies. i like bath water. i do not like redistribution. 70%, that's a big number. gentlemen, thank you. now, markets took a step down today. small business confidence fell. that's not good. we have one prominent analyst who's predicting a recession. that's not good. but i've got another who's a roaring bull. go figure. we're going to talk about it with our money experts next. remember, america's mayor rudy giuliani just a few minutes away. we've got a lot of work for him tonight. she loves a lot of the same things you do.

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modest losses for the market today. the s&p lost ten. a couple of weird scenarios here. one is a recession scenario. one is a bull market scenario. by the way, i just want to put on the table, the small business confidence index fell. that's the national federation of independent business. so let's fry to sort this out. lee munson, portfolio sec. first of all, steve, i'll go to you. i didn't like the nfib.

on key points, it actually fell a lot and that troubles me. that may be weather, but i kind of doubt it. what do you think? >> i don't think it's weather, larry. i think it's policy. i think the fact is the animal spirits of america and american capitalism can't be unleashed because of overtaxation and overregulation. and nobody feels that more, by the way, than small business men and women. they are the ones who can't write regulations the way big companies can, and so i think we see small business increasingly pessimistic because they really feel the sting of regulation on a day-to-day basis. >> bill dunkleburg, he blamed uncertainties across the board on taxes, obamacare, the epa, minimum wage. minimum wage could really hurt a lot of these smaller businesses. lee munson, on the other hand, our great friend jeremy segel at

penn is a roaring bull and thinks, if i get this right, the dow is going to 18,000 and the s&p is going to 2,000. what's your take? >> well, i think the s&p could go to 2,200 before the end of the cycle. you have to remember, what my clients need to know is we're about 75% through this bull cycle right now. it could last two, three, four more years just because it was so deep in the first place. so we don't want to spend a lot of time worrying about, you know, where's the top or where is going to be the end of it. we're still in the cycle. we're still expanding the economy. i hate that survey too today because that's something that bulls love to look at. as a small business owner myself, it is unemployment insurance, health care, those things do prevent me from wanting to hire new people. but you just 1099 them, you move on. it takes courage to be a pig and you've got to ride this bull cycle all the way to the end. and that's why you always have bonds in your portfolio. >> it's interesting, steve cortez, i'm a big fan of jeremy

segel's. i've always been a big fan of stocks for the long run. i'm not a fan of really active management. but i must say, when i look at jeremy's numbers, he's really talking about a 10% rise from here. i don't know if that's a cycle high, but i suspect it is. if you believe that the market can go up another 10%, that's really a sell signal, isn't it? >> no. >> no one can pick the absolute top, just like nobody can pick the absolute bottom. >> if there's 10% of upside from here, that's a symmetric risk pigs get slaughtered in the end. it's been a magnificent run for the market. to me, the biggest overhang, and -- the bigger overhang is what's going on overseas. we've gotten terrible data out of asia lately. we've seen copper, an absolutely

key indicator, go down 7% over the last three sessions. if dr. copper -- it's known as the doctor of economics, if it still holds its doctorate, it's telling us to be very careful here. i think you want domestic companies that pay dividends -- i think this is a time to be careful. >> i've got a little different scenario. my friend dick bovet, a famous bank analyst, he has a different scenario. i want you to react to this. he sees a recession, but not until 2018. so that's four years from now. he sees an inflationist recession. he thinks ten-year treasuries are going back to 8%. i guess he thinks the velocity of money, the turnover of money is going to be very rapid, even though it's been falling for years. he thinks nominal gdp is going up. he thinks inflation is going up. now, in that scenario, that's kind of an old fashioned inflationist fed scenario. suppose you bought into that. four years away. does that start to affect the

market now? >> i don't think so. i mean, the market is really going to be looking about six to 12 months out. and i would tell steve, it's the bulls and bears that get slaughtered, the pigs are going to be the ones that survive. why? because i think that viewpoint that there's going to be increase in money velocity, it's too extreme. i expect rates to rise 1% or 2% over the next couple years. but to think things are really going to be this different and that this economy is going to have so much velocity going forward, you know, steve's right. we do have regulation problems right now and it is slowing down, but all it's slowing down is an expanded economy. i think four years is on the nose. i think eight years on a treasury yield, anybody's guess is as good as mine. >> gentlemen, thank you. i appreciate it very, very much. now, we've got bill de blasio, the new mayor of new york. he wants to raise taxes and he's closing charter schools. but the real outrage,

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he wants to get rid of the horse and carriage industry. i don't know if you know that. >> yeah. >> it's been around since before abraham lincoln's first inauguration. >> the horse and carriage is kind of tradition, go around central park. >> i know. and there's all these fake false rumors going on about the abuse of the horses, which is total bs. >> or hs. >> or hs. as long as the horses are being taken. >> the horses are being so looked after. they're so regulated out the wazoo anyway. >> pretty cool. not something you see every day. a star from what usually liberal hollywood opposing government regulations. mr. neeson doesn't sound like a liberal to me. we welcome back america's mayor. he just happened to shape up this city and turn things around for eight years. that being my great friend rudy giuliani. mayor, always great to see you. >> always great, larry, always.

>> this mayor de blasio. i call him -- you know, he's the head of the san denista wing of the democratic party. why is he against the horse and carriage? they had horses in nicaragua when he was there. >> i don't know. when i became mayor, there was a big movement to ban them. i investigated the industry very carefully. liam neeson is absolutely correct, the horses are very well-taken care of. just think about this. they're the livelihood for these men and women, most of whom are middle class and poor. so they have to rely on these horses in order to make their living. they take very, very good care of them. they actually give them vacations. and i think it adds something very, very special to the city. after all, horses are animals that like to work. i mean, what, are we going to put them on welfare? we've got enough people on welfare. >> that's a great point. horses like to work. i think the democratic party does not understand that concept of work. i just want to say to neeson,

i've never met him, but he sounds like somebody i'd really like to talk to. equally serious, rudy giuliani, is the closing down of charter schools. now, this is an incredible thing to me because this is exactly the constituency that supposedly de blasio wanted to represent. >> absolutely. >> and i do not -- i do not understand one little bit of this, except the teachers union. why on earth would you close down high performing charter schools? >> i, like you, larry, don't understand the reasons. i have to suspect the political pressure of the teachers union, which i know can be immense, has a lot to do with this. but you are basically selling out poor children. you are selling out poor children whose parents want them to go to a school that is better than the public schools. if you've ever been in a charter school, a new york city charter school right next to a public school, the difference is immense. and part of the difference is that the teachers are evaluated differently. the rules are different.

the parents have a lot more control. it's exactly the direction the public schools should be going in. and if you care about poorer children, lower middle class, everyone i described, children whose parents don't have the resources to pay for a private school, i would think you'd be in favor of expanding these charter schools rather than contracting them. >> you know, i think rudy, up until now, he really hasn't given an explanation. at least not a decent one. he's got the new school chancellor out there, and i don't anything she says. she contradicts herself constantly. the head of the city council. she's defended this. all i can think of, is this teachers union politics. and that is the worst kind of politics in the world. because the teachers union -- not the teachers, but the teachers union, rudy, they don't care about these kids, they never have. >> a big distinction. mayor bloomberg did a very good job here of creating these

alternati alternatives. but if you look at the public school system itself, one could argue that it's a job protection system and not really a school system. since teachers get paid according to formulas that can't be varied, so if a teacher dawes good job, bad job, intermediate job, teachers who are alleged to have sexually abused children have to get paid for two, three, four years. it's primarily a job protection system. the charter school breaks you out of that system and puts the child and the parent at the forefront of the school. >> right. >> they've been enormously successful. we should be doing it for more of these children. the big argument they make is you can't do it for every child. well, i mean, the fact is, you help every child one at a time. and hopefully, ultimately these charter schools will point the way to a way in which we can recreate our public school system, make it more effective. >> absolutely. success begets success. so a lot of people want to contribute to these schools. >> absolutely right. >> maybe build new businesses.

anyway, i want to go on. i appreciate your thoughts. we've got a very serious moment coming up in the ukraine. not simply the election in the crimea, mayor, but sanctions are coming. today a french diplomat said they're about to put sanctions on economic sanctions, trade sanctions, visa sanctions. maybe bank deposit sanctions. these are things that president obama has talked about, and i support him on this. but what i don't know, mayor giuliani, is whether we can count on president obama to follow through and be tough and implement these sanctions, because, rudy, this is the turning point. this is the last chance he has for credibility in his presidency. >> larry, i'm going to go out on a limb here and say i think he will follow through on the sanctions. i know the sanctions with regard to iran, some of those he had to be pressured into doing. i mean, the congress had to push them very, very hard.

and i think he's making a mistake in not increasing the sanctions, pressure on them to do the nuclear deal. but in any event, i think here he understands that this is a major turning point. and he's left himself no other option but sanctions. i mean, i'd add a few other things. i would renegotiate the nuclear defense treaty with poland and the czech republic to up the pressure on putin. i would also immediately start to bring whatever remains of the ukraine, i'd start to bring them into nato and i'd start to bring them into the eu. at least i'd start them on that track as well as some of those other countries that surround them. i mean, he's got to up the pressure on them substantially. but i think he's going to do the sanctions. if he doesn't, then we're going to be in for a very, very bad time with russia. we're going to teach putin all the wrong lessons. >> yeah. i want to tell you, some of my friends spent all their time attacking obama. i'm not. obama's not the enemy right now. whatever mistakes he's made in the past, the enemy right now is

vladimir putin. he's a real bad guy and he's trying to do real bad things. so like you, i'm hoping that these sanctions work, including maybe booting him out of the g8. but the time has come, it's come very fast, rudy. >> it is. >> and you've got your sunday election in crimea. let me put it to you this way. do you think putin cares -- there's a story in "the new york times" about this. do you think putin cares about the economics of russia? you know, they've got a stock market. the thing could collapse. it's already down huge this year. they've got a currency that's collapsing. do you think putin cares about the economy? >> i don't think he cares, because he controls them, right? basically what he said to them is you shouldn't be putting your money outside of russia, and when that money starts to get frozen, he's going to tell them "i told you so." but i do think he cares about the economy of russia. any leader tho eer has to care e

economy, because if it gets too bad, the pressure gets tremendous. one thing we can conclude about putin, although he may be an amoral man, he seems like he's an intelligent man. so if that economy gets hit too hard, just like eventually iran had to react, i think russia is going to react. i think the sanctions can be effective, if the president sticks with them, if he's serious about them, if we can get enough buy-in from our allies. i think they can be effective. >> and one last piece. listen, i am totally behind you on this. i truly hope you're right. one last piece real fast. natural gas. this would be a great time for him to endorse the pipeline, for heaven's sakes, the xl pipeline. got to build a whole pipeline infrastructure. let's endorse the whole natural gas fracking shale revolution because that's how we're going to ultimately knock putin down five or six steps and i don't see why president obama doesn't just say yes to keystone, yes to permits for liquid natural gas.

>> he should have done it four or five years ago, so he wouldn't be in this position. that's an i told you so moment. but the reality is he didn't. that can take that trump card aware from him. >> america's mayor, as always. talking some very good sense, rudy. thank you ever so much. appreciate you coming back on. that's it for tonight's show. i'm larry kudlow. thanks for watching. so we're up early. up late. thinking up game-changing ideas, like this: dozens of tax free zones across new york state. move here. expand here. or start a new business here... and pay no taxes for 10 years. with new jobs, new opportunities and a new tax free plan. there's only one way for your business to go. up. find out if your business can qualify at start-upny.com

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