that's why milton friedman called spending the gdp the ultimate tax burden.ending gdp from 25% to 20%, wow, you'll be cooking up some economic growth. now, these cuts so-called it's about $80 billion, i think, in the first year, over ten years it runs about $1.2 trillion in total. i think it'll bolster confidence in business, i think it'll help markets, and i think it'll show people that the u.s. economy is not greece. now, everybody may not agree with me. and those that do disagree with me are, of course, wrong about this issue. but, yes, we will debate it. it's an important issue. but first up, here's what paul ryan says about why these cuts are important. >> we're not preaching austerity. we're preaching growth and opportunity. what we are saying is if you get our fiscal ship fixed, you preempt austerity. that's the -- here's what a debt crisis is. a debt crisis is what they have in europe which is austerity. ♪ alright, let's go. ♪ shimmy, shimmy chocolate. ♪ shimmy, shimmy chocolate. ♪ we, we chocolate cross over. ♪ yeah, we chocolate cross over. ♪ [ male

this was milton friedman, who was mentioned in your book. >> right now, take the simplest measure. the government spending and federal, state, and local levels, amounts to 40% of the income of the people in the country. if you ask people, are you getting your money's worth for 40% of your income which is being spent on your behalf by government, there are very few people who will say yes. they are right. we are not getting our money's worth. it is not money that is being wasted. it is being wasted in a very particular sense. you are spending money to two opposite things. at one place, you spend our money to try to propagandize us not to smoke. in another place, we are spending our money to subsidize the growing of tobacco. you can go over and over again and find exactly the same thing. the government is too big. it is too intrusive. it restricts what we can do. it is becoming our master instead of our server. we have got to react against it. >> put milton friedman into context. >> i called him a classical liberal in the book. i quote one of its colleagues. i see him as having a par

john: even "the terminator" the republican and i thought here is a politician quoting milton friedmanwhat happened? >> he enacted the largest tax increase at the state level in history. i resigned as the chief republican whip in protest. john: he also funded stem cell research. i talk to the guy pushing this and i said you could pay for this yourself why is it a government job? >> democrats wanted to stick a thumb into the eye of georgia bush just like the emission standards to say we are californians. john: then i read this organization has to be revamped, a conflict of interest, all of this money is invested? >> now with about the initiative another large tax increase in history now by $50 billion. but they are lying. revenue projections will not come true. the balanced budget looks good in jittery but then the revenues come of you say it is a shortfall. it could be a billion or $30 billion. we will see that happen again. john: chuck devore you moved to texas? >> the states are so similar. population, the second and third states with land mass mass, more similar than different, both

john: even "the terminator" the republican and i thought here is a politician quoting milton friedmanwhat happened? >> he enacted the largest tax increase at the state level in history. i resigned as the chief republican whip in protest. john: he also funded stem cell research. i talk to the guy pusng this and i said you could pay for this yourself why is it a government job? >> democrats wanted to stick a thumb into the eye of georgia bush just like the emission standards to say we are californians. john: then i read this organization has to be revamped, a conflict of interest, all of this money is invested? >> now with about the initiative another large tax increase in history now by $50 billion. but they are lying. revenue projections will not come true. the balanced budget looks good in jittery but then the revenues come of you say it is a shortfall. it could be a billion or $30 billion. we will see that happen again. john: chuck devore you moved to texas? >> the states are so similar. population, the second and third states with land mass mass, more similar than different, both l

in some ways, i trace this to an article that milton friedman published in 1970 in the new york times. he argues that shareholders own corporations. the idea comes out of academia. this idea comes out of academia, and because of the poor stock-market performance in 1973 and 1974, it becomes appealing to a number of interest groups. i will talk about those in a moment. first i want to talk about why, oddly enough, this idea which came out of academia is just wrong. it is just empirically incorrect. if you look at the foundation it is built on, it crumbles when you look at it closely. as the supreme court has recently reminded us, corporations are illegal persons. they on themselves. what shareholders own is a contract called a share of stock. but bond holders also have a contract with the corporation, and employees have a contract with the corporation. there's no reason to treat shareholders as different from any of these other contrasting parties on the basis of some ideal of ownership. another idea that is often thrown around, not only by economists but legal experts, if shareholders

government spending is milton friedman is taxation. government doesn't create resources, it redistributes resources and this government spending is why we had the recession. obama continued the bad job for four straight jobs and this is the result. >> eric: but they would say isn't for government spending we would have no growth? >> government spending it's not in spite of government spending it's because of the government spending. we think of it, you got two guys in the world, "a" and "b". if "b" gets unemployment benefits who do you think pays for it. it's "a" and it's taxation and that is the root of the problem. >> you drop taxes like the blogo sphere, no he raised taxes. did ronald reagan raise or lower taxes? >> he cut the highest tax rates. you want to look at rates from 70% to 28%. now, is that a good enough tax cut for you? >> eric: what happened? >> we had great growth. when the tax cuts took effect, we phased in the tax cuts but when they took effect, it went like a rocket ship. we had 7.35% in 1983 and 5 1/2 in 1984. >> er

locking in one of the best poverty-fighting programs begun by ronald reagan, suggested i believe by milton friedman, supported by both parties for many years, we're not seeing that the that that d to with the earned-income tax credit. it rewards people that work, a family making $30,000 a year, not more than the minimum wage, $3, $4 more than the minimum wage that they get significant tax credits shall what friedman called a negative income tax. this works so well for encouraging work in this country. we did that only for five years while the estate tax bringing it up to $5 million exemption, which i thought was far too generous because it's only paid by far fewer than 1% of the american people, that was made permanent while the earned-income tax credit was only made for five years. the tax credit for college students, for families was so important in this legislation, too, and much of what we did was simply ask the wealth wealthy ta little bit more, to bring tax rates back to the levels of the 1990's. i think it's important to put it in a little historicaal perspective. in the 1990's, tax rates we

as milton friedman taught me spending is a far more accurate gauge of spending. is a dollar taxed away from someone. if it is borrowed it is higher for taxes later. our purchasing power falls. it is all a tax on our future. instead of politicians pledging not to raise taxes what we need are politicians pledging not to raise spending. now finally we have got that thanks to jonathan bid lack of the coalition to reduce spending which came up with this reject the debt pledge. tell me about that. >> well, the pledge basically asks candidates three things one vote for a balanced budget, two they won't vote for any spending that is offset elsewhere in the budget. three they won't vote to increase borrowing or the debt ceiling. >> anybody sign it? >> we had 24 candidates who signed. >> you just started it this year? >> this election cycle. the two elected were senator cruise from texas and doug collins representative from georgia. >> that means most of them lost. >> obviously this is not something that is easy to sign. it is easy to say you are not going to write taxes a

it's laissez-faire capitalism, milton friedman capitalism. but there are other places, china, certainly, is a communist country. but it's also a capitalist country, it's just got a different definition of capitalism. and in places like singapore where there's small countries where there's a strong collaboration between the government and the market, you have a different form of capitalism. places like brazil and india where there's a big social agenda because they're developing. and even in europe, southern europe, northern europe are turn. forms, but in northern europe you have a form of capitalism where the government believeses in a strong social safety net, believes in paying for health care, believes in playing a role in determining what businesses succeed or fail, and yet those governments have budgets that are balanced, and they're growing faster than we are with, they're creating more jobs than we are. so i think we have to be a little bit careful when we, as we sometimes do in the united states, get up on our high horse and say, no,

there's a real irony in that we've all heard bernanke's speech to milton friedman, you know, we learnedrom the '30s. we're not going to get it wrong again, but there's a grain of truth to where they got it wrong and almost very much the same way that when you needed to provide broad liquidity to the banking system, they did not. >> all right. we will leave it there. great analysis and great points you both make. thanks, steve. >> see new davos, maria. >> and i will see you, steve liesman, in davos in the snow. >> and i will see you in davos. >> thanks very much to you both. see you soon, guys. thank you. appreciate it. by the way, don't miss jim cramer's "mad money" tonight. he got it right with the federal reserve. you saw how emotional and upset he was about the fed. as we look back, we all know cramer was right. he'll be on tonight 6:00 p.m. eastern with a lot more on that. >>> stay with us. will we avoid the debt ceiling cliff? house republicans will consider a plan to extend the debt limit deadline. why that may set up an entirely different kind of cliff. we'll take you live to was

milton friedman said this, nobel prize winner, frederic haye can k, nobel prize winner.id, this another nobel prize winner. shrinking the government is pro growth in the economic model i subscribe to. why aren't the republicans talking about that? this is one of their problems. all right. you gentlemen stick around. keith, matt, and mark. now, we're going to tackle gop rebranding. this is going to be good. rebranding efforts. and minority reach-out with a senior republican who was at 9 williamsburg conference. let's hear his story. >>> welcome back to "the kudlow report." in this half hour, the stock rally is still riding high. that's right. we closed at another five-year high for the dow today. but not enough americans seem to be enjoying this ride. they're sort of staying out of stocks and missing this big run-up. and whole foods ceo john mackey is speaking out again about obama care and many other issues. remember, he is probably the most outspoken business leader against obama care, and he's going to join me later in the half hour. >>> first up, just days after presi

because what milton friedman the great economist called law of the few.e tax breaks when a group is relatively small because it is affordable. but as we baby boomers age and there are a lot more of us, that is where the money is. and of course the politicians are coming after where the money is. that's what you're seeing. jon: but seniors also vote. can't they, you know, undo some of this at the ballot box? >> well, they could. there is no question about it. but on the other hand, you know, there is, there will be that tension. in some states they may end up voting against this sort of thing. but meanwhile the politicians will go where the money is. you will see them limiting certain exemptions. for example. the amount of money some states exempt from income tax. to some degree the amount of money, income you get from the 401(k)s or ira's, which remember have been saving up tax-free over the decades. then when you're 70 1/2 to begin to pay those down. jon: what about social security? there are slightly more than half the states that exempt social security

milton friedman, or read ayn rand's atlas shrugged.otion of the difference between capitalism and socialism, the collective versus the individual, when we get the bill, it will be too late. back to you. >> rick, grover norquist later in the program, as well. rick santelli live in chicago. she's been dubbed fashion's fairy god marry and now she's bringing the hottest designer fashions straight from the runway to your closet before anyone else can get them. the cofounder and ceo of modus operandi will join us live right after the break. [ male announcer ] it's simple physics... a body at rest tends to stay at rest... while a body in motion tends to stay in motion. staying active can actually ease arthritis symptoms. but if you have arthritis, staying active can be difficult. prescription celebrex can help relieve arthritis pain so your body can stay in motion. because just one 200mg celebrex a day can provide 24 hour relief for many with arthritis pain and inflammation. plus, in clinical studies, celebrex is proven to improve daily physi