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tv   The Kudlow Report  CNBC  May 9, 2012 7:00pm-8:00pm EDT

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start worrying about deflation. that's right. deflation could be in the air. "the kudlow report" just moments away. all-new, are violent street gangs taking over white-collar crime like mortgage fraud? if you want to find out, you must watch my favorite show. i'm talking about an all-new american greed tonight on cnbc. is the market going to take its queue from cisco and greece and from spain? don't sell into the panic. i'm jim cramer. see you tomorrow! hey larry, what do you have for us tonight? thank you, jimmy. the president panders to avoid the real issue, which is the economy. good evening, everyone. i'm larry kudlow. this is "the kudlow report." the president comes out in support of same-sex marriage. okay. my take, it's an opportunistic distraction from his economic record and the fiscal issues that are front and center that
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are going to determine this election. one of seven unemployed are underemployed. like growth at a stagnant 2% and his war on business, energy, and successful investors. those are the issues. also this evening, any reports of the tea party's death are greatly premature. angry voters throw senator richard lugar out of office after 35 years. a resurgent tea party tidal wave should send a message to republicans and democrats. and ahead, newly minted republican tea party candidate for senate in indiana richard murdock, and tea party statesman, south carolina's senator jim demint. we have them both. and also this evening, ceos slam tim geithner to boost growth by not raising the dividends or the capital gains tax. they slam him. we'll debate him. and you know what, stocks volatile on the downside today. i still think it's a slowing u.s. economy to blame, not
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greece. but first up, a hastily arranged interview with abc news comes out in support of same-sex marriage. john harwood got the full story. all right, john. good evening. what you got? >> good evening, larry. that's political bombshell that the aides said was going to come out eventually, but was expedited, so today under pressure, the president in an interview with abc became the first president the say he was in favor of legalizing gay marriage. >> at a person point, i've just concluded that for me personally, it is important for me to go ahead and affirm that i think same-sex couples should be able to get married. >> remarkable to think how fast public opinion has evolved on this issue. 2004 when republicans capitalized on opposition to gay marriage, it was 2-1 against.
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then it was 49-40 in favor -- i'm sorry, against in 2009. now that's flipped to 49-40 in favor in the most recent nbc "wall street journal" poll. but that doesn't mean there's no political risk for obama. yes, it will energize his liberal base. it will encourage gay donors, especially who are active, and also young people. but it also poses the risk of alienating some noncollege whites in swing states like ohio, north carolina, and virginia. obama administration officials say any of those voters who would vote against him on this issue already think he's for gay marriage even before today's announcement, but republicans say some of those conservatives who were not energized by mitt romney could all of a sudden have a new reason to turn out, larry. >> it kind of blew my mind. after north carolina voted to ban gay marriage, a constitutional state amendment by a big margin, if i'm not mistaken, why has obama come out on the day after? >> well, i think if vice president biden hasn't done what
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he did on "meet the press", it wouldn't have happened today. i think the president felt he needed to act. and in some ways that north carolina amendment increased pressure because you had a big public statement from the electorate in the state that obama carried and i think he felt the need as a matter of conscience under a lot of pressure from his base to say okay, i've been saying i'm evolving. everybody knew that was a bit of a dodge, and he came out and said exactly what his position was. that will, by the way, open him to charges of flip-flopping, which is one of the things democrats have used against mitt romney. >> that is a key point. thank you, john harwood. here now to hash through this whole deal, we have keith boykins, former clinton white house aide. tony katz is a tea party supporter and radio talk show host. heather higgins, independent women's chairman. heather higgins, i just want to ask you what you think about obama coming out in favor of same-sex marriage. is this a distraction from the economic issues, or what, heter?
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what what do you think? >> absolutely. obama coming out of the closet is nonnews. there was always a wink and a nod this is where he was and he was only saying for political reasons that he was on the other side of the issue. he's very much hoping that romney takes the bait. he's also hoping to make his deep pocketed extreme left wing of his base very, very happy with this issue. and so it's a political dodge. it's about avoiding economic issues, which is really what this is about. >> by the way, senator jim demint later says exactly what you said. mitt romney is much smarter than your man on this, keith, because romney just said it's a stayed issue, and that's what dick cheney said not so long ago. it's a state issue, keith. why didn't obama just leave it there? >> obama said the same thing. it is a state issue. he's just expressing his personal opinion and his personal opinion has evolved to the point where he now believes same-sex marriage is something that should be allowed. but i don't think this is an issue that's going to hurt the
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president in the election. 50% of the independents who have been polled recently show that they support same-sex marriage. i don't think that's going to affect him in the swing states. i think people are focused on the economy for the election. those are the issues that are going to actually help barack obama. >> now you're cooking, keith boykins. now you're cooking. ge go ahead, heather. >> it's really interesting that he does this the day after north carolina. that vote came from the black community. it just is a real testament. part of the report mentions some of the communities that opposed gay marriage, but really a lot of it is the hispanic and the black communities. to so deliberately go in their face shows them how much he takes them for granted. >> i have to correct you on this, heather. i've studied this issue for quite some time. there's not a single vote any time in the past 20 years where any black elected official has ever lost office for supporting same-sex marriage. you can go back any time. there's no example of that. >> it's not going to happen in this case. >> it's probably because there are not very many of them who
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have done so. >> david paterson here in new york. look at cory booker in new jersey. there's tons of examples. >> if your examples are going to be from northeast states, you're not speaking to the rest of the country. >> you have a lot of black ministers, by the way, who oppose gay marriage. i'm a live and let live guy. it is a state issue. i want to get my friend tony katz in here. as a tea party guy, which is why we recruited you, and i thank you for coming on the show, give me a whack at the gay marriage issue before we go to tea party. >> it's not a tea party issue per se, but keith is right in one respect. it doesn't do anything for the president. he still can't win re-election. and when you talk about the constituencies you're talking about, which is hispanic and black con stitch when sis, we're talking about people who have a cultural belief and a religious belief to which this goes against. but the real issues are the
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economy. the real issues are the death of brian terry. >> hold those thoughts. the angry voters took out their fury over the president and the economy at the polls. three big winners, wisconsin governor scott walker, a resurgent tea party itself, and a federal inmate who beat president obama in several west virginia counties. you can't make that up. now, bob costa, he joins us now with all of last night's highlights. good evening, robert. we are moving on from gay marriage. what can you tell us about today's elections? >> first of all, in west virginia, you had a federal inmate who is living in texarkana. the people have soured on the president. they don't know how the epa is holding on those and they revolted. >> was scott walker a big winner? he polled more than his two leading democratic opponents polled.
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that to me is sheer raw political power. does that make scott walker the prohibitive favorite in wisconsin? >> i don't want to say he's the prohibitive favorite. it's going to be an uphill challenge for scott walker. we did see a contentious democratic primary in wisconsin's recall election and that shows the big labor forces are a bit divided. walker still has a struggle. wisconsin is a battle zone. he has to have a lot of troops on the ground to go up against the union. >> last one, quickly. mitt romney's relationship to the tea party. if the tea party is resurgent, and there are a lot of senate primaries coming that are going to involve tea party versus status quo republicans what is mitt romney's relationship to the tea party as you see it right now, robert costa? >> real quick, larry, in politics, it's actions, not just words. romney has spent a lot of time courting the tea party and
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skerv conservatives. he wants to build his base. >> thank you, bob costa. keith m keith boykins, tony katz, heather higgins. i want to ask if the tea party is resurgent. i don't see it around the country. i saw it with richard murdock's election. i get your issue on obama care. he's coming on the program later on. but this isn't 2010. you don't have the town meetings and the town halls and all that stuff. and most of the big money came from washington organizations, heather. color me just a little bit skeptical. >> i think that if you look -- and a lot of the money did come from washington organizations. club for growth was a huge player. freedom works was, too. but freedom works has an awful lot of boots on the ground. if you understand indiana law, one of the challenges we had with the obama care repeal pledge and letting people know it is obama has -- indiana has a
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rule that you cannot do a robo call there. it has to be a live caller. if you are genuine tea party group, you can actually get your message out. so the murdock campaign, freedom works, various other tea party groups that were indigenous to ib, worked their tails off on this one and it really showed. >> tony katz, i want to ask you, is there going to be a throw the bums out mentality because the economy stinks, is that going to happen? >> it's not even a question of is it going to happen. nothing has changed between 2010 and now. you don't see them on the street corner, but you see the effect of what they do. they're poll watching. they're precinct watching. they're working for ted cruz down in texas. they're working for karen harrington in florida to take out debbie wasser man schultz. kathleen falk.
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she lost dane county by 30 points. dane county is, as mike flynn called it, the san francisco of the heartland. 30 points. no one is buying what the big left is trying to push and the tea party never went anywhere. they just got smarter and more adept. >> keith boykins, you are our leading progressive on this panel. would you respond to tony katz, please? >> i think the tea party is sending mixed signals. on the one hand, you nominated basically mitt romney to be the republican party -- >> untrue. >> republicans have nominated mitt romney regardless of who did it. he is not a tea party candidate. on the other hand, you have this election with murdock. but murdock is going to have the same fate essentially that sharon engel has, christine o'donne o'donnell. they all won the primary but end up losing the election. cause them to lose the election.
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they might even lose indiana. >> you're completely wrong. first of all, that's complete mythology. you're making up all along. >> it happened in 2010. >> you can't say that the tea party elected mitt romney and then say oh, it doesn't matter. that's not acceptable. >> hold on a second, i need another opinion on this. heather higgins, how do you see the relationship between the tea party and mitt romney? let's assume for the moment that the tea party is resurging. i think i just invented that. but you know what i mean. how does mitt romney relate to a resurging tea party? >> when there were primaries, the bar was incredibly high. the standard was ronald reagan and essentially everybody fell short of that standard. once you have a nominee, the bar becomes incredibly low. the bar becomes is he not barack obama, and is he breathing? romney is breathing and he's not barack obama. plus, he's really changed. if you look at how he's evolving as a candidate with his experience, and i'm one of those
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who thinks it was actually very good for him, but it wasn't easy, it wasn't a coronation, because he has moved from being a resume candidate to when he was increasingly talking about the larger vision of the country. i think what the tea party is looking for is a contrast election. they are people who really understand that this is about the future of the country. >> free market capitalism. i want to hear free market capitalism. >> it's about the constitution. >> producers are screaming at me. you're all great. i just want to say heather richardson higgins, it's a pleasure to have you back. tony katz, my man, thank you very much. keith boykins, you are such a professional. next up, a rare move for american ceos. this is an interesting story. they are demanding the treasury man timothy geithner not raise taxes on dividends and capital gains for the good of america. and ahead, we talked about the tea party.
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senator jim demint and the man who defeated richard lugar, that being richard murdock, they are going to be right here. later in the show, europe, a slow motion train wreck? does it matter to stocks at all? don't forget, free market capitalism is the best path to prosperity. i'm larry kudlow. we'll be right back.
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war continues. 18 top level ceos blast tim geithner and the obama administration for near doubling the cap gains tax, tripling the dividends tax, and basically killing the economy. 18 ceos. and gosh, are they right. plus, what about this bush era tax clip coming at the end of the year? here's speaker john boehner talking to our own maria bartaromo yesterday. >> the house is going to act to extend the current tax rates. it's time for the united states senate to do their work. otherwise, we're going to have this mess all stacked up until after the election. and you want to talk about a train wreck? >> let's bring our guests to talk about this story.
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we have jared bernstein. we welcome back republican conference chairman jeb hensarling of texas. congressman hensarling, i was happy to hear that you were going to extend the bush tax cuts. i wanted to ask you, would that extension be temporary? would it be permanent? when do you reckon you'll take your vote? >> take it soon, because obviously the market needs some certainty, particularly after we looked at the last jobs report. third straight month where job growth has decreased. we now have -- looking at the labor force participation rate, the worst employment record of an administration in 30 years. so we need some certainty. frankly, we want to go beyond that. we need a tax cut that is fair, flatter, simpler, more competitive, which is what we have in our budget and the president threatens the single largest tax increase in america's history that, number one, would even forget decimate
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the economy, and number two, doesn't even make a dent in the $11 trillion of additional debt that he's going to plow on this economy as he drives us down the road to bankruptcy. >> it sounds to me that the republican house is going to lead with key legislation and the wlous is nowhere to be found. >> that's not the way it sounds to me. nice to hear you, represent hensarling. it sounds to me that what the respective is describing there is a map to a train wreck. the idea that john boehner is going to get on the floor and propose full extension when he knows that president obama is saying here's how we resolve this. we coming to, we extend the tax cuts for the middle class. we all agree on that. but we allow the high end bush tax cuts. if the republicans want the stone wall on that yet again, they're taking us right off the cliff. >> sounds like a little old
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fashioned cliff. >> you give the president every single job harming tax increase that he has asked for and that's like 16% of the $11 trillion additional debt he's going to put on the table. number one, the red herring. you cannot tax your way into economic prosperity. you cannot tax your way out of this incredible debt crisis that the president has hoisted upon us. >> here's where we disagree. i think that you have your debt picture completely backwards. you and the republicans continually come out with these tax cutting measures and then you say somehow the president -- and then you say the president -- >> their tax rates are going up in january and you call that a tax cut? >> no, i agree with you there, sir. >> we have to agree on something. >> we must preserve the tax cuts for the middle class. you and i are on the same page there. but for the very top folks, the top 2% who have done extremely well, you can't keep cutting
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taxes and you guys and ryan go much further, and not have any regard to debt. >> that tax increase, you well know for the top two brackets, is aimed at small businesses. and then with your buffett rule, that affects not 1%, no not .1%, .01% of the additional federal spending. >> correct. that's my point. >> the whole thing is a red herring. >> i just have a minute. to me, even worse than the class warfare over the bush tax cuts, what these ceos are saying, in the obama budget and in obama care, the dividend tax is going to 45% from 15%, and the capital gains tax is going to 24% from 15%. it will damage savers. it will damage retirees. it will make the united states
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uncompetitive and will give us the highest investment tax rates in the world, jared. jared, how can you be so anti-business as to propose these things? >> our businesses have done totally fine under a tax regime like the one you are describing. when we shift around -- >> we're losing jobs. >> sir, can you let me finish? when you shift around these tax rates for dividends and capital gains, what you find is that people simply change the timing of the realization. sorry, go ahead, sir. >> with the spending trajectory that this administration has put us on, if they don't change it, we're going to have tax rates that make the socialist government in france blush. we will have the single highest marginal rate. i want an example in history of a country that has managed to
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either bail out these acts or borrow its way to economic prosperity. >> i'm going to have to call my good friend jared bernstein mr. hollande. jared, you speak some french. oh, we're going to have to revisit this again. jeb hensarling, thank you very much. jared bernstein, as always. coming up, fizer is feeling no pain after getting the big boost from the fda. that and all the latest headlines when "the kudlow report" continues. still ahead tonight on "the kudlow report," is there a tea party title wave coming to washington? senator richard lugar unseated, defeated by a tea party favorite richard murdock. the new political star joins larry.
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is rage in the resurgent tea party resonating republicans? jim demint also joins larry. don't go anywhere. "the kudlow report" will be right back. tdd# 1-800-345-2550 let's talk about the personal attention tdd# 1-800-345-2550 you and your money deserve. tdd# 1-800-345-2550 at charles schwab, that means taking a close look at you tdd# 1-800-345-2550 as well as your portfolio. tdd# 1-800-345-2550 we ask the right questions, tdd# 1-800-345-2550 then we actually listen to the answers tdd# 1-800-345-2550 before giving you practical ideas you can act on. tdd# 1-800-345-2550 so talk to chuck online, on the phone, tdd# 1-800-345-2550 or come in and pull up a chair. my high school science teacher made me what i am today. our science teacher helped us build it. ♪ now i'm a geologist at chevron, and i get to help science teachers. it has four servo motors and a wireless microcontroller. over the last three years we've put nearly 100 million dollars
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all goes here. the one. the accord. smarter thinking from honda. third point's dan lobe unloads on yahoo!. facebook files that good news could be bad news. cnbc's brian shackman joins us
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with all the latest on that. good evening. >> and this one just in, larry. lobe going to war with yahoo! selling cnbc today that there is a lack of leadership, vision, and values atiyyah hoo. lobe tells cnbc he's concerned about accountability with yahoo!'s leadership. lobe says he plans to fight it out as long as it takes, so stay tuned. that story not over. over to facebook now. the expelosi of mobile users is so fast that the debl is struggling to monotize the business, saying it's increasing more quickly. shares of cisco fell sharply on weaker than expected guidance. if the losses hold, cisco will open tomorrow negative for the year. news corps announcing a buyback program. the chief operating officer said
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we reject the notion that rupert murdoch is unfit to run the country. have a good night, larry, back to you. >> thanks to brian shackman. up next, a significant step towards the tea party takeover in the senate. richard murdock easily trounces longtime senator dick lugar. murdock plus senator jim demint. they are joining me next. and later on, dr. doom, he says europe is in a slow motion train wreck. is it true? stay with us. we'll have it all.
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welcome back to "the kudlow report." i'm larry kudlow. in the second half of the program tonight, warning, a tea party tidal wave is coming to washington. a resurgent tea party challenging status quo. senator richard lugar unseated,
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defeated by a tea party favorite richard murdock. the new political star joins me as does senator jim demint of south carolina. and still ahead, downsized volatility in our stock market is a by-product of the slowdown of jobs and the economy here at home. greece is just an excuse for bears to sell. we'll get into all of it. we start with the tea party tidal wave, and what could be a harbinger of things to come. richard lugar of indiana, he lost his latest re-election to his tea party challenger yesterday. lugar's loss has left democrats nervous for november. take a listen. >> he refused to allow this march to an orthodoxy about ideology. the alarm bells have been sounded, i think. >> are we going to succumb to
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making it more dedicated to obstruction than moving forward? >> joining me now, we welcome back to "the kudlow report" senator jim demint of south carolina and indiana state treasury richard murdock, who won a huge victory last night, defeating incumbent senator richard lugar out in indiana. mr. murdock, if i can beg your pardon, i just want to have some business with my friend senator demint. i just want to ask you about what's become the hot political story of the day. president obama has come out in favor of same-sex marriage a day after that proposal was slaughtered in north carolina. can you give us the take? what are you thinking about this? >> well, the president's trying to get us to talk about anything but the economy and what his policies have done to our country. so he's deflecting attention here. he wants republicans to take the bait and talk about that for a week or two. we don't need to do that right now. the states need to decide this.
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marriage is a religious and state issue. the president has even said that. we don't need to be dealing with it at the federal level and we have no business trying to redefine it. >> is it fair to say that you are suggesting to republicans -- and i think this probably includes former governor mitt romney -- don't take the bait, stay on message, jobs, economy, keystone pipeline, energy, deficits and debt. that's where this election is going to be played out. is that what you're saying? >> yeah. the democrats are bringing up the buffett rule and student loans and all of these things that are minor issues. they don't expect them to even pass. but they don't want us talking about what this president has done to jobs and the economy and our country as a whole. that's where we need to stay on message. i think mitt romney is going to be disciplined on this, and i know richard murdock will be because he's campaigned on getting -- stopping the status quo here in washington. stop the spending, get control of our debt and get our economy back growing again.
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>> richard murdock, you heard senator demint on the issue of same-sex marriage and not be diverted away from economic issues. do you agree with that view? >> i absolutely do. as i've traveled indiana over the last 15 months, that issue hasn't come up but maybe two or three times. but what i do here is we need to get the economy going again. people understand that the obama plans haven't worked and they want to see more private sector growth, and unfortunately with the plans of the united states government, they continue to stifle economic development and economic creativity and it's hurting our economy for the long term. >> let me ask you on this point while we're on the race. a lot of people were surprised just how large your margin of victory was. is it because of obama care that you brought that in as a kind of litmus test that there will be no retreat on repealing obama care? was that a big factor in the last days of your race? >> we had over 3,000 volunteers yesterday manning the polls. that's probably never happened before in indiana. and those people were motivated
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by the entire obama agenda. you know, we've had this thing going since 2009 when the government seems that they can spend their way to prosperity and continue to issue more and more regulations and somehow encourage economic growth when the opposite is happening. >> senator demint, is there going to be a tea party tidal wave, a kind of renewal of what happened in 2010? are you going to get some new tea party blood in the senate? >> well, i think you saw that in indiana, but it's not all under the tea party name. it's really citizen activism, grass roots activism. they're more organized than they were last time. there's energy out there. but i think you'll see what happened in indiana happen in other places just as well, because americans are concerned. it's not about a political philosophy. it really is about saving our country, and i think you're going see americans more activated in this election than they were in the last one. >> i know you're a senate conservative. i've been doing some homework. you're backing jeff blake, josh
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mandel, and ted cruz. right now, senator demint, do you think they will all win and join you and mr. murdock in the senate? >> well, most of our candidates are underdogs, so we don't expect them all to win, but we're encouraged that they all have a good shot, if we can just help get enough resources, that the people in their states can know who they are. these are great candidates. and i expect them to do really well. so josh mandel has already won his primary. jeff flake is in a very positive position. i think you're going to see a runoff in texas that ted cruz will win. we still hope don stinburg will win in nebraska. mark newman in wisconsin. so we've got a good lineup of new potential senators that could join richard murdock, and i think we could change the republican party and then change the senate and hopefully save the country. >> hopefully save the country. richard murdock, i know you struck gold. i know the tea party was solidly behind you. but i want to ask you an honest
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question. outside of indiana, i don't see the tea party rallies and activism that i saw in 2010. if you know who i am, i was a great sympathizer. i was one of the earliest tea party supporters. but i don't see it. i haven't really seen it in over a year. i know you've got a lot of money from washington-based tea party groups, i think $3 million. but do you think grass roots tea party that was so vital to the 2010 landslide, do you tli ithi it's still alive? >> i agree with you. you don't see those tea party activities like we did a few years ago. but just because those folks aren't gathering on the street corner 500 at a time under a don't tom bra don't tread on me flag doesn't mean they aren't engaged. the day i announced, had three quarters of indiana's county chairman sign on to support me as well as over half the members of the state committee. this wasn't just a tea party movement. but the tea party and those
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organizations like it certainly were the source of the volunteers that gave us the grass roots game. anyone who's written the obituary for the tea party is going to find out the report was greatly exaggerated. >> if you make into it the senate, you become a tea party senator and so forth, would you think about voting for a bold simpson type deal, where the thrust of that deal would be to your political and philosophical liking, but you might not like every part of that deal. many people believe such a deal is going to wind up happening. would you go vote for a bull simpson type deal? >> i'm going to look at every issue as they come up. it's a complex series of decisions you have to make to vote on any bill. and there's going to be a lot of additions, a lot of amendments to it. i'm going to be a conservative, and we are going to take that look to see, number one, how can we afford whatever we want to put forward. does it fit the constitution of the united states. is it going to lead to economic prosperi prosperity. if it doesn't meet those tests, we ought not be considering it.
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if we don't get straightened around very quickly, we'll face an even greater crisis. we have to make tough decisions or there will be dire consequences and we better get ahead of the game here. >> senator demint, you intend to vote against the re-authorization of the xn bank, even though it affects boeing in south carolina. are you going to stay on that track? will you vote -- if the bill was passed today overwhelmingly in the house, it will come to the senate, what are you going to do, senator? >> well, i'm not going to support it, larry. what we're trying to do is send out signals now that we're not going to accept this type of disguised spending, which is really what it is. this is a program that started less than five million, now they're asking 140 billion. we don't need to be subsidizing major corporations. what we need to do is work with the world trade organization and stop it in europe, stop it here. we do not need to put the taxpayer on the hook for literally trillions of dollars of loan guarantees, not just
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with the x.m. bank, but the student loans and all kinds of other guarantees. we're out of control on the spending and when we can't spend it on the books, we do it with loan guarantees and other federal programs. it's time to just stop the status quo, stop the spending. that's what richard murdock will help us do and hopefully some of the other candidates we've talked about as well. >> thank you, gentlemen. you're both terrific to do. this senator jim demint, as always, sir, and mr. richard murdock, states treasury of indiana. congratulations again. hope to see you again. >> thank you. >> thank you, larry. up next, is there a european train wreck coming? so what if the euro zone broke up. it could be a big so what. stocks and oil and gold are all plunging. there are some whispers of deflation. we'll debate deflation.
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let's solve this. ttd# 1-800-345-2550 let's talk about the typical financial consultation ttd# 1-800-345-2550 when companies try to sell you something off their menu ttd# 1-800-345-2550 instead of trying to understand what you really need. ttd# 1-800-345-2550 ttd# 1-800-345-2550 at charles schwab, we provide ttd# 1-800-345-2550 a full range of financial products, ttd# 1-800-345-2550 even if they're not ours. ttd# 1-800-345-2550 and we listen before making our recommendations, ttd# 1-800-345-2550 so we can offer practical ideas that make sense for you. ttd# 1-800-345-2550 ttd# 1-800-345-2550 so talk to chuck, and see how we can help you, not sell you. ttd# 1-800-345-2550 in the sense that the euro zone is not going to collapse in the next six months or 12 months, but greece is not going to be the only country with the fracture. i think it's going to happen in
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portugal, most likely in ireland, and eventually even in italy two or three years down the line. that was dr. gloom himself on cnbc's "fast money." would bit that big a deal if the euro zone did break up? let's talk to nile gardner. he just recently wrote the piece "election victory: a symbol of the eu's decline." i know outside of germany and switzerland, maybe holland, i know you've got all this tax and spend and regulate. i want to ask you this. if the euro zone broke up and the euro collapsed, wouldn't that cause financial and commercial chaos? >> i think in the immediate term, it probably would, especially once the greeks get out. spain and italy would likely follow at some state in. the long term, i think it's only right that europe returns to national sovereignty. i think a key factor in this
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economic crisis right now in europe is the european project, this idea of the creation of some sort of monstrous european super state, which makes it individual for individual nation states to deal with their own financial problems. i believe -- >> but look, just think of this. the banks raul denominated in euros. the corporations are all denominated in euros. the only decent economy, germany, is all denominated in euros. it's almost unimaginable to me that this institutionalized system, even though it ain't working very well, could actually implode and start back and go back to the deutsche mark and the franc. how do you get from here to there? that's the part i don't see, nile. >> yeah, larry, you know, the euro zone is a european project. it's a political project. there's no reason why european countries can't go back to their original kurn sis.
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70% of germans want to go back to the deutsche mark. the germans are also running out of money to bail out other european countries. so i believe that europe needs two things. more national sovereignty and greater economic freedom. the two go hand in hand together. >> i sure agree with that. national sovereignty, i don't know. you may be right. i don't know. thanks. nile gardner, we appreciate it. up next, what a roller coaster ride for the markets. the longest losing streak for the dow since august 2011. is the spring stall spreading to stocks? "the kudlow report" will be right back. ortho weed b gon max. with a new continuous spray wand. so you can kill invading weeds down to the root. without harming your lawn. guaranteed. ortho weed b gon max.
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another down day for stocks. oil plunging. gold hit a new 2012 low. treasury bond rates are collapsing. european fears still linger. here now is katie stockton, contributing editor of "smart money" magazine. we welcome back brett aarons, he recently wrote the piece "france's left turn may be right for stocks." and andy bush. welcome back, buddy. let me start with you. my thought here -- you can tell me if i'm right or wrong, whatever, this correction started with the lousy march jobs numbers. it continued through the lousy april jobs numbers. we're seeing a slowdown, even a decline in business investment.
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the u.s. economy is sputtering to 2% and we're not going to get an end to the correction until we get some better economic numbers. it's not greece. it's right here at home. what's your thought? >> yeah, i think that's really the case. greece is just kind of a smoke screen. yes, europe has their problems, but you're talking about really stalled earnings, or very much lower earnings. stalled economic growth and stalled employment growth. that's worrisome. we don't know if we pulled some of the growth because of the warm weather in the beginning, but now it's clearly going lower. if we were at any kind of normal participation rate, it would be at 10.8% and that's not good either. >> i think the market corrected after being surprised on the upside for about five or six months. katie stockton, who do your charts tell you? you are what they call a technician. you look at the charts. you massage them. sort of a magic to this story. is the correction going further? >> i think so.
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what we've seen is a very significant loss of intermediate momentum. that suggests for the next several weeks that we could see more corrective price action. >> how much? this is a primetime evening show. you're telling me basically stocks are going south. is that fair? >> that's fair to say. >> give me a percentage. how much are they going? >> i'm looking for another 4% to 5% on the downside. i'd be looking to take advantage of preelection rallying. >> so brett aarons, you're going to tell me we're all going to get bailed out by france, by these left wing high tax big spenders in france? that is so off the charts that i have to love it. >> i love a good panic. i hate to say that. i mean, like most people, i got money in the market. but the fact is when things like this, people panic and stocks get cheap. it's really that simple. i ran about france's stock market the other day. yeah, they've had a tough turn. i think hollande -- i think
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sometimes to anglo saxon eyes, it's not all that different. >> you are so right, brett. sarkozy was raising taxes. he was spending so. this guy might do a little more. >> this guy, what has to be understood is this is not shea gorvera. he went to the same place as the guys running the major french companies. >> but he's talking about raising corporate taxes and raising taxes on the highest earning individual. that is not a growth policy. they need to shrink the size of government. >> you're looking at a market that -- >> they're not going to grow their way out of it. >> andy busch, because he wants to punish successful people, there won't be anybody left in france to buy stocks, right? they're all going to go to london or germany or come to new york, right? no one's going to be left in france.
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>> 50% unemployment out there. that really is a social nightmare. and i just don't see how they're going to get jobs for those kids and those younger adults that are out there. >> i want to come back to katie stockton, because i am observing gold going down, a lot. it's correcting almost 20%, if i'm not mistaken. oil going down. treasury bond yields going down a lot. now, my friend mike churchill wrote a very interesting report. i gave him credit. he's a great thinker, and i think you know him. churchill says this is deflation. is it deflation? how far down are treasury bonds -- they're at 180. that's insanity. how far down is gold going? how far down is energy going? >> it's a good question. there does appear to be a floor underneath the ten-year treasury. there's a big phase in place. however, the first move from that basing phase failed, so i think we're stymied down there for a while. looking at gold, there's some very important support being
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tested, very hard this week. if it doesn't hold, it's right around $1,600 per ounce. if it doesn't hold, it could mean weakness the next several months. >> what about oil. retail gasoline is coming down. how about crude oil? >> looks somewhat oversold to me. we've seen a pronounced correction already. basically, in line. but i think it will help it stabilize. >> there's some deflation going on. the dollar, by the way, is pretty darn strong. so, brett, serious question. would you buy french stocks? serious question. >> yes. yes, i would. certain stocks -- look, i can't speak for the whole market. the whole market is cheap. a couple of these, the big names. they certainly look, to my eyes, pretty cheap. obviously you want to kick the tires in any individual stock before you buy. but there's some good quality names in there. they priced in an awful lot of bad news. when you look at one of the world's largest oil and gas companies, thinking about six
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times earnings. the yield is nearly 6%. >> thank you very much. i preernappreciate it. andy busch, you and i are going to go to a french restaurant in new york, that's where all the french people will be. tune in for larry summers tomorrow night, he was obama's chief economist until november 2010. thanks for watching this evening. i'm larry kudlow. [ male announcer ] citi turns 200 this year.
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