Transcripts For CNBC 20100303

that people that are hard times should get support, and i support that, we should just pay for it. and that's what jim said. >> i've known you for the last few years and you've absolutely stood on that principle. i know you have work to do. we all got to move on. i want to ask you one last thing, on the top of the drudge report page, it says "obama to trigger nuke option on health care" in this case meaning reconciliation. i'm sure you know that this 51-vote majority for this massive, massive, what could be a takeover of 16% or 17% of the economy, going way beyond just a budget bill, this is very unpopular. polls are showing the public is opposed to reconciliation and once a three-fifths vote just to make sure. your thoughts on this reconciliation push for obama care? >> well, first you got to understand what it really means. they will actually have to pass the senate bill first, which is the huge bill, the $2.5 trillion massive intrusion of the federal government into everybody's day-to-day lifestyle basically controlling health care. the bill that pushes a lot of people off their present insurances and forces them on to an exchange which inevitably lead to government-type programs. that bill will have to be passed first, and when they pass it, the president has to sign it. and that means the bill will be law before we get to the reconcile jation bill. the reason they are doing the trailer bill, is to buy votes in the liberal caucuses of the house, so those folks will vote for the big bill. so, this is really serious. i mean, and the people should understand that the -- that when that big bill passes, the president's got what he wants, and the american people got -- are going to be getting the exact opposite of what they want, which is a massive intrusion of the government into their lifestyle. whether the reconciliation bill passes or not, well, that's going to be problematic. i actually believe that house members that vote on the belief that they'll get the reconciliation bill in the form the house claims it will be are really rolling the dice. because here in the senate reconciliation is one tough lift and we'll make it hard as possible because it's really not an appropriate way to legislate on something this big. >> the vote buying you're referring to and the trailer bill, it seems to me after what we saw in nebraska, what was it the cornhusker thing and the thing in louisiana? the public went nuts over this. they went nuts. >> it will make it look like small change, small change. >> it will be a big turnover come november, that's what you're really saying. >> what i'm saying this isn't the right way. they are not only railroading the senate, but they are railroading the american people. >> senator judd gregg, it's a pleasure to talk to you. thank you for your time, sir. terrific stuff. before we go to break we have a statement from senator bunning. "i hope senate democrats tonight vote for their own pay-fors and show americans that they are committed to fiscal discipline. i will be watching them closely and checking off the hypocrites one by one." you see, this was the brilliance of what mr. bunning did. a lot of people really missed that, okay? he basically said, you're not going to get away -- you're not going to get away -- with some unanimous vote. i'm going to put you on the record so every single taxpayer and every single voter in this country can read the roll call to see who voted in this expanded spending without any budget carry savings offsets in a $3.5 trillion budget, as senator judd gregg just talked about. that is the beauty of what mr. bunning did, and people that opposed mr. bunning are nothing but hypocrites. that's all they are. and this hypocrisy is what has caused a massive revolt in this country. washington continues to basically lie to the american people and continues to produce a fiscal spending and borrowing and taxing product that the rest of the country utterly will not buy. and that's the problem, and i say hats off to jim bunning for exposing that, and god bless judd gregg and jon kyl and other republicans stood up for it, and those republicans that did not stand up for it, including senator collins of maine and some others, are absolutely dead wrong! wrong. and they've done their party and their country no good at all. anyway, enough from me. coming up, my one job requirement for president obama's federal reserve replacement. okay, this is a serious point. no ph.d.. i don't want any more academics on the fed. what i'd like is a real housewife who goes out and shops for food and shops for gasoline and understands the value of the dollar. that's what we need on the federal reserve board. and we are going to chew on it and debate that very proposition. stay with us. you're watching cnbc. we are first in business worldwide. we've secretly replaced these diners' at&t smartphones with verizon smartphones. let's see what happens. where are all my apps?! i don't know. this download's taking forever. is that right? what is this? where's my cool phone? so, don't dumb down your smartphone. choose the nation's fastest 3g network. 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[ male announcer ] when you compare, there's no comparison. at&t. a better 3g experience. buy any smartphone after mail-in rebate and get any messaging phone all right. here's some free advice for president obama, as he looks for replacements for fed vice chairman donald kohn and some other unfilled seats. my thoughts, sir, go with a real housewife who actually shops for food and gasoline. no ph.d. academics allowed. let's talk about this. we have vince reinhardt, and we have dave goldman, "first things" magazine senior editor, and you're probably saying, i'm kidding, this is tongue in cheek. let me say to you i am not kidding. i don't want any more academics on the fed. i don't need ph.d.s, i might want to rule out the top 50 universities because they don't understand what any real housewife in new jersey understands, and that is, david goldman, the value of the dollar! and the dollar in her purse and her pocketbook when she shops for food and groceries and energy. that's my point. i want a housewife on the fed, david goldman. >> larry, i'll give you one housewife, but i'd also suggest that we think in terms of franklin roosevelt hiring joe canada to run the s.e.c. the big problem with the academics they were 15 years behind the so-called derivatives market which were ways of obscuring massive amounts of leverage putting on top of leverage. so, when ben bernanke okayed the outrageous aspects of his aig bill, his excuse to congress was we didn't have a lot of time to figure it, which simply meant he didn't know what was going on and the academics on the fed staff didn't know what was going on. so get someone like john paulson or eric howard -- >> that's your idea of kennedy the fox to guard the henhouse. >> yeah. >> but you see, look it, vince, i know you hate this vince, i know you're going to put me down, and i love you and you're a great american. but the fact is more ph.d.s m n means more keyesians, and more people that will actually tell me inflation of food and energy and gasoline doesn't really matter, vince. and if you asked me, somebody who says, only the so-called core inflation rate matters should be barred from the fed. >> that's two sets of issues. let me first agree with you on personalities. >> whoa. >> your no-ph.d. rule means that paul volcker could be chairman? >> yes, yes. >> and let me say in my experience at the fed one of the most experience governors was edward mykelly. he served the nation well. however, can i disagree and what scares me? and that's about practicality. when you or i say, person on the street, we think josephine the plumber. when this white house says -- thinks person on the straight, they think clara, the community activist, right? and the point is requiring -- >> deep for the fed. >> right? requiring technical expertise has to pull the white house more towards the center. you might not like the way they talk, but they come from a more homogeneous group. that's what you're complaining about? but if you give them free rein, i'm afraid what would happen. >> all right. i know. look, i don't harbor any illusions here, but i am making an important point, i think. because it just blows me away that we don't look at energy, that we don't look at gasoline or home heating. these are the things people pay, that we don't look at food and groceries in the supermarkets, and, therefore, by implication, david goldman, and you used to be a strong dollar guy. we need a stable dollar. we need a stable dollar, okay? one way or the other. >> i'm a strong dollar guy. i want to emphasize, larry -- >> and a housewife wants stable prices in the grocery store and at the pump, and i'm saying, stable prices means a stable dollar, and that's what's missing from this whole thing, because you know, look, let me read you, these are brilliant people, christina romer's name is on the list. she's brilliant. dan turollo, he's a smart guy, guest of the show. janet yellen, she's out at san francisco fed, i think, she used to be on the federal reserve board or the council of economic advisers. i'm not saying they are not smart, they are brilliant people, they are all smarter than i am. but they have no bloody common sense about the stable dollar. that's my problem. >> they simply don't understand what's happened to financial markets in the last ten years. the academics got rolled by the bankers because when a guy who is worth $200 billion tells an academic if you don't bail out aig and put $2 trillion in the fed's balance sheet, the world will come to an end, we better go do that right away. the danger is we get a reaction to use a blunt instrument that will either cripple the banking system, or we get the comedy, like paul krugman saying it's all been a swindle, let's nationalize-of- the banks. >> he's not a communist. he's a left winger. >> the danger is we have a political reaction, knee need someone with the credibility on the fed board who knows not only how the bodies are buried but how the frankenstein on wall street is made out of body parts. >> i just want to say this, mr. donald kohn has given very distinguished service to the fed and the country. i want to say that publicly, even though i disagree with his model, he targets the unemployment rate, i don't. i want to target the dollar and including a basket of commodities including gold. none the left side, mr. kohn has given distinguished service, so i won't take it away. vince, you got one vice chair coming open in june and three seats in total. give me a name or two. >> don kohn lays it out so you can argue with him. he explains it. >> he's a fine person. i don't have any of those issues with him. >> i think the course of least resistance, the vice chairman as the person with banking and regulatory expertise, you elevate danny turullo. and you got to fill two of the open slots. one with an academic, one with some with more practical experience. >> oh, oh. >> because ben bernanke is going to want to be able to talk to somebody, somebody to watch his back. >> i don't want another academic. i want to rule out the academics. >> two out of the three were not academics so -- >> unless you can find me somebody from, i don't know, texas a&m, or something, i might go for that, because those are good old folks, boys and girls. dave goldman, who is your top pick for the fed? >> john paulson. >> the hedge fund guy. >> absolutely. >> who is your second pick? >> the second pick would be somebody like allen howard, but somebody else from the banking or hedge fund world. there are several possible candidates. >> i'm going to lob steve forbes' name in. >> he's fantastic. >> he's great. and i know it won't happy i think it would be really cool, i know it won't happen, but, vince, if obama appointed a housewife, i don't care race, color, religion, section of the country, a commonsense housewife who does her own shopping and fills up her car with gasoline would be better at this federal reserve game than what we've had in the last ten years at least. that's just my say. i think it would be totally cool. he won't do it. i know, vince, you're thinking i'm nuts. i may be nut. vince reinhardt, thank you so much. and david goldman, thank you. don't miss david fisher on "squawk" pretty bright guy. coming up on the "kudlow report" tonight, a deal seems to be nearing on financial regulatory reform, and the senate, the focus is really on this sort of consumer protection side show. it doesn't go to the root of the problem, which is too big to fail. but cnbc's john harwood, he's going to have some details. mark colabria, and peter moricci will have debate when we return. give me a real housewife or two on the federal and our economic condition would improve. that's my take. all right. on another front, senators chris dodd and bob corker seem to be near a deal on financial regulatory reform for the banks in the senate. our chief washington correspondent, john harwood, has the full report. hello, john. >> larry, the story of negotiations over new financial regulation bill in the senate is one of lots of conversations, but no deal yet. here's where things stand. the talks between senator chris dodd, the chairman of the banking committee, and republican bob corker of tennessee, who is negotiating with him, could drag into next week. principle topic of discussion is where the new consumer protection unit will go within the government. probably not going to be standalone. could go to the fed. could go to treasury. could go to the fdic as richard shelby, republican from alabama, suggests. there is hope that a markup of the committee bill could occur within two weeks and then get the bill to the senate floor, but you're already seeing some pushback from liberals about the prospect of putting financial regulation within the fed which has a history as a weak regulator. look at chuck schumer of new york today saying he's very leery of that idea which has been advanced by senator corker. so the talks have a ways to go and liberals think they hold a high card in this debate which is public anger at wall street and the banks, so we'll see where this thing ends up and once they get a bill out of the senate and conference with the house of representatives, which is, of course, already passed their bill, larry. >> all right, john, thank you very much. that's a good rundown. it either goes to the treasury or the fed or the fdic, it does not look like it's going to be standalone, run by presumably my friend elizabeth warren. all right, let's talk about this some more. and i want to raise the issue of too big to fail which i think is the ultimate problem with this whole banking regulation story. we've got mark ka labbryia, he's the director of financial regulation studies at the cato institute and we have peter moricci, the former international trade commission chief economist. good evening, gentlemen. >> good evening. >> just give me a quick take. this consumer thing blows me away. but, peter, were you in favor of elizabeth warren commission? are you okay sticking it in the fed? where do you come out on this? >> i am not okay with elizabeth warren, i don't want her to have her own agency to muck things up. but we do need regulations and protections, so put it in an institute where the needs of the banks and the consumer are balance. i like strengthening consumer regulation at the fed. i think it's the best place for it and it's the safest place to keep clara, you know, from having her own agency. >> all right. by the way, my criticism is warranted. i like elizabeth warren a lot. i just don't want a separate agency. mark calabria, many think we were victimized. the evil brokers forced me to take loans i couldn't afford. is that what the consumer protection thing is all about, or is there a deeper meaning? >> and not to mention that they forced you not to make a down payment on your mortgage. >> or put any documentation or -- >> yeah. they told you to sign your name beside your false income. i think the analysis that we're here because some failure of consumer protection is way off. the fact is, the problem wasn't that credit was too expensive or predatory, the problem was that credit was too cheap. it was too widely available. i would roll back some of these laws. put under the rubric of consumer protections also things like the community reinvestment acts that pushed banks, the last thing you want to do is have cra and other things be divorced from the bank regulators, because you'll get community activists in there to push the banks to make even more unsustainable loans. i wouldn't move it to the fed or the fdic, i would be repealing most of it. most of our consumer protection also works the way like a gamble. >> all right. let's just -- we just have a couple more minutes. i want to get too big to fail, peter moricci. that's the heart of the problem as long august the big banks and trading companies believed they're going to get bailed out, then they're likely to make more bad decisions than they might otherwise make. i'm not saying -- being stupid isn't breaking the law. but too big to fail is a moral hazard. now, peter, as i understand this debate, number one, in these reform bills is a government resolution process. $4 trillion. that to me thak smacks of bail nation in per pep tuty, and on the other hand, many people of aai in washington, said we should have a bankruptcy court resolution authority that would sell them all to get rid of the assets and not saddle the taxpayers, peter. that's my -- that's my duopoly, please comment. >> we already have regulation authority. look at what's going with aig. they can't sell off the pieces. that's why they poured so much money into it, which was a terrible thing. they should have a bankruptcy court type of operation. just break it down. sell the pieces for what they're worth. the stockholders, the bondholders, take the losses. that's it end of it. kaput. too big to fail is one of the worst ideas i have ever heard. >> see, mark, i don't see that they're going to use a bankruptcy resolution. i think they're going the government route. i know the house bill has $4 trillion -- $4 trillion -- in reserve to bail out, you know, these failing institutions. and you heard what peter said. i think he's right. i -- to me this is the wrong way, and no one will ever fail, mark. >> i would agree with you 100%. the way the direction of the house is going it would allow creditors to be bailed out. and i think that's the most important thing, that creditors, you lend money to these institutions, you have to believe that your money's on the line and the house bill allows that. and i think it's important -- it's not just problematic that the taxpayer pays it out. even if you set up some fund that bails out creditors that the rest of the industry pays back, that still creates a tremendous amount of moral hazard by creditors. so i think if anybody's going to pay it back, it should happen to be the creditors. but at the end of the day people should take haircuts if the firms are insolvent, i don't think -- >> if we have a system that excludes failure -- >> yes. >> -- then we have a bad system. >> absolutely. >> you both agree with that. >> yes. >> to me that's the bottom, the consumer protection thing seems like it's going to be solved some bureaucratic way, who the hell knows, but it's the too big to be failed stuff i think needs to be resolved. we'll get you back when there's more information, appreciate it very much. come up on the "kudlow report," is president obama really telling the truth when he says he's a fierce advocate for a thriving, dynamic, free market? or might me be speaking with forked tongue? we will be right back to have a discussion about forked tongues and free markets. we got some breaking news. go to breaking news. all right. nbc news, representative charlie rangel will give up his ways and means tax chairmanship. he's under too much heat and too much fire on ethical -- ethical issues, so, there you have it. some breaking news on charlie rangel. you know, i love the guy. he's a wonderful man, but unfortunately he is in a heap of trouble. it's too bad. "kudlow report" will be right back to talk about obama. 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>> he is not the likelihood. let me get through the quick facts here. charlie rangel has agreed to give up the gavel. the question is how temporarily has he agreed to do it, but he's agreed to give it up for now. there's going to be a vote on the floor of the house in the coming days to on stripping him the gavel. many democratic leaders in congress had said to leadership, don't make us have to do this vote. it wasn't clear he could survive this vote, and he did one and attempted, and democrats killed it. it didn't look like they could do it this time. pelosi went to rangel and got him to agree to give up the gavel until the ethics sprgz is finished. the question is, will he ever get it back. and there's some talk already he may not seek re-election. >> that was my other question, chuck, he's just going to resign the seat, isn't he? >> not resign, he may end up retiring, you know, serve out his term and not seek out re-election. that is still unclear. he hasn't made that decision yet, but if there's any chance of him getting the gavel back, i'm told that would probably push him into deciding not to seek another term. now, the guy who will take over, by the way, and i know there's a lot -- this is as powerful a house committee chairmanship as there is sander levin, the brother, by the way, of carl levin, the senator from michigan, he's been in the senate for a very long time. he sits second in seniority, on ways and means, but the number two guy, pete stark, a california democrat, has been ill and is not -- and so the leadership has made the decision to hand the gavel temporary to sander levin. >> chuck, sander levin, i know him, he's actually been a guest on this show. but in terms of philosophy, he's on the -- definitely the liberal side, the "left of center" side, there's not going to be change in policy? >> i've talked to many, and i know you have, too, larry, there's an argument to be made that charlie rangel was a guy on policy that many republicans actually liked working with, and of all the choices, you're exactly right, philosophically, they may find it harder to cut deals with him than rangel. >> i am sorry that the ethical issues have come up. but he's got to deal and take responsibility and ownership. but charlie rangel and i cooked up several corporate tax rate cuts on this show. he just never got any support from the democratic congress. >> no, he is a -- yeah, however you want to describe him, you know, i try not to pick sides here, but he is very much a -- a -- you know, some might not call him pro business, but you cannot classify him as anssi busine as anti-business. >> thank you ever so much for weighing in. all right, folks, stay with us. we'll go back to the president obama. is president obama telling us the truth when he says he's a fierce advocate for the thriving, dynamic free market? or does he speak with a forked tongue? . you don't want to miss this. the "kudlow report" will be right back. st: could switching o 15% or more on car insurance?e you host: did the waltons take way too long to say goodnight? mom: g'night john boy. g'night mary ellen. mary ellen: g'night mama. g'night erin. elizabeth: g'night john boy. jim bob: g'night grandpa. elizabeth: g'night ben. jim bob:'night. elizabeth: g'night jim bob. jim bob: g'night everybody, grandpa: g'night everybody. jim bob: g'night daddy. vo: geico. 15 minutes could save you 15% or more. all right. is president obama really a believer in the kudlow creed? let me read to you what he said in a recent "business week" interview, and i quote, we are progrowth, we are fierce advocates for a thriving, dynamic free market. okay, here now with some different thoughts is mark scazin, editor and author of "the big free economics." mark skousen, you don't agree with president obama. >> it's one of the most shameful comments. you talked about hypocrisy early on in the program. this is the classic example of hypocri hypocrisy. it will come back to bite president obama. because here's a man who has don't everything anti-growth and anti-jobs and -- >> walk through some specifics. >> we're talking about the minimum wage law, on labor, flexibility. we're talking about the huge increase in obama care, which is a huge burden on business. we're talking about tax increases on successful entrepreneurs. i mean, no free market -- no fierce advocate of free market economics would support this kind of agenda. it is orwellian. >> orwellian's a good word. i want to ask you politically a thought. why do you reckon he would come out with that kind of statement? does he think he will never be held accountable, or is it just sort of a massive cognitive dissonance? >> he's a rap that he's anti-business. this was a "business week" article. so, he was trying to play up to the business people. but are we stupid? that we can't see that every piece of agenda that he is anti-business? and the unemployment rate is, you know, with this minimum wage law and so forth and the extended unemployment benefits that you're talking about, two years, you're not going to get people going out searching for jobs as long as they're getting that paycheck. >> with it all, real quick, last 25 seconds, stocks. you're a little more defensive now on the stock market. what's your favorite stock pick? because obama may be defeated. these ideas may be defeated come november it's quite possible. >> that's true. ford motor company is my aol stock pick of the year. >> good story. >> and it's up about 20% this year so far. but i'm defensive largely, i'm recommending high dividend paying stocks such as aberdeen asia pacific income, known as f.a.x., and gladstone capital is a great undervalued story. >> we'll get you back on that. we appreciate your stories very much, interrupted by the charlie rangel story. mark skousen does not agree with president obama as a free market advocate. that's the kudlow creed. maybe mr. obama wants to come on the show. coming up my "last thought" please stay with us. i want to close the show where i began, in praise of senator jim bunning. you know what, you'll never cut spending if you don't cut spending. congressional hypocrisy is just pathetic, and jim bunning pulled the curtains and unveiled it all. congratulations to a good man. 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