Transcripts For CNBC The Kudlow Report 20140325

Welcome to the kudlow report. Im larry kudlow. Its 7 00 p. M. Eastern and 4 00 pacific. We begin tonight with the gm recall crisis thats threatening to blow up into one of the most expensive lawsuits in the history of the auto industry. Our own phil lebeau joins us now from chicago with the latest. Good evening, phil. Hey, larry. Pressure is reallyla starting t mount on not only General Motors but also regulators in washington to do something more about whatshi happened with regard to this gm recall crisis. The latest comes from a filing out of texas. An attorney down in texas has filed a motion with the u. S. District court asking the court to have General Motors issue a recall ireport. He says the cars should not be driven because they could potentially hit a bump. Y they say they can be driven as long as theres nothing weighing down the key. These cars could be thrown into thent troublesome position if t car hits a bump. And that according to the attorney is what is the potential problem with people still driving these cars. Pr if theyre telling their customers, if you hit a bump in the i road, this could happen, even if you follow the instruction on the keychain, you know, theres not anyone i know that would put a Family Member in it at all. A meanwhile in washington, a senate bill has been introduced that i would make it necessary r early were with aing reports that come from automakers from the National Traffic Highway Safety administration to make it public. That would force them toe repo deaths. There would be Information Available about awo potential problem. And finally, connecticut senator Richard Blumenthal wants compensation to be set up for victims who have been involved in this recall crisis. A fund is what hes proposing that would be set up, larry, that would take care of not only those who are owners of recalled vehicles since gm came out of bankruptcy, but also before bankruptcy. Nd hes calling on the department of justice to c set that fund. Itth will be interesting whethe or not the department i of juste says yes, theres some grounds here to do that. Because as we allat know, wheth or not general, motors should py for the liability of incidents before bankruptcy is a huge question. And whos going to decide that question . Ho i think ultimately its going to have to be a judge somewhere because as you know, Bankruptcy Law is pretty clear here. In civil cases, companies that go through bankruptcy, as General Motors did, are not responsible for incidents that happened before the company went through bankruptcy. And thats what a lot of lawyers are saying. Wait, listen. This is not fair because youve got some deaths, many accidents that happened in these vehicles before gm went through bankruptcy. Thats Bankruptcy Law. In criminal cases, General Motors, which is under a criminal investigation by the department of justice, would be liable for the actions of its employees before bankruptcy as well as after bankruptcy. So its pretty clear on the criminal side which the doj is investigating. Its on the civil side, larry, that a lot of people are looking at this and saying wait a second. Gm is getting off the hook, not having to pay for these claims. Look, im no expert on this, but just reading about it, phil, listening to your reports, some of these ignition switch problems can be traced back to 2003 models . Right. The bailout was, what, 2009 . Do i have that right . Right. How they worm out of that, something that occurred six years before the new gm emerged . Well, a lot of people are asking that question. Theyre saying, look. Did they know about this when they went through the bankruptcy process with the federal government . And if they did know about this, why didnt they disclose this . Thats a gray area at this point. Now, General Motors so far hasnt said much, which is understand building given the fact that theyre under a criminal investigation. But i suspect, larry, that as we have the criminal investigation unfold with the doj as well as the congressional hearings that well have next week with Ceo Mary Barra as well as the national highway traffic association. Keep in mind, when you look at toyota which is the most relevant case that people are pointing to, it took four years before the doj finally said heres the deal. 1. 2 billion fine for toyota which was just levied, you know, last week. And in terms of just final one in terms of the same process, would this conceivably be larger than the toyota story no matter how many years it takes to work out . Yes. It could. When you look at the scale and the scope of the problem and you compare it with toyota, theres no doubt that it could be as large for General Motors as it was for toyota. Now, whether or not that happens over the next several months and years remains to be seen. But 1. 2 billion, thats the benchmark thats out there, and i wouldnt be surprised if, when its all said and done, General Motors faces a fine of at least that much, potentially even more. Many thanks. Phil lebeau updating us on the gm story. Thank you, phil. You bet. Now, the gm bailout is always going to be a part of president obamas legacy. What about his Overall Record in history . Thats something i asked Texas Governor rick perry. Heres what he said. I think the president is missing an opportunity. Open up the xl pipeline, send the message to federal lands to be opened up to allow for the expiration, safely, thoughtfully, creating massive amounts of jobs. This president actually could have a good legacy when he leaves in two years. All right. You can see my full interview with governor rick perry in just a few moments. Were going to talk about energy, obamacare and what he would do to respond to Vladimir Putin in the ukraine. Speaking of president obama, he held a key News Conference in the netherlands today on the ukraine situation. And cnbcs own john harwood joins us now with the details. Good evening says, john. Reporter good evening. The president s been in europe trying to rally International Support to counter russias seizure of the crimea from ukraine. Now, the president rejected charges at that News Conference that he had misread Vladimir Putins intention, saying he cares about actions, not intentions. He also rejected the charge which has circulated in recent days that his 2012 opponent, mitt romney, had been right to say that russia was the number one geopolitical foe of the United States. Heres the president. Americas got a whole lot of challenges. Russia is a Regional Power that is threatening some of its immediate neighbors, not out of strength, but out of weakness. They dont pose the Number One National Security Threat to the United States. I continue to be much more concerned when it comes to our security with the prospect of a Nuclear Weapon going off in manhattan. Now, as for the somewhat broader sanctions or the somewhat limited sanctions that he has imposed so far, the president said those could be expanded to broader sectoral sanctions on energy, on Financial Institutions if russia goes further into the ukraine. Many of his partners are not eager to go there. But the United States senate and the house of representatives are moving to give the president additional flexible, larry, because theres progress on a bipartisan bill that would have aid to ukraine, a billion dollars in loan guarantees, and new sanctions and flexibility for additional sanctions for the president , should passed by the end of this week, larry. John, i was surprised actually, two things surprised me on this. Number one, his reference to a nuclear bomb going off in manhattan. All right, is he talking about terrorism . Is he saying terrorism is the number one threat, not russia . Yes. And i will say, in fairness to mitt romney, his response was a little off point to what romney said. Romney said geopolitical foe. Thats not the same thing as an individual threat. Nevertheless, the president has faced a lot of people coming out and saying hey, mitt romney was right, and he was determined to back that down and not acknowledge any sort of flipflop in his position. Ill leave it there. John harwood, thanks very much. We appreciate it. A lot of Economic Data coming into the market today. But the real question for me remains, why are we still experiencing such a substandard recovery . Two of the kudlow reports alltime best experts set to tackle that question. For now, dont forget free market capitalism is the best path to prosperity. The kudlow report will be right back. Stay with us, please. Larry, youve been one of the very best shows on television. I consider being interviewed by you a privilege. Your interviews have always been very insightful and very good. Free market capitalism is the path to prosperity. Larry kudlow, thank you for those great words. Youre a true american patriot. Youve really demonstrated to the american audience for nine years that the thing that defines us from all others is our free market. Larry, the adventure continues. What youre doing next is going to be fantastic. Listen, youve been fantastic in my life. At thanksgiving, we thank the good lord, we thank larry kudlow, and not always in that order. Best of luck. [ male announcer ] how can power consumption in china, impact wool exports from new zealand, textile production in spain, and the use of medical technology in the u. S. . At t. Rowe price, we understand the connections of a complex, global economy. Its just one reason over 75 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. With investment information, risks, fees and expenses so our business can be on at ts network for 175 a month . Yup. All 5 of you for 175. Our clients need a lot of attention. Theres unlimited talk and text. Were working deals all day. You get 10 gigabytes of data to share. What about expansion potential . Add a line, anytime, for 15 a month. Low dues, great terms. Lets close new at t mobile share value plans our best value plans ever for business. Lots of Economic Data came out today. Consumer confidence on the upside. Caseschiller home prices very strong. Although new home sales declined. But ive asked it on this show many times before, and im going to ask it again. Why is this such a substandard recovery, and in particular, is it because team obama has consciously fought true free market supply side policies . Here now, old friends of the show, dean baker, center for Economic Policy and research, codirector and dougie holzekin. I hope you can see this chart because what weve got today, weve got the highest Consumer Service number in the postrecession period, all right . So thats good. But its nowheres near what we got back in 2007. And as you can see, the king of the hill, the top for Consumer Confidence goes all the way back to year 2000. Now, we are so far from that right now. You could call year 2000 clinton, thats fine. You can call 2007 bush, thats fine. You can call 2014 obama. Thats fine. The point im making is, weve had a steady drop in Consumer Confidence. It isnt even a cyclical drop, doug. And that troubles me. Why are we having so many problems with Consumer Confidence . Larry, before i answer that question, let me voice join those who congratulate you on a great run, and thank you for your steadfast adherence to free market capitalism as a way to prosperity. Thank you. I really do appreciate it. Thank you. I think what youre seeing is exactly that. Were seeing a mismatch between the problems people recognize on the ground and the kinds of policies that are being put out there to solve them. Whats being put out is old thinking. Its topdown, born in washington, one size fits all, stimulus, health care, and thats not how economies grow. And people know that they need to have an open economy. They know theyre interconnected. They know its about the future and starting things up. And were not seeing startups. Were not seeing the confidence that we can look past this problem over the horizon to success. And thats whats going on with the confidence numbers. I mean, dean, it troubles me that theres so much pessimism. Now, confidence is rising in a cyclical basis. But again, its so far from that 2000 peak, one wonders if well ever get back. I have to think some of this has to do with the very mediocre job performance, and thats true during the bush years just as its been true during the obama recovery years. Why that is, i dont know. But i dont think weve really recovered in the job market. Is that part of the problem . Well, theres actually a more simple explanation, but let me also extend my good wishes. Ill miss you, larry. Youre starting to convince me about free market capitalism. I dont know what ill do now. Anyhow, good luck in your future endeavors. Getting back to the issue, you look at 2000, you want to call that clinton, 2007, call that bush. I call them bubble. We had a stock bubble in 2007. People were really happy. We had a huge housing bubble back in 2007. People were really happy. But that wasnt the real world. If we actually look at what people are doing, if we look at how much theyre spending, consumptions at a near record high as a share of gdp. So regardless of what people tell, you know, the surveyors, theyre actually spending money. The reason why we arent back to, you know, the peaks that we were in 2000 and 2007 is we dont have a bubble which to my mind is a good thing. We need to replace that with Something Else. My explanation, id have larger budget deficits. You dont like that. Id say get the trade deficit down. If it was close to balanced, wed be back at pretty much full employment. No real mysteries here in my book. Doug, no, i dont want more i dont want more government spending. I would like to abolish the Corporate Income tax altogether. I this i that wounk that would d wages. We had ed lazere on. He talked about something that was on the front page of idb today. People are being hired 180,000 a month, thats historically rather lower for a recovery, but hours worked are falling. And somehow i hear, dean, on the bubble story, but i dont know. I dont think consumers can anticipate bubbles any better than policymakers. I mean, something, doug, theres something going on here, and im not sure what it is except we dont have a lot of happy campers in the economy. The weather. I want to agree with dean. I understand the timing there, but remember, what also came with the bubbles was the innovation. You know, it was a dotcom bubble. New things started up. There was a path to the future that wasnt stuck in the policies of the past. The same was true in 2007. People thought they could see the future. Thats what they want to see again. Were not going to get that unless we get serious and have some fresh thinking about what can get out of the way and let people start up some new companies. Thats where the jobs typically come from. Build a little dynamism into the labor market. And when that happens, then were going to see the employers extend hours. Were going to see the employers raise wages. And that has been the missing ingredient in this recovery. Yeah, there havent been jobs, and thats been a problem for a decade. But for those with who have had jobs, we havent seen real wages rising. The hours havent been there. The wages havent been there, and we need to get back to that. Dean, you probably wont agree, but i also think consumers are as conscious about regulatory problems. They know that companies are worried. Obamacare is a deterrent to hiring. Maybe they love the minimum wage maybe theyre actually spending. Im not looking at what theyre saying. Theyre actually spending at very high rates. We have no reason to expect them to spend any more than theyre doing. The savings rate the only time the savings rate has been lower was at the peak of the bubble in 2000, at the peek of the peak of the bubble in 2005, 2006 and 2007. People were spending based on fictitious wealth. The same with the housing bubble. Again, you can look at the data. Its very clear on this. All right. Doug, ill give you the last word. On Consumer Spending, i mean, yeah, dean is right, theyre spending, but growth of Consumer Spending is 2. 5 on average. The growth of the economy. Right. I mean, wheres the 4 to 5 gdp growth . Wheres the 4 to 5 Consumer Spending . Wheres the 10 to 15 longterm Business Investment spending . Thats where thats what im looking for. I think thats exactly right. Because what weve got is an economy muddling along at 2 to 2. 5 . The wage growths been slow enough that yeah, theyre spending wages but theres no real growth there. You need the spike in business durables, in investment. Those are characterized by confidence that looks like 2007, confidence that looks like 2000, not like the confidence we have right now. We had some of it in the 80s, a lot in the 90s. I dont disagree about the bubbles, but somehow i dont think the bubbles explain everything, but i dont know. Well revisit it. Both of you, god bless. Now, folks, the markets had a pretty good day. They bounced back after a bad friday and monday. Will we really see any direction until First Quarter profit reports come in next month . Remember, profits, the mothers milk of the stock market. We are looking at your money next up. And dont forget, the full interview with Texas Governor rick perry. He was in fine form. Its coming up in just a few minutes. And guess what . He thinks president obama has a relatively easy path to leaving a good legacy. All right. Stay with us. Youll hear much more. [ cellphones beeping ] [ cellphone rings ] hello . [ male announcer ] over 12,000 Financial Advisors. Good, good. Good. Over 700 billion dollars in assets under care. Let me just put this away. [ male announcer ] how did edward jones get so big . Could you teach our kids that trick . [ male announcer ] by not acting that way. Ok, last quarter. [ male announcer ] its how edward jones makes sense of investing. Stocks popped on the day as investors cheered Consumer Confidence data which did hit a sixyear high. The dow up t91. Lets get straight to it with great friends of the show, jim le camp, Senior Vice President of investments at ubs and lpl chief market strategy. You guys are among the earliest, as i recall. Its been seven years. To come on this crazy place, but we appreciate it we have. We love you. Jeff, let me start with you. The market is sort of backing and sliding all year. Whats it waiting for . I think its waiting for profits. I think its waiting for the profit report listen, over the last five years, all of the gains weve seen in the stock market have come during the earnings season. Between Earnings Seasons have been zip no kidding. I didnt know that. Nothing. The profits are really the mothers milk of stocks. Youve been saying it. It is absolutely the truth. Did you know that . I did know that, absolutely. Faethats fascinating. Theres Something Else going on here, too. The tenyear treasury yield is really the key here. Janet yellen has created a sense that the fed is going to manage this smoothly. But stocks are still reacting to what the Federal Reserve board does and watching the tenyear treasury very, very closely. And i think the dollars going to be a key player moving forward as well, in a positive way, i might add. I know we shouldnt do this on nighttime tv, but yield spreads are narrowing, flattening. Doug wrote this up, the 10s to 5s and then i look 10s to 2s. They flatten by about 60 basis points. A, that cant be great for banks even though banks have had a good run. But b, does that have any Economic Significance . Historically that would suggest a slower pace of Economic Growth. The truth is Economic Growth hasnt kept up with as wide as the yield curve has been. Normally wed expect to see 4 or 5 growth. We havent gotten that. We can collapse a little bit and still see better growth. I dont see right now any particular political issues influencing the stock market. Theres not going to be any tax bills. Nears n were going to wait till the election and see what happens. Maybe republicans will take the senate. Maybe they wont. I get that ukraine if russia militarily invades ukraine, all hells going to break loose. Sure. Thats geopolitical, though. But thats geopolitical. So do we just back and slide . I mean, what happens here . Youre right and youre wrong. If you look at the history of Midterm Elections, the market always corrects in Midterm Elections, often pretty sharply. In fact, the average correction in a Midterm Election has been about 20 . I dont think were going to get that this year as much as 20 . And the reason i dont is the markets looking forward to what they expect the result will be. And that is that the republicans do very, very well. And that that will bring about some positive market changes, maybe impact obamacare, lessen the damage that thats doing. Maybe less red tape. Leg regulations. I think well get some sort of pullback as that election uncertainty comes into play. I think its not going to be as much as what weve seen in the past. We were looking at this confidence consumer chart, jeff. Maybe well put it up again. I dont want to obsess about it. Maybe i am. The stock market is running in some sense the same way. It had its biggest peak in 2000. A second peak in 2007. Were close now. Weve gotten pretty much back to the alltime highs in the stock market. But we havent, you know, gone through it. And there just seems to be a link between the lackluster Consumer Confidence for you, stocks rally. Im not saying that away. But its just like somethings missing here. Were not what is missing hooer . Whats missing is the individual investor, i think. What weve seen is buybacks really be the big driver of this rally weve seen so far. Individual investors only began to come back very late last year, tepidly stepping back into the markets. Theyve been boycotting stocks for almost five years now. That Consumer Confidence threshold, weve finally gotten to the point where theyre starting to feel more confident again to put risks of money in the stock market. Will they come in . I think they will. Let me add one thing. Sure. You mentioned janet yellen. Are they worried about the fed, or are they worried about Interest Rates in i think individual investors are worried that were in a dream world. That the Federal Reserve board has created this artificial complacency, and everybody looks around, and everybody feels okay. And the stock markets done well. Individuals, they dont feel that in their own pocket book. I mean, the average consumer hasnt done as well as investors have done or homeowners have done. So they look around at the economy, and they dont feel that confident. I dont see any exuberance. I dont see any rational or irrational exuberance. Ive got to get out of here. Individual investors, theyre not that bullish. Its just an odd period of time. Theres not enough optimism. A second wind. Thank you so much for the last seven years. Youve kept me around a long time and i really appreciate it. Youre both great. Folks, hang on. Weve got the big interview with Texas Governor rick perry. Its up next on the show. I think hes starting to look more and more like a very serious contender for the white house in 2016. But i want you to watch and see for yourself. Rick perry joins me here on the set next up on kudlow. Hi, larry, bob pisani here. Thanks for having me in your show for all these years. Im not the kind of guy who looks backwards. I like to look forward, and im looking forward to seeing you more in the daytime right here on the floor of the new York Exchange would you can give us the benefit of your knowledge on politics, but more importantly to me, the benefit of your knowledge on the markets and the global economy. Oh, and one more thing. When you do come down here to see me, try not to dress so well. You know, i try with the pocket squares, but you always look a little more dapper than i do. Its tough competing against you, old friend. But its never been boring. Love you, larry. Ive always had to keep my eye on her. But i didnt always watch out for myself. With so much noise about health care, i tuned it all out. With unitedhealthcare, i get information that matters. My individual health profile, not random statistics. They even reward me for addressing my health risks. So im doing fine. But shes still gonna give me a heart attack. Innovations that work for you. Thats health in numbers. Unitedhealthcare. Welcome back, everybody. Im larry kudlow. We welcome an old friend again to the show, Texas Governor rick perry. Ran for president in 2012. And many of us believe we i will run again. Governor perry, as always, sir, thank you for coming. Good to be with you, larry. Thank you. I know you left the door open for president. I want to come back to that later. Sure. I just want to talk about big pictures, though, that a prospective president might consider. Theres a poll out today, one of the best pollsters in the country for investors, business daily. 65 of those polled believe that america is in decline. And inside the detail is that we have little global influence. They cited places like syria and ukraine and so forth. And you are well aware of whats going on. Let me ask you this. How would a president perry handle Vladimir Putin and the whole crimea, ukraine, business and in general putins bad behavior . How might a president perry handle that . Well, were going to have a real hurdle a group of hurdles on our hands if this president continues to perform and send the messages that hes continuing to send from the standpoint of heres a red line, and then debating, backing up off that as we did in syria and then opening the door for allowing putin to come in and basically take credit for that action. So in libya, in egypt, in iran, weve seen this very feckless, muddled foreign policy. Were seeing the same thing. Putin is clearly does not fear the United States. Diplomatic policy comes in a lot of different forms. I will suggest to you, we have a very powerful tool in the United States today. And i would recommend that the president use it now. And that is sitting down with our european allies and clearly telling them not to worry about russia cutting off their gas. Well supply it. Those lng plants that are coming online in texas and other places in the United States, clearly a powerful diplomatic tool that our allies who really dont know where we stand right now, would know without a doubt, were going to protect not only the home front with energy, were also going to be there for you from the standpoint of supporting any other nato activities that require to send a powerful message. You know, yesterday was the first time so interesting to me all these weeks of going through this crimea, ukraine, crisis, yesterday was the first time the president talked about natural gas. One additional permit for lng export terminal. Youre the oil expert, but how many nat gas how many lng terminals could we, should we be building in this country . Weve probably got enough that are coming online, being built. I think there was one in oregon that was just permitted within the last few days. But the fact is, the message needs to be clear that we will when you look at canada, when you look at the United States and mexico, mexico is going to come on and be a major energy player, and sooner rather than later. Even private investment. Absolutely. Mexico is going to be a very interesting place. Theres going to be a lot of investment going on in mexico. I think the future of mexico is very bright. The north american region may have more oil and gas and Energy Resources than the whole of the middle east. So using that diplomatically is very important. And i think the president is missing an opportunity. Open up the xl pipeline. Send the message to the federal lands to be opened up to allow for the exploration, safely, thoughtfully, creating massive amounts of jobs. This president actually could have a good legacy when he leaves in two years, or he can have one of loss of jobs, loss of foreign policy, and loss of reputation. This is the texas model, the red state model, well go there. Youve already started talking about it. Youve been in california. Youve been here in new york. Youve been in connecticut. Youve been in illinois. Youre trying to bring people into texas. Can the texas model be exported to washington, and can we make the washington, d. C. , model the new texas model for the economy . Well, i think theres a bigger issue. And the issue is do you believe that our Founding Fathers had the right vision when it comes to the tenth amendment . That washingtons supposed to do a few things really well. Like foreign policy. I tell people, you know, cogent foreign policy, and heck, deliver the mail on time. Preferably on saturdays. But do you believe in that model . That the states are the ones that should be empowered, that the states should be given the decisions about health care, about transportation infrastructure, about education policy . And the federal government do a few things. I really believe in that. And then let andrew cuomo and rick perry or greg abbott, the next governor of texas, let them compete out there amongst themselves. You have this massive obamacare. Its been a political disaster. Its a health care disaster. What specifically would you do . What would a president perry do . Would you fix it . Would you repeal it . There are some things in there that do poll pretty well. On the whole, though, the thing is kind of a disaster. How would you handle that . Well, you have to work from the premise that one size doesnt fit all across this country. And washington, d. C. , is incapable of putting a Health Care Plan in place that will serve these 50 very different, very diverse states. So if thats your principle, if thats your premise that youre going to work from, you do away with obamacare. And then you basically cut the strings from all of the red tape that comes from the health and Human Service agencies back to the state. I think you could compress substantially the amount of money that you send back to the states, save billions of dollars every year, and allow those states to implement the programs. We put personal responsibility programs in place. We put copays in place. Wed put a menu of issues out there. Preexisting conditions, can you make the message, then, at the state level, if that be the case, that the Republican Party cares about sick people, that the Republican Party understands theres always been an insurance problem . Absolutely. And weve done it in the state of texas. Its about access to health care. This isnt about forcing people to buy insurance. Access to health care is the real issue here. Im going to read your cpac speech. A little rebellion now and then is a good thing. Now, i knew thomas jefferson, and i remember when he said that. But youre quoting thomas jefferson. Is this the kind of rebellion youre talking about . Yeah. Look at what our Founding Fathers meant for the states to be laboratories of innovation, to compete against it. It clearly says here are the enumerated items in the constitution the federal government is to take care of. Everything else, states, thats your responsibility. Im looking in there, it doesnt say anything about federalization of classrooms. It doesnt say anything about nationalization of health care in our constitution. Those are state functions. And let the states listen, the president of the United States, three weeks ago, i think, we were at the white house with democrats and republicans. And we were talking about the health care bill. And he basically said, when asked about given more flexibility to the states, he basically said, i dont trust you to deliver health care to your citizens. Wow. What a powerful message to democrats and republicans. These are men and women who have been elected by their own citizens, but we dont trust you. Even though hes changed everything. Hes practically done away with his own Health Care Plan. Lets go back to the president ial thing where we began. You are saying you are leaving the door open, okay. Is that still true . Sure. You said that on this show, obviously. Sure. And ive said that many times. I havent made a decision. Its another ten months of being the governor of the state of texas. January of 2015. Sometime in 2015, ill sit down, make the decision and announce it. With a went wrong in 2012 . Oh, a host of things. But actually, 2011 was when the real issues started. I had major back surgery six weeks before the youve had that procedure done. I have. I have. And you know that 18 months, minimum, for you. Six weeks is not quite enough time for you to heal up and be performing at a high level. It was a very humbling experience for me, larry. I will tell you that. I thought gosh, ive run for governor of texas four times. What could be harder than that . Well, there is something harder than that. Its called running for the presidency of the United States. Preparation is important. Be prepared. Yes, sir. Can you make the case can you show a new image that the Republican Party is not just the party of older white males . Can you do that . Can you do that nationally . Absolutely. And i think the Republican Party can do that. This is about laying out a clear vision. Its what we do in the state of texas on a regular basis. We marry each other. Mexicos our number one trading partner. Weve been doing business. Yes, weve got challenges. Weve got a border that has to be secured. But they have a president who is changing the law to allow for the private exploration of energy in mexico. There is Great Potential there. I suggest that singularly may change the immigration debate as quickly and as powerfully as anything that happens out there. A lot of mexicans who have come here because of the allure of work are going to go home to better jobs and to be closer to family. And that substantively changes the immigration debate and how we deal with individuals who are here i will loo llegally. Well leave it there. Governor rick perry of texas. As always, great stuff. Many thanks. Up next on kudlow, an allstar panel waiting in the wings to react to what the governor just told us. Howard dean, chris ruddy and Terry Jeffrey join us right after the break. Im kudlow. Please stay with us. On my journey across america, ive learned that when you ask someone in texas if they want big savings on car insurance, its a bit like asking if they want a big hat. scuse me. Or a big steak. Or big hair. I think we have our answer. Geico. Fifteen minutes could save you fifteen percent or more on car insurance. Do you have a minute to think ok, how about thirty seconds . At comcast business our internet is fast. Up to 5x faster than slow dsl from the phone company. And our phones better too. 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Im with scottrade. announcer ranked highest in Investor Satisfaction with selfdirected services by j. D. Power and associates. Welcome back to the kudlow report. I want to get some reaction from our seasoned veterans on the rick perry enter rinterview. Howard dean, chris reddy, president and ceo of newsmax, soon to be launched newsmax tv. Christopher, i want to go to you. Were you looking at a president . Do you think rick perry can make up for the mistakes of 2012 . He seems very assured, seems much more knowledgeable. Whats your take on perry . Absolutely. First of all, americans are very forgiving. Theyll judge him on his record. He did screw up by his own admission. There were apparently, as he said, some health issues, larry. I think rick perry has a great, tremendous record as governor of texas. But he also is a forwardthinking republican. He reaches out. Hes done a tremendous job there. So i think americans will gravitate to him, and i think he would be one of the frontrunners. And i think the polling data shows that he is. Howard dean, it may be an odd thing to say, but i think that i think governor perry is going to be one of the frontrunners. Im not making a choice. Its way too early for that. But i want to get your take on it. Hes running on a platform of jobs and growth and texas as appear example of where to do business. The socalled red state republican model. I would guess, howard, you hate that model, but i think its going to be very effective. Well, were going to get to the model first in a minute. First i just want to say, even though you and i dont agree on a lot of things, i think youre a terrific guy, and youve had a great show. I really appreciate being on one of the last ones youre going to do. Thank you. Thank you for all youve done. Thank you, howard. I appreciate that. I think rick perrys got a problem. I think he did a good job on the interview on your show, but the fact is, hes talking about let the states do health care. 22 of his children in texas have no health care. 26 of his adults have no health care. He has the highest graduation failure rate of any state in the entire country including places like mississippi. So he, in fact, does not have a record. And most of the jobs hes bringing to texas are lowerwage jobs. The average income in texas is actually lower than it is in vermont which i found to be shocking. This is a lot of political spin. But i dont think hes going to be elected president of the United States. Howard, if things are so bad in texas, why is it that 1 million new taxpayers went to texas . 1 million new taxpayers went to florida, and 1. 5 million taxpayers left the state of california . People cant pay for these services. They cant pay for big government. And theyre voting with their feet. Thats what the public is saying. I think theres a lot of growth going on all over the south. Thats been going on for 20, 25 years. But you look at the creation of highwage jobs, those are still going on in places like silicon valley. Terry jeffrey, let me bring you in here. Look, the governor perry statistics for texas, theyve created probably onethird almost onethird of all the new jobs in this country in the last ten years. The average wage from what i gather is above the minimum wage. Substantially above the minimum wage. So terry, are you looking at a frontrunner . I mean, theres scott walker. Theres john kasich. Theres a lot of people out there. The question is before the house tonight, has rick perry made a comeback . Is he in the process of making a comeback . Sure, youre looking at a serious viable candidate. By the way, i want to echo what governor dean said. Congratulations for the great show. Youve done a wonderful job, my friend. Thank you, thank you. On the subject of governor perry, i think hes got an excellent message, larry. His idea of federalism. The federal government is limited to those powers enumerated in the constitution, the rest of things is a competition between the states. And his state is definitely beating my old home state of california. People out there talk about moving their businesses to texas. They do it. They see their friends going there and succeeding. And the competition of freedom, rick perrys state is winning. Jerry browns state is losing. Chris ruddy, governor didnt elaborate so much, but he did say people are going to move back to mexico because their economy is improving. But i think perry is sensitive. He gets 40 plus of the latino vote. I think hes sensitive to the immigration issue. And i think thats the direction he would move in. Not all republicans agree with me. I dont think Terry Jeffrey agrees with me. But i think the gop cannot win without immigration reform, chris. I agree. I think that the Republican Party should become the party of immigration. Were the party of lincoln, the party of inclusion. We want legal immigration. And i think many of the illegals that are here, i think we want to have a situation where they pay taxes. I think that there should be some status, not necessarily citizenship, and i think rick perry gets it. That the future of the Republican Party is bringing people in. So and jeb bush has a very similar sentiment, and i think he would be one of the potential frontrunners as well. Howard dean, again to you, perry. I think the guy wants to expand the partys base. I think he understands that this image of older white men cant win. Thats why i think hes going to be big trouble for democrats. Well, again, the problem is his record doesnt stand up. As i said, they have if you have 22 of your kids with no Health Insurance, that means youve chosen, as a public policy, not to make sure that kids have Health Insurance. I dont think thats going to fly. The Texas Legislature has made idiots of themselves in terms of what theyve had to say about women and womens rights to make their own decisions about their personal lives. Thats going to be a big issue. I dont think greg abbotts going to be the next governor of texas. I think wendy davis is going to come from behind and win that one because i think texas, people want something different, and theyre going to get it. And ill tell you one thing, texas is not such a red state. Theres a democratic mayor in houston. There are democrats in a lot of them in dallas, austin, which is where a lot of the jobs are going, is probably the left of silicon valley. So its a very complicated, interesting state. But democrats i love i mean you may have a point in austin. You may have a point in austin. Ill grant you that. But i think Texas Democrats in houston and Texas Democrats in dallas would be republicans in every other state including vermont. Thats what i think. Seriously. You know what i sort of agree with howard and you, larry, that texas is changing. The country is changing. Blue states are staying blue. And red states like florida and texas are becoming bluer on the way to becoming blue. The answer is not to become like the blue states, which all have low Economic Growth, where people are leaving. The tax base is fleeing. The answer is to take those very good states that are low tax states, improve them, and reach out, figure out ways to cover people with insurance. Howard keeps on saying 22 of the kids arent covered in insurance. I think if you go into a lot of the blue states, youll find a very High Percentage of children arent covered. Thats actually not true. All i know is i think that the red state republican model of low tax and spend and regulate is going to be a very big issue in 2014. But especially 2016. Howard dean, thank you, my friend. I appreciate it. Thanks, larry. Christopher ruddy, see you soon. Terry jeffrey, thanks for everything. Folks, this is a major day at the Supreme Court for obamacare. Cnbcs Hampton Pearson is going to tell us how the oral arguments went down in the hobby lobby case. Very, very important. Next up on kudlow. Let me talk to you about retirement. A 401 k is the most sound way to go. Lets talk asset allocation. Sure. You seem knowledgeable, professional. Would you trust me as your Financial Advisor . I would. I would indeed. Well, lets be clear here. Im actually a dj. [ dance music plays ] [laughs] no way i have no Financial Experience at all. That really is you . If theyre not a cfp pro, you just dont know. Find a certified Financial Planner professional whos thoroughly vetted at letsmakeaplan. Org. Cfp work with the highest standard. [ male announcer ] how could switchgrass in argentina, change engineering in dubai, aluminum production in south africa, and the Aerospace Industry in the u. S. . At t. Rowe price, we understand the connections of a complex, global economy. Its just one reason over 75 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. Very serious challenge to obamacare coming before the Supreme Court today. The hobby lobby, a familyrun Small Business in oklahoma, says its freedom of religion is being infringed upon because of the mandate requiring it to provide contraception in the Health Insurance plans for all its employees. Hampton pearson joins us now with all the details. Good ening. Larry, this is the second major constitutional challenge to obamacare. There were demonstrators both for and against the two familyowned businesses that say covering certain Birth Control methods violates their rmgs beliefs. The oral argument inside the court focused on whether prof profitmaking businesses have rights. The Supreme Court has never ruled on that before. The three women justices questioned whether a favorable business ruling would open the door to piecemeal challenges to things like blood transfusions or vaccinations based on religious grounds. Justice Anthony Kennedy so often the likely swing vote once again he really challenged both sides, pointing out if the governments logic for fail, its possible a corporation might be required to pay for abortions. But he also expressed concerns about the rights of female employees, if their employers, for example, might be conservative and order conservative dress based on their religious beliefs. Chief Justice Roberts suggesting the courts could set limits for familyrun businesses. Look for a decision in june. Court watchers point out we could be looking at several years of other kinds of challenges to obamacare. Larry . Many thanks, Hampton Pearson. You got it. Thats it for this evenings show. Im on the religious liberties side of that one. Tomorrow night ill be joined by Wisconsin Governor Scott Walker and wisconsin senator ron johnson. I will hope youll join us, too. Much more on the kudlow report. Co ive always found you dont know you need a hotel room until youre sure you do. Bartender thanks, captain obvious. Co which is what makes using the hotels. Com mobile app so useful. I can book a nearby hotel room from wherever i am. Or, i could not book a hotel room and put my cellphone back into my pocket as if nothing happened. Hotels. Com. I dont need it right now. Ameriprise asked people a simple question can you keep your lifestyle in retirement . I dont want to think about the alternative. I dont even know how to answer that. I mean, no one knows how long their money is going to last. I try not to worry, but you worry. What happens when your paychecks stop . Because everyone has retirement questions. 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