holiday. we welcome back luke russert who joins us from capitol hill. i hear breaking news, the payroll tax holiday is moving forward, making progress in the conference. what can you tell me? >> that's right indeed, larry. the payroll tax holiday, there seems to be tentative agreement to extend that for the rest of the year. it will cost $100 billion to the national deficit. it will not be paid for. also within that bill there's a plan to attach unemployment insurance, as well as the medicare doc fix. there are important changes to both of those as to why it will get gop support in the house. unemployment benefits used to be 99 weeks. for most states, it would be 63 weeks, if they an state has a high level of unemployment, it will be in the 70s. however, limited drug testing will be in there as well as someone must be actively searching for a job to get the benefits to do the entire week allotment. on the medicare docs, these are changes going into the bill that should elicit enough gop support in the house, as well as democrats seem to have signed off on this within the conference committee. it o could be done as early as friday. >> then they'll bring it back and vote. last one, do you think the republican leadership in this conference committee can sell it to the rank and file in the house without any pay fors, luke. i guess that's the tricky part. >> i just came from the meeting where all the gops were outside. a lot of the rank and file members, especially newly elected freshmen were unhappy with the fact the payroll tax cut will add $100 billion to the deficit. they think it's flawed policy. the question becomes is are there enough folks within the conference that the leadership can say come on board and join with democrats to get this forward to avoid the absolute political fallout that happened in december. the gop leadership with folks i've spoken to are pretty confident. some rank and file members will get angry and beat the drum. >> luke russ et, we appreciate it. we will have house budget chairman paul ryan. he's going to join as you little later in the show, tell us all about the budget and perhaps the payroll tax holiday as well. >> i want to get back to this other story, the biggest corporate tax hike in the history of the earth. today tim geithner testified before the senate fans committee defending team obama's election year call for higher taxes on wealthy taxpayers. here he is on corporate tax reform. >> we're going to propose a broad reform that will lower rates, broaden the base and wipe out a very substantial fraction, dozens and dozens and dozens of special tax prercferences for businesses. >> while creating a lot of new ones? >> no. >> the obama budget has a $350 billion tax hike on american companies. that is crazy. and inside that according to the budget is a $150 billion tax hike on u.s. profits overseas, exactly wrong. there is talk about a goebbels minimum tax, which is perhaps where that $150 billion tax hike comes from. that is also wrong. essentially these measures are penalizing american companies operating overseas. it create as double tax on their profits. i don't like any part of that. business is going to hate that. now, let's debate it. we have cnbc contributor, our great friend jared bernstein. we also have steve forbes, chairman and editor in chief of forbes media. gentlemen, thank you. jared, i am all for a lowerer marginal tax rate on corporations. i reckon it might come in under 30% from the current 35. but i'm hearing these massive tax increases everywhere else so that this thing is going to wind up being a trojan horse for job destroying and stock market destroying tax hikes on business. >> not at all, larry. in fact, this sounds precisely what you have been asking for for months and years and steve as well. look, you know that you can't have a revenue neutral tax reform broadening the base. you're going to have to close a bunch of loopholes. there will be winners, there will be losers. how else account do the arithmetic, larry? what am i missing? >> steve, if it were me, i'd want it as close to revenue neutral as possible. >> thank you. >> i'd want to get down to 20% on the corporate tax rate or 15% and take away the loopholes. steve, do you think we should have global minimum taxes and tax american companies who are profitable overseas just because they're overseas? that's what's got me going about this plan. >> yes, unfortunately they're sipping the poison wine from europe. you have the german and frenchmen proposing this for years, larry, minimum taxes, which means higher taxes, which means less economic growth around the world. we should be closing loopholes, lowering rates but not punish companies that have world wide presence like apples, not picking winners and losers, bashing our energy companies, giving a few break of high tech companies. stop playing winners and losers, have a level field and we'll all be better off. but no minimum tax. that means higher tax. >> i actually agree with what a lot of what the two of you just said. i do think it's unnecessarily confusing when you have these conflicting eye keys. what i want to hear from you and steve is that the part where secretary geithner says we're going to cut dozens and dozens and dozens of tax preferences because you're on board with that. there's $160 billion of tax expenditures every year in the corporate tax code. you've got to be ready to put those on the table if you're serious about this. >> the true flat tax does away with all of them and slashes the rate. my proposal from 35% down to 17%. and none of this territoriality we have. we're one of the few countries that punish companies for having a worldwide presence. >> okay, steve, i take that but -- >> get rid of all of them. >> steve, i take that point but here's the thing. on deck, i'm talking about in the batter's sirk certainly corporate tax reform ala larry kudlow and a lot of different people. i want to heart two of you stand up and applaud when geithner takes this tax rate down to 28% and cuts all those loopholes. >> if you cut all the loopholes, you can get this thing down to 15 or 20%. this is a disguised tax increase and punishes companies for having that global presence and they're still playing winners and loses, energy versus technology and who knows what else. why not make it clean? if you don't make it clean, it's not going to happen. >> i agree. >> i just want to weigh in on that because these are big numbers. a $350 billion tax increase, which is a revenue increase, is not consistent with the kind of vision that steve forbes is proposing or that i propose. >> that's a ten-year number. >> i would say to you if you're going to raise that kind of revenue, let's put the territorial aside. i think this global minimum tax is inexcusable and it will never pass because the business community won't hear of it. the other tax hikes on business should never go through unless the statuary rape is brought down. this is a bill lit of a trojan horse. i could be wrong. a 28, 29, 30% tax rate that still raises $350 billion, this can't work the numbers don't match. it tells me this is a big tax hike and not a tax kwut. >> first of all, that 350th is a ten-year number. every year accelerated deappreciation -- depreciation. you and steve have to be ready to put it on the table and i think i sort of hear you saying -- >> i'm good with getting rid of the loopholes and expenditures, steve forbes. i just want the rate to come down commensurately. >> this is like a jimmy carter tax reform when he proposed cutting it from 77 to 64 and getting rid of tax preferences, which have been a disguised tax increase. it should be across the board and propose something truly radical. in terms of accelerated depreciation, how about keeping instant expensing. >> now you're picking and choosing your loopholes again. you got to be ready to get ready of interest deductibility. >> if you company spends $100 million on a new factory, they shouldn't be able to write it off? that's not going to work in the world. >> that's what i was worried about. when push comes to shove, everybody likes their loopholes. >> if you want to get rid of ak celebrate raitted key preesh yagts and instant expensing and go along with 10%, i'll go -- >> i want a revenue neutral. >> revenue neutral in a -- not the crazy way the cbo does it, which assumes no effect on the economy. i don't like that. >> cbo is going to have to score this. >> it should be brought into the real world where when you reduce tax rates, you get more activity. >> i'm just looking for you and larry to applaud this when it comes across -- >> i'm not going to applaud a massive tax hike. i will applaud rate reduction. that 50 billion scares the day lights out of me, $150 minimum global tax scares the light out of me. thank you. >> happy valentine's. >> happy valentine's day. >> from greecee got an old fashioned bull bare debate and don't forget, free market capitalism is the best path to prosperity. let us help corporations and reduce their rates. let's not penalize them. we want success, not failure. what's this? 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>> would i change my outlook on the economy and the markets. but one of the good things that's been going on in the last couple of years, larry, is that we've had basically a budget freeze for two years. spending has been flat. little by little, if i were republicans, i would be taking credit for some of the recovery and better news on jobs -- >> because they stopped the bad stuff, the real bad stuff. >> stopped the bad stuff. if we were to get the obama budget as it was today, it would put in a lot of bad stuff. >> bone crushing tax hikes. retail sales come in soft and import prices are still rising, maybe more slowly but they're still growing at 7%. i raise that because i know you are not a bull on the stock market. >> our act to create wealth has decreased dramatically. real gdp is down almost 3% since all the stimulus spending began three years ago. the dollar is taking a pounding, the incentive to work is taking a pounding. that's why i tell you, inflation is coming -- >> world food prices up 27 postlast year. >> i hear you but let me play obama. since my policy, stocks have doubled -- >> that has nothing to do with it. the fed has been printing money. this is a bubble! this is a bubble! >> jobs have gone up by 2 million in the last year. >> at what cost? what cost in. >> the problem that we have today started a long time before obama became president. >> absolutely. >> we've increased spending by way too much. i go back to 2008 and say we made a bunch of mistakes, republicans made a bunch of mistake. tarp was a mistake. it interfered with the free market processes. we're paying a price for that. but it doesn't mean we won't have growth. that's one of the the key points. even in france they have economic recoveries. even in canada. canada has national health care and they have 7% unemployment. >> wait a second, canada has a 15% federal tax rate on corporations. canada is doing better than we are. >> they have national health care. >> canada has a appreciate conservative prime minister who is cutting back on socialized medicine and lowering regulations and pumping oil. canada gets me going. >> by the way -- >> valuations. you got a 2% dividend yield. where's the great value in that? then you have a budget where the president will continue to blow out government spending, 22% or greater. 2 -- >> if you believe his budget will pass, you should properly be a bear. >> i think they're going to use scare tactics to say you're going to cut back on this $8 billion still laws to community colleges, that's why -- >> you don't think the republicans will stop, it's actually $1.9 trillion in taxes overall. you don't think the house gop will stop that? >> look, they're caving on the payroll tax. >> republicans have a free lunch here, it's called the payroll tax holiday and they won't pay for it. that's not a good leading >> the obama budget is the anti-tea party budget no, doubt about it. but the republicans are squhag they're against what the tea party stood for as well as. we have to get back to that spending cut. they're afraid of them. they want to win the election. they're trying to go down the middle of the road. we've gotten small benefits from -- >> i'm very bullish. >> quickly. i'm runging out of time. >> the stock market is worth -- the dow, it's worth 18,000. i think it will go to 14,000. >> i think gold will go up a at least 10%. china's money supply increased 15%. >> you should be bullish on stocks. >> china is running rings around us, larry. commodity prices are going to go up because of all of china's infrastructure. >> i think canada is going to -- >> that's because they're not killing their currency. >> brian thank you so much. the fed has okayed a merge are of two big banks, may become the nation's fifth largest banks when all is said and done. please stay with us. hello, how can i deliver world-class service for you today ? we gave people right off the street a script and had them read it. no, sorry, i can't help you with that. i'm not authorized to access that transaction. that's not in our policy. i will transfer you now. my supervisor is currently not available. would you like to hold ? that department is currently closed. have i helped you with everything you needed ? if your bank doesn't give you knowledgeable customer service 24/7, you need an ally. ally bank. no nonsense. just people sense. . we have breaking news about the merger of two big banks. jonathan joins us with the latest. good evening. >> good evening, larry. breaking news to report. the federal reserve has given the right for capital one to acquire ing direct. the price tag $9 billion. people are watching zynga. shares moves down sharply after trading. julia boordstin has more. >> the stock is lower after hours. projections fell short of wall street expectations and earnings are down from a year ago when the company was still private. on the up side the social gaming giant says advertising and partnership revenue tripled from last year. its mobile business has strong momentum and the company said that the potential for legalized online gambling is a, quote, very interesting opportunity. >> new guidelines from the treasury department are hurjing banks to cut all ties to iran's central banks. talks between yahoo! and internet giant ali baba were abraptly called off. boeing stocks went up after it received -- late payments rose and 60% of mortgages are now 60 days late in payments. finally tonight the sports illustrated swim suit issue has been released. on the cover, kate upton, the niece of michigan congressman fred upton. no comment from the congressman. si.com expects 45 million views and video plays today alone. happy valentine's day. >> of course kudlow viewers are very much aware of the "sports illustrated" cover. we appreciate your help as always. coming up, paul ryan, republican from wisconsin and his first tv interview since the president's budget released. he'll tell us why he's he opposes the budget and how he'll save america. i look forward to it. nesis. in a new, faster-acting formula. zero-to-sixty in less time than a porsche panamera s. the 429 horsepower genesis r-spec. from hyundai. sadly, no. oh. but i did pick up your dry cleaning and had your shoes shined. well, i made you a reservation at the sushi place around the corner. well, in that case, i better get back to these invoices... which i'll do right after making your favorite pancakes. you know what? 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[ male announcer ] marriott hotels & resorts knows it's better for xerox to automate their global invoice process so they can focus on serving their customers. with xerox, you're ready for real business. welcome back to "the kudlow report." president obama sent congress his 2013 budget proposal yesterday. gop house budget chairman paul ryan has already said the president's budget ensures debt crisis and decline. he called it failed leadership. here now for his first tv interview since the president's budget released is house budget chair paul ryan, republican from wisconsin. mr. chairman, welcome back as always. i want to talk about budget details but let me get your overview. you're calling it debt crisis and decline. tell us why. >> it's a fundamentally unserious budget. the president literally is just punting on the issues. this is really more of a campaign document than a credible fiscal solution to our big budget problems the president is claiming this is a $4 trillion reduction pack and. but when strip out all the tricks, he's increasing taxes for a $1.9 trillion for a measly $4 billion in deficit reduction over a four-year period where he proposes to spend $47 trillion. the debt raises 76% unserious. the problem we have is in this moment in history, this is whether we need leadership and it's when we can least afford to have a president who is just walking away from this. it's the fourth year of trillion dollar plus deficits with the president's fourth budget. that's why we say it's not serious. >> he says he's cutting the deficit by 4 trillion but when you look at the numbers from his own table, the deficit rises by 6.7 trillion and spending rises by $47 trillion. this is over the ten-year window. you mentioned almost $2 trillion in tax hikes, about $350 billion of business tax hikes, offshore profit tax hikes, repeal of the bush tax cuts, you got payroll tax cut is in here someplace but everything else, capital gains, dividends, banks, oil and gas companies, millionaire, how can that grow the economy? you're a growth guy, a supply sider. i don't understand how that grows the economy. >> it doesn't grow the economy because of effective top personal income tax rate goes to 44.8% in 2013. you and i both know that 8 out of 10 businesses in america file their taxes as individuals, subss, locs, partnership. we're going to tax where half our jobs come next year at over 45%. the canadians are dropping their tax on their businesses to 15%. the chinese are at 25. the irish are at 12.5 and president obama is saying we're going to tax all these successful small businesses at about 45%? and even taking these tax increases, just those bush tax cuts, the top two rates, that pays for something like 1