Transcripts For CNBC The Kudlow Report 20121122 : vimarsana.

Israel and whhamas. Is israel snaf particularly when we know that palestinians and gaza may just rest unand rearm for the next round . Finally as you head out into the thanksgiving traffic, ask yourself where president obama still hasnt given the green light to the Keystone Pipeline that would give us jobs and energy n independence . Now a truly Bipartisan Group of senators is telling the president to make a decision right now. First up this evening, this is the big question. Will we get a deal done or might president obama just let us go right over the fiscal cliff, take the recession, and simply blame the gop . This is a serious question that im hearing from washington all the time. So lets talk. We have cnbc contributor jack bernstein, former chief economist, and art laffer, former reagan adviser. Im not attacking obama or anything. Im just saying there is a lot of talk of stalemate. Well perhaps go through where, why and how. Staffs have been meeting unsuccessfully. Some people are saying, art, that the scenario is going to be that president finally throws up his hands and says there is no deal, were going to have a stalemate and we will tall off the fiscal cliff into recession and then he will blame the republicans. Whats your take . I think hes going to blame the republicans, larry, for sure. And i think in the republicans interest to delay it as long as possible and make the republicans look as uncooperative as possible. But we will fall off the cliff anyway, larry. And i think we will have a very bad year in 2013, even if they do extend all of the tax cuts. I think we have a real bad scenario coming forward. Jared bernstein, what do you think that the president might go off the cliff. Okay, nothing on your end. Then blame the republicans. And add one thing, jared, president obama does have a legacy. Seems to me that part of that legacy is, you know, better fiscal position and better economic position. Thats why im a little skeptical of this scenario but i want your take on it. Yeah. I share your skepticism, look. If we do go over the cliff, and i sure hope we dont, remember, it is going over and staying over thats recessionary. If theres a real deal that could show markets that we could actually get in a sustainable budget path, even if that deal isnt signed and stamped by december 31, a short trip over the cliff wont hurt us. But here is the thing for you and art to consider. I disagree, by the way. On thanksgiving eve, heres the thing i want you to consider. Repeat after me, guys. Tax rates are going to go up on the top 2 of households and its not going to hurt the economy one bit. Oh, that part i wont its got to be part of the deal. Thats part of the deal. Before you answer that, art, i want to say, a second issue. Lets put it right on table since jared opened up. Many people believe since the president s budget want 1. 6 trillion 1. 6 trillion, of revenues, over ten years. Over the next ten years, to be clear. Next ten years. He will wish to raise the top tax rates. That includes income taxes, cap gains, dividends and estate taxes. And art laffer, he will also wish to curb deductions so he will raise tax revenues as well as tax rates and art, that sets the stage for a stalemate politically. What does it do economically also . Well, it does set the stage politically. By not doing anything, all the tax rates go up on everyone. Thats for sure. So, the question is, the republicans will pass a bill that extends all the tax cuts. I mean, that they will go along with no problem. They wont go along with a double wammy and they shouldnt. This is obamas economy. This is obamas issue. If obama wants it pass that in the house, he has it find a group of republicans that will peel off from the rest of the republicans and good along with the democrats it pass this other stuff. But otherwise, i dont see any incentive in the president s part to not extend a large portion of the tax cuts if he can. I dont think he ever wants it see the whole thing go over the cliff. I mean, you have to remember that he does as you guys have both suggested, he does want to extend a large portion of the tax cuts. Thats 98 of them. Its the top 2 of house holds, that not only he, but a majority of the lek electorate and and the polls, and a nonpartisan poll keeper says in the 2013 if the top two rates expire, we are talking about a tenth of a percent on gdp. Isnt that worth the cost of getting on a bitter budget path, guys . Work with me here. Jared, come on, help me here. These people you are raising taxes on are job creators. This is the worst group you could raise tax rates on. Honestly here is the thing that the simpson bowls, by the way. By the way, they assume the top 2 tax. And lowers the rates. How do you explain the simpson bowls would bring down rates. Better markets, better incomes and with the older tax bracket. We are not going to have art, you answered it. One of the things that bothers me the most, art, is remember, we have the obama care tax hike. So we have Capital Gains rising. We have estate taxes rising. Cost of investment will rise. The return on investment will fall. Now, art, through the years, you have taught me that that means less business formation, lower productivity, worst jobs, and lower wages. How can that be a good thing . Its not. You cant tax an economy into prosperity, larry. And by the way, did you see what california has done . Do you know what after tax rate of return on assets held in california is happened . It just plummeted. Thats a very large share of the u. S. Economy. Were noncompetitive in the world and we will have a real serious recession in 2013 unless something is really done quickly. Jared, i just want to ask you a question. Sure. You hinted this is really important. Where we are going tonight is more politics than economics. Okay. You kind of hinted that we might cross through the year, that we might fall off the cliff. If only for a short period of time. Now as someone who worked in there years ago as arthur did, short period of time, you will take the better part of the winterer to make a deal. So we are going to go into recession. The question is, do you think the president can take that and do you think he can really blame republicans . Is it that easy, or is all hell going to break loose in the country . I think it will be absolutely terrible if we go over and stay over the cliff long enough for recession. I dont care who blames whom but i will blame everybody up there. This economy actually has a little bit of momentum behind it and we would be crazy to kill that. Obama says they would blame republicans so probably the white house is thinking about that. But if we have a deal by mid january, mid february, i dont see why that is going out of the question at all. They agree with most of what is on paper here. One quick thing. Okay, sure. I dont think dividends will go up to 40 . I think there has to be some compromise. Art, you get the last word. Let me say, that people already moved a lot of income forward. Theres income shifting as well as lower growth and that income shifting is going to drop gdp by a percent and half to 2 in the first half of 2013. Thats baked into the cake already. Over a hundred Large Companies have already brought forward their special Dividend Payments to avoid that tax hike. Anyway, i got a job. Jared bernstein, art laffer, have a happy thanksgiving. Happy thanksgiving, everybody. You too, guys. Well, here is a very interesting idea, carving out Small Business owners from the deadly fiscal cliff tax hikes. Here now to tell us more is maine senator susan collins. As always, whenever you come on this show, you have something really interesting to tell us. Im reading about this carveout for Small Businesses you are kind of looking after. Tell us more, how does this work . What i wanted to do was to try to forth a middle ground that protected Small Businesses from any of the rate hikes that are being discussed. It seems to me that democrats have been focussing mainly on increasing taxes, republicans were focussing mainly on the need to protect Small Business. And that there was a way to accomplish a middle ground by allowing for a sir tax on the very wealthy, those making over a Million Dollars a year. But not applying it to Small Businesses. Many of whom paid taxes through the individual income tax system. Right. Thats a key point. All right, im going it leave the sir tax alone. I just want to focus, you basically keep Small Business top rated 35 , and i wanted to ask you, are there any restrictions. We are talking sub chapter llcs, et cetera, et cetera. Are there any restrictions to that, or is it just everybody . There are restrictions. First of all, it would require that Small Business actually have employees. Thats the whole point is to protect the job creators in our society. Second, it would apply to businesses that had up to 500 employees. So were not talking about very large sub chaptersing corporations so most of them are smaller. And it is really focused on protecting those businesses, such as those that employ between 20 and a hundred employees who are employing 18 million americans. In addition, theres another very important distinction. The protection the carveout would apply to Small Businesses whose owners are actively involved in running the business, not just passive investors. So thats the kind of business that were trying to protect. Those are the job creators, i think, basically you captured most of the job creators. Now, i want to circle back just for a second. You mentioned a sir tax on millionaires. Do you see a sir tax on millionaires as part of a fiscal cliff compromise, senator . I do. I think ultimately thats where were going to end up. Weve got to look at both sides of the ledger. But my concern is that in imposing this kind of sir tax or higher tax on people who make more than a Million Dollars, that we dont head our Small Business sector, it is Small Businesses that are creating the vast majority of new jobs in this country, and sustaining the jobs that we have. And the last thing they need is to be hit with additional taxes. So thats the whole concept behind this proposed i think it is great job protection for the proposers. No one really knows, we dont know if it is stalemate, solution or who, what, when, why. There were bad stories in the paper today that staffs werent getting along. But when you mention the millionaire sir tax, do you think thats it . . Other words, would the millionaire sir tax cover that and would the john baner idea of putting a limit on tax deducks work also . So have you a revenue but a compromise on tax rates . I think that t it would work. And it would give us time to do a complete overhaul of the tax code, which is what i know youve talked about on your show many times. And it really is what is needed. But were not going to be able to do that before january 2nd, before we go over that fiscal cliff. So we need a balanced plan that addresses spending as well. But i think John Boehners proposal plus the proposal i put forth last fall, for the sir tax, but with the carveout for Small Business, offers a way forward. And would help prevent us from speeding over that fiscal cliff, which would be a disaster for our economy. All right, well, thats it. I think youre rate about that. Maine senator, susan collins, cant thank you enough. Have a very happy thanksgiving. Thank you, larry. All right. Stock markets of course are still obsessed with the fiscal cliff. Market did go up today by 48 points on the dow. You know, it is as though nothing else exists. So were about to talk to a market pro whos going to help you with therapy on this market obsession. Speaking of therapy, dont forget, folks, free market capitalism is the best bet to prosperity. This whole fiscal cliff issue is tied up with Economic Freedom and prosperity. Im larry kudlow, well be right back. [ male announcer ] at scottrade, we believe the more you know, the better you trade. So we have ongoing webinars and interactive learning, plus, inbranch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade, seven dollar trades are just the start. Our teams have the information you want when you need it. Its another reason more investors are saying. [ a im with scottrade. Cliff, thats what we need. Hey, washington, even santa claus is calling for a fiscal cliff deal. But it depends on the kind of deal. Certainly investors are obsessing over the entire fiscal cliff subject. Our next guess will help us with this therapy. Welcome back it tjm institutionaler is visions. I want it ask you, lets run the table on this, jimmy. First of all, if there is a stalemate and no year by year end and Jared Bernstein in the first segment suggested that that might happen. Then, does the stock market really start selling off big time, lets say, in december or the last two weeks of the year . What happened . I dont know if big time is the right way to describe it. I could see them losing a hundred handles relatively quickly, down to 1250ish. I think we would see a Quick Response from the fed. We know where they stand on this. They want to provide liquidity and any time they see a need for that. Ive never uttered these words before, but santa claus is wrong. We dont want a deal on the fiscal cliff, we want a good deal on the fiscal cliff. Right. Now this is really key. First of all, i want it say one thing, regarding ben bernanke and his monetary safety net and he did say yesterday that he didnt think Monetary Policy could offset a fiscal cliff recession. I dont want to get into a lot of fed watching. Im just saying, im not sure the Federal Reserve will do much more. Maybe they will, maybe they wont. Now regarding good deals versus bad deals, this is where i disagree with some of think kol a colleagues here. Maybe you do too. If this is deal that jacks up tax rates, the Capital Gains rate, dividend rate, if it has a millionaire surtax as senator collins said, thats not such a hot deal. How would they react to a high tax on investor type of deal. They limit investments. They make investments less attractive. The stock market doesnt want a big raise on Capital Gains and dividends. The stock market is okay with a small one. The best is the 39 ordinary income tax hike. But essentially leave dividends and Capital Gains alone with only a tiny bit of increase in that. But that is not going to happen, my friend. Its not going to happen. This is a grade in scale on the possibility. Thats the best side. Im just saying, youre here to give us therapy. Okay. John boehner doesnt want them to. John boehner says lets put a lid on loop holes and raise revenues that way. Some people, including myself, believe the president wants it raise revenues by loophole closures but also raise tax rates. Wasnt both. If he goes the tax rates, jim, youre talking about Capital Gains going from 15 to 24, including obama care tax. And youre talking about dividends going 15 to about 44. Now maybe they will fix that dividend thing. But there is no question that the incentives will roll back by 10 or 15 on those two investment tax rates. No question. But if the dividends are fixed, did you say 25 on Capital Gains, i think the market will learn it live with that. If we can rework the dividend part, the market may think that is positive and think thats a risk so you might have a shock initially. But then the market will absorb the new tax rates, is that what you are saying . Thats what i believe, certainly. Then you get back into things like apple. If they raise Capital Gains and dividends and raise dividends up to 40 like on ordinary income, then i see this sluggish recovery, the market will interpret as that, then you run into things like cocacola, proctor and gamble, things reviewed as safe havens, because we wont have a very good economy. If we dont get it done by yearend, good over the cliff, and into First Quarter recession, art laffer thinks there is recession baked into the cake for first and second quarter. Cbo says go over the cliff, we will have recession. Thats bad for growth, bad for gdp and bad for profit. You have to expect another correction that might go well into the winter. Absolutely. They make it out that it is not a big deal if we go over the fiscal cliff. But if there is a tremendous amount of uncertainty, the stock market can sell off and selling begets selling and thats a tremendous danger to wealth. Many of them believe it is only up on air at this point, anyway. So i think thats an awful deal. We just i dont know. I think you got to keep your powder dry right now. I just think you have to wait and see what the reports are, what comes out of press, what spokes people say, we just dont know. But there is no question stocks are obsessing about the fiscal cliff. Jim, have a great thanksgiving. You too, larry. Thanks for coming on tonight. 18,000 lost jobs as hostess goes into liquidation. But the fat cats will not lose any money. Wait until you hear the money they are making even as their members suffer. Twins. I didnt see them coming. I have obligations. Cute obligations, but obligations. I need to rethink the core of my portfolio. What i really need is sleep. Introducing the ishares core, Building Blocks for the heart of your portfolio. Find out why 9 out of 10 large professional investors choose ishares for their etfs. Ishares by blackrock. Call 1800ishares for a prospectus which includes investment objectives, risks, charges and expenses. Read and consider it carefully before investing. Risk includes possible loss of principal. So the Bankruptcy Court approved Hostess Brands liquidation plan late this afternoon. The firm may still soon several brands but 15,000 workers are being terminated now. While the bakers union and families suffer, the leaders are coming out like financial band its. Get this, Keystone Pipeline<\/a> that would give us jobs and energy n independence . Now a truly Bipartisan Group<\/a> of senators is telling the president to make a decision right now. First up this evening, this is the big question. Will we get a deal done or might president obama just let us go right over the fiscal cliff, take the recession, and simply blame the gop . This is a serious question that im hearing from washington all the time. So lets talk. We have cnbc contributor jack bernstein, former chief economist, and art laffer, former reagan adviser. Im not attacking obama or anything. Im just saying there is a lot of talk of stalemate. Well perhaps go through where, why and how. Staffs have been meeting unsuccessfully. Some people are saying, art, that the scenario is going to be that president finally throws up his hands and says there is no deal, were going to have a stalemate and we will tall off the fiscal cliff into recession and then he will blame the republicans. Whats your take . I think hes going to blame the republicans, larry, for sure. And i think in the republicans interest to delay it as long as possible and make the republicans look as uncooperative as possible. But we will fall off the cliff anyway, larry. And i think we will have a very bad year in 2013, even if they do extend all of the tax cuts. I think we have a real bad scenario coming forward. Jared bernstein, what do you think that the president might go off the cliff. Okay, nothing on your end. Then blame the republicans. And add one thing, jared, president obama does have a legacy. Seems to me that part of that legacy is, you know, better fiscal position and better economic position. Thats why im a little skeptical of this scenario but i want your take on it. Yeah. I share your skepticism, look. If we do go over the cliff, and i sure hope we dont, remember, it is going over and staying over thats recessionary. If theres a real deal that could show markets that we could actually get in a sustainable budget path, even if that deal isnt signed and stamped by december 31, a short trip over the cliff wont hurt us. But here is the thing for you and art to consider. I disagree, by the way. On thanksgiving eve, heres the thing i want you to consider. Repeat after me, guys. Tax rates are going to go up on the top 2 of households and its not going to hurt the economy one bit. Oh, that part i wont its got to be part of the deal. Thats part of the deal. Before you answer that, art, i want to say, a second issue. Lets put it right on table since jared opened up. Many people believe since the president s budget want 1. 6 trillion 1. 6 trillion, of revenues, over ten years. Over the next ten years, to be clear. Next ten years. He will wish to raise the top tax rates. That includes income taxes, cap gains, dividends and estate taxes. And art laffer, he will also wish to curb deductions so he will raise tax revenues as well as tax rates and art, that sets the stage for a stalemate politically. What does it do economically also . Well, it does set the stage politically. By not doing anything, all the tax rates go up on everyone. Thats for sure. So, the question is, the republicans will pass a bill that extends all the tax cuts. I mean, that they will go along with no problem. They wont go along with a double wammy and they shouldnt. This is obamas economy. This is obamas issue. If obama wants it pass that in the house, he has it find a group of republicans that will peel off from the rest of the republicans and good along with the democrats it pass this other stuff. But otherwise, i dont see any incentive in the president s part to not extend a large portion of the tax cuts if he can. I dont think he ever wants it see the whole thing go over the cliff. I mean, you have to remember that he does as you guys have both suggested, he does want to extend a large portion of the tax cuts. Thats 98 of them. Its the top 2 of house holds, that not only he, but a majority of the lek electorate and and the polls, and a nonpartisan poll keeper says in the 2013 if the top two rates expire, we are talking about a tenth of a percent on gdp. Isnt that worth the cost of getting on a bitter budget path, guys . Work with me here. Jared, come on, help me here. These people you are raising taxes on are job creators. This is the worst group you could raise tax rates on. Honestly here is the thing that the simpson bowls, by the way. By the way, they assume the top 2 tax. And lowers the rates. How do you explain the simpson bowls would bring down rates. Better markets, better incomes and with the older tax bracket. We are not going to have art, you answered it. One of the things that bothers me the most, art, is remember, we have the obama care tax hike. So we have Capital Gains<\/a> rising. We have estate taxes rising. Cost of investment will rise. The return on investment will fall. Now, art, through the years, you have taught me that that means less business formation, lower productivity, worst jobs, and lower wages. How can that be a good thing . Its not. You cant tax an economy into prosperity, larry. And by the way, did you see what california has done . Do you know what after tax rate of return on assets held in california is happened . It just plummeted. Thats a very large share of the u. S. Economy. Were noncompetitive in the world and we will have a real serious recession in 2013 unless something is really done quickly. Jared, i just want to ask you a question. Sure. You hinted this is really important. Where we are going tonight is more politics than economics. Okay. You kind of hinted that we might cross through the year, that we might fall off the cliff. If only for a short period of time. Now as someone who worked in there years ago as arthur did, short period of time, you will take the better part of the winterer to make a deal. So we are going to go into recession. The question is, do you think the president can take that and do you think he can really blame republicans . Is it that easy, or is all hell going to break loose in the country . I think it will be absolutely terrible if we go over and stay over the cliff long enough for recession. I dont care who blames whom but i will blame everybody up there. This economy actually has a little bit of momentum behind it and we would be crazy to kill that. Obama says they would blame republicans so probably the white house is thinking about that. But if we have a deal by mid january, mid february, i dont see why that is going out of the question at all. They agree with most of what is on paper here. One quick thing. Okay, sure. I dont think dividends will go up to 40 . I think there has to be some compromise. Art, you get the last word. Let me say, that people already moved a lot of income forward. Theres income shifting as well as lower growth and that income shifting is going to drop gdp by a percent and half to 2 in the first half of 2013. Thats baked into the cake already. Over a hundred Large Companies<\/a> have already brought forward their special Dividend Payments<\/a> to avoid that tax hike. Anyway, i got a job. Jared bernstein, art laffer, have a happy thanksgiving. Happy thanksgiving, everybody. You too, guys. Well, here is a very interesting idea, carving out Small Business<\/a> owners from the deadly fiscal cliff tax hikes. Here now to tell us more is maine senator susan collins. As always, whenever you come on this show, you have something really interesting to tell us. Im reading about this carveout for Small Business<\/a>es you are kind of looking after. Tell us more, how does this work . What i wanted to do was to try to forth a middle ground that protected Small Business<\/a>es from any of the rate hikes that are being discussed. It seems to me that democrats have been focussing mainly on increasing taxes, republicans were focussing mainly on the need to protect Small Business<\/a>. And that there was a way to accomplish a middle ground by allowing for a sir tax on the very wealthy, those making over a Million Dollars<\/a> a year. But not applying it to Small Business<\/a>es. Many of whom paid taxes through the individual income tax system. Right. Thats a key point. All right, im going it leave the sir tax alone. I just want to focus, you basically keep Small Business<\/a> top rated 35 , and i wanted to ask you, are there any restrictions. We are talking sub chapter llcs, et cetera, et cetera. Are there any restrictions to that, or is it just everybody . There are restrictions. First of all, it would require that Small Business<\/a> actually have employees. Thats the whole point is to protect the job creators in our society. Second, it would apply to businesses that had up to 500 employees. So were not talking about very large sub chaptersing corporations so most of them are smaller. And it is really focused on protecting those businesses, such as those that employ between 20 and a hundred employees who are employing 18 million americans. In addition, theres another very important distinction. The protection the carveout would apply to Small Business<\/a>es whose owners are actively involved in running the business, not just passive investors. So thats the kind of business that were trying to protect. Those are the job creators, i think, basically you captured most of the job creators. Now, i want to circle back just for a second. You mentioned a sir tax on millionaires. Do you see a sir tax on millionaires as part of a fiscal cliff compromise, senator . I do. I think ultimately thats where were going to end up. Weve got to look at both sides of the ledger. But my concern is that in imposing this kind of sir tax or higher tax on people who make more than a Million Dollars<\/a>, that we dont head our Small Business<\/a> sector, it is Small Business<\/a>es that are creating the vast majority of new jobs in this country, and sustaining the jobs that we have. And the last thing they need is to be hit with additional taxes. So thats the whole concept behind this proposed i think it is great job protection for the proposers. No one really knows, we dont know if it is stalemate, solution or who, what, when, why. There were bad stories in the paper today that staffs werent getting along. But when you mention the millionaire sir tax, do you think thats it . . Other words, would the millionaire sir tax cover that and would the john baner idea of putting a limit on tax deducks work also . So have you a revenue but a compromise on tax rates . I think that t it would work. And it would give us time to do a complete overhaul of the tax code, which is what i know youve talked about on your show many times. And it really is what is needed. But were not going to be able to do that before january 2nd, before we go over that fiscal cliff. So we need a balanced plan that addresses spending as well. But i think John Boehners<\/a> proposal plus the proposal i put forth last fall, for the sir tax, but with the carveout for Small Business<\/a>, offers a way forward. And would help prevent us from speeding over that fiscal cliff, which would be a disaster for our economy. All right, well, thats it. I think youre rate about that. Maine senator, susan collins, cant thank you enough. Have a very happy thanksgiving. Thank you, larry. All right. Stock markets of course are still obsessed with the fiscal cliff. Market did go up today by 48 points on the dow. You know, it is as though nothing else exists. So were about to talk to a market pro whos going to help you with therapy on this market obsession. Speaking of therapy, dont forget, folks, free market capitalism is the best bet to prosperity. This whole fiscal cliff issue is tied up with Economic Freedom<\/a> and prosperity. Im larry kudlow, well be right back. [ male announcer ] at scottrade, we believe the more you know, the better you trade. So we have ongoing webinars and interactive learning, plus, inbranch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade, seven dollar trades are just the start. Our teams have the information you want when you need it. Its another reason more investors are saying. [ a im with scottrade. Cliff, thats what we need. Hey, washington, even santa claus is calling for a fiscal cliff deal. But it depends on the kind of deal. Certainly investors are obsessing over the entire fiscal cliff subject. Our next guess will help us with this therapy. Welcome back it tjm institutionaler is visions. I want it ask you, lets run the table on this, jimmy. First of all, if there is a stalemate and no year by year end and Jared Bernstein<\/a> in the first segment suggested that that might happen. Then, does the stock market really start selling off big time, lets say, in december or the last two weeks of the year . What happened . I dont know if big time is the right way to describe it. I could see them losing a hundred handles relatively quickly, down to 1250ish. I think we would see a Quick Response<\/a> from the fed. We know where they stand on this. They want to provide liquidity and any time they see a need for that. Ive never uttered these words before, but santa claus is wrong. We dont want a deal on the fiscal cliff, we want a good deal on the fiscal cliff. Right. Now this is really key. First of all, i want it say one thing, regarding ben bernanke and his monetary safety net and he did say yesterday that he didnt think Monetary Policy<\/a> could offset a fiscal cliff recession. I dont want to get into a lot of fed watching. Im just saying, im not sure the Federal Reserve<\/a> will do much more. Maybe they will, maybe they wont. Now regarding good deals versus bad deals, this is where i disagree with some of think kol a colleagues here. Maybe you do too. If this is deal that jacks up tax rates, the Capital Gains<\/a> rate, dividend rate, if it has a millionaire surtax as senator collins said, thats not such a hot deal. How would they react to a high tax on investor type of deal. They limit investments. They make investments less attractive. The stock market doesnt want a big raise on Capital Gains<\/a> and dividends. The stock market is okay with a small one. The best is the 39 ordinary income tax hike. But essentially leave dividends and Capital Gains<\/a> alone with only a tiny bit of increase in that. But that is not going to happen, my friend. Its not going to happen. This is a grade in scale on the possibility. Thats the best side. Im just saying, youre here to give us therapy. Okay. John boehner doesnt want them to. John boehner says lets put a lid on loop holes and raise revenues that way. Some people, including myself, believe the president wants it raise revenues by loophole closures but also raise tax rates. Wasnt both. If he goes the tax rates, jim, youre talking about Capital Gains<\/a> going from 15 to 24, including obama care tax. And youre talking about dividends going 15 to about 44. Now maybe they will fix that dividend thing. But there is no question that the incentives will roll back by 10 or 15 on those two investment tax rates. No question. But if the dividends are fixed, did you say 25 on Capital Gains<\/a>, i think the market will learn it live with that. If we can rework the dividend part, the market may think that is positive and think thats a risk so you might have a shock initially. But then the market will absorb the new tax rates, is that what you are saying . Thats what i believe, certainly. Then you get back into things like apple. If they raise Capital Gains<\/a> and dividends and raise dividends up to 40 like on ordinary income, then i see this sluggish recovery, the market will interpret as that, then you run into things like cocacola, proctor and gamble, things reviewed as safe havens, because we wont have a very good economy. If we dont get it done by yearend, good over the cliff, and into First Quarter<\/a> recession, art laffer thinks there is recession baked into the cake for first and second quarter. Cbo says go over the cliff, we will have recession. Thats bad for growth, bad for gdp and bad for profit. You have to expect another correction that might go well into the winter. Absolutely. They make it out that it is not a big deal if we go over the fiscal cliff. But if there is a tremendous amount of uncertainty, the stock market can sell off and selling begets selling and thats a tremendous danger to wealth. Many of them believe it is only up on air at this point, anyway. So i think thats an awful deal. We just i dont know. I think you got to keep your powder dry right now. I just think you have to wait and see what the reports are, what comes out of press, what spokes people say, we just dont know. But there is no question stocks are obsessing about the fiscal cliff. Jim, have a great thanksgiving. You too, larry. Thanks for coming on tonight. 18,000 lost jobs as hostess goes into liquidation. But the fat cats will not lose any money. Wait until you hear the money they are making even as their members suffer. Twins. I didnt see them coming. I have obligations. Cute obligations, but obligations. I need to rethink the core of my portfolio. What i really need is sleep. Introducing the ishares core, Building Blocks<\/a> for the heart of your portfolio. Find out why 9 out of 10 large professional investors choose ishares for their etfs. Ishares by blackrock. Call 1800ishares for a prospectus which includes investment objectives, risks, charges and expenses. Read and consider it carefully before investing. Risk includes possible loss of principal. So the Bankruptcy Court<\/a> approved Hostess Brands<\/a> liquidation plan late this afternoon. The firm may still soon several brands but 15,000 workers are being terminated now. While the bakers union and families suffer, the leaders are coming out like financial band its. Get this, Union President<\/a> frank hz pay is up and while the union lost 50 of membership. Compensation, 45 rise from 182,000 in year 2000 to 262,654 in 2011. And that, according to the department of labor. Now, the leaders pensions, they are a hundred percent funded and paid for by the union members. And in addition to the sixfigure salaries paid it unions executive staff, both hurts and his secretary treasurer have their kids working at headquarters pulling down over 71,000 and about 49,000 respectively. I think thats called nepotism. Now hostess isnt our only labor problem. But i hope you consider how the leadership hosed over the membership. But today, weve also got the seiu. They went ahead, snarling traffic at Los Angeles International<\/a> airport, in the middle of the thanksgiving day rush. But you know what . Airport employees say they dont even support the seiu. So what is up with this . We are going to ask the seiu president live a little later, who exactly shes prep accidenting. And a ceasefire in the middle east, but questions still abound. Will it hold . Did israel get the short end of the stick in my own take, israel should have gone ahead and finished the job of pummeling the hamas terrorists. Thats next up on kudlow. [ male announcer ] if you suffer from heartburn 2 or more days a week, why use temporary treatments when you can prevent the acid thats causing it with prevacid24hr. With one pill prevacid24hr works at the source to prevent the acid that causes frequent heartburn all day and all night. And with new prevacid24hr perks, you can earn rewards from dinner deals to music downloads for purchasing prevacid24hr. Prevent acid all day and all night for 24 hours with prevacid24hr. Welcome back to the kudlow report. Im larry kudlow. In this half hour, how can anyone not be in favor of completing the Keystone Pipeline<\/a>. Nine democrats and nine republicans want the president to authorize construction right now. But alas, we will debate it. The seiu union is snarling 1. 79 passengers going through lax this thanksgiving. Turns out, the employees they say they represent dont want a thing to do with them. What a story of outside agitators. Thats all it is. Now a ceasefire between israel and gaza went into feekt today after eight days of heighten et violence. Gaza is celebrating when the ceasefire was announced but at least 12 rockets have been fired into israel since the socalled truce. So is this deal bad for israel and good for the terrorists . Lets get right to our distinguished guests. Former Deputy Assistant<\/a> of defense peter brooks and we welcome back wes clark former nato ally commander and fellow senior at ucla berko center. A serious question, do you think israel got done what it needed to get done in terms of taking out the hamas military installations and the rocket installations . Did they get the job done . It is too early to know, but they sure hit a lot of targets in there, and you have to believe that targets were appropriate targets. They were plotted, picked up through various means of intelligence, and they had adequate time to strike them. The question is, did they do enough . We dont know that. The Ground Campaign<\/a> remains an option. The troops are still there and as Prime Minister<\/a> nettena hugh said, he cannot and will not allow the terrorists to rearm. Interesting petoint, peter p you say ground war, if hamas doesnt round up the truce, it still can happen. It can still happen. Youre the only one saying truce may not happen. Now, peter, this is something, a quote from secretary of state Hillary Clinton<\/a> today. She is in egypt. She says with president marcy. Egypt assumed responsibility and leadership for the peace. Peter brooks, i guess i might like it believe that. But with marcy and the Muslim Brotherhood<\/a> behind them, they favor hamas. They hate israel. How can he possibly preside over real truce . Thats a very good question, larry. I mean, president morecy is being tested. We will see if he rises to the occasion. Dont forget he has the camp david acords with israel and he gets a lot of aid. Egypt gets a lot of aid, economic and military aid for the United States<\/a> with a peace treaty with israel. If they move away with that, thats in jeopardy. This new president is untested. It is a new government. If he is not able to provide for the country of egypt, things may change. He has been put on the spot, and he will have to perform. One more spot, peter. His Foreign Ministry<\/a> and his morn minister and Prime Minister<\/a> have said good things about hamas and bad things about israel. Pardon my skepticism. Yeah, of course, you are right to be skeptical. Weve got to see where the rhetoric and deeds match up, dont we . Thats what we have to see. I think the general is right. We have to see what happens in the days ahead. Earlier today was five rockets. Now 12 rockets. Israelis have to respond. I mean, this is a ceasefire. The devil is in the details. The negotiating starts now with the ceasefire. The hamas and palestinians want things out of this. So do the israelis. Im not saying we are out of the woods on this at all and i think we could see more conflict. A very smart move, larry, to put the egyptians in the position where as president morsi says, he is in charge. Okay, hes got to be responsible. No more rhetoric. No more siding with one side. Hes got to make the thing work. Thats what we want to see as responsible leadership. Not id logical leadership. Thats a great point. Let me ask you, something unresolved, in this peace treaty or truce, is the issue of gaza and its borders, which borders up into egypt. Now the hamas, they want israel to pull the military out. And have a complete opening of the borders. Into egypt. General clark, doesnt that open the door, if that ever happened, to iranians rearming, rearming three egypt, through the sinai, rearming hamas just like they always do. Of course, and israel cant permit that and shouldnt permit that. This is where egypt has to step up and say, we will insure that no weapons get back into gaza. That has to be worked out in stages and demonstrated. It has to be checked and verified. And israel has a continuing interest and should have a continuing right to verify that. Do you think, general, serious, do you think that hamas, i hope im not being too cynical, but hamas in some sense, gained a Public Relations<\/a> victory . Is that possible . And when you talk about egypt, egypt helped them gain a Public Relations<\/a> victory . That kind of burns the back of my neck, general. But thats kind of the way i see it. Obviously, they are going to say they gained a victory. I think the real loser is the Palestinian Authority<\/a> and who has been sidelined by the hamas. A, they wanted to go after the Palestinian Authority<\/a> and show they were powerless. They did do that. And secondly, to get egypt to come out and back hamas, which egypt hasnt done. So, at best, hamas got a partial victory and egypt has it think about its relationship with the Palestinian Authority<\/a> and how to restore balance there. Peter brooks, last 30 seconds. How does benjamin nettena hugh come out of this . I think the bigger question here is the middle east. I mean within you know, step back from what we were just talking about. Look at syria. Look at issues there. Look at spillover from syria. The administration has to get their arms around this problems in the middle east. And their policies right now are failing. This is just one small section of it. Irans nuclear program, we need a lot of attention on this and it just gots dressed. Iran is the key point. Wes clark, happy thanksgiving. Peter brooks, like wise. Same to you. Folks, we know president obama loves green energy. But his bets havent paid off. Some senators on his side of the aisle are seeing the light when it come to the Keystone Pipeline<\/a>. Are they right and will the pressure finally pay off . When you take a closer look. At the best schools in the world. You see they all have something very interesting in common. They have teachers. With a deeper knowledge of their subjects. As a result, their students achieve at a higher level. Lets develop more stars in education. Lets invest in our teachers. So they can inspire our students. Lets solve this. Asking obama to okay the Keystone Pipeline<\/a>. So mr. President , what is the holdup . Here is tyson cloak yum, director of Energy Program<\/a> at public citizen. And ken green, resident scholar at aei. Tyson, im stunned to see your notes you havent come around to the easiest policy position regarding jobs, regarding energy independence. Regarding more refineryes. How can you not be wildly in favor of the Keystone Pipeline<\/a> . Because the Keystone Pipeline<\/a> has nothing to do with American Energy<\/a> security or lower gas prices for americans. It is all about what is good for canada. It is getting landlocked canadian crude out of alberta and to a coast. 75 of the record canada is an ally . Where is that bad . First of all, oil is oil, right . Oil is oil. It helps them, it helps us. Jobs are jobs. Helps them out. But i didnt like your reference to canada. Canada is americas greatest ally and friend. We should Work Together<\/a> on energy. What in what is imaginabye what could be bad about working with canada . The issue isnt about what is bad working with canada. The question is what is good for American Energy<\/a> security and gas prices. And the Keystone Pipeline<\/a> is sending that oil to the gulf coast where it is refined for product outside of the United States<\/a>. The United States<\/a> over the last 12 months already exported a record 3 1 2 Million Barrels<\/a> of oil and refined product a day. Thats extremely misleading. It isnt. They are. We cannot use them, thats why we export them. Ken green, let me go to you. Yes. This pipeline will get all kinds of gas, all kinds of oil to be refined to the east coast and west coast, which we have learned from the hurricane emergency, we desperately need. And ken, one other point, the head of the aflcio building trades, has been on here, 220,000 immediate jobs and as much as 500,000 indirect jobs. Ken green, how can we not do the Keystone Pipeline<\/a> . It is a nobrainer. Canada is our ally. You dont blockade allies and trading partners when they are trying to get goods into your market when they both benefit from the trade in the market. We have over 2 million miles of pipeline which are operated safely. We can certainly build another one to operate safely. This is the environmentalives trying to bottle up the oil of canadians and americans because of their concern of climate change. It is not about cost or export markets or any of that kind of thing. They dont want it say it is about climate change. Radical environmentalists that hate fossil fuel. Come on, tyson. Thats your real position. You hate fossil fuel. Larry, i didnt understand the, understanding the science, makes one a radical. The fact is, there is no question, concerns about the Keystone Pipeline<\/a> are all about climate change. The problem i have is when proponent of the Keystone Pipeline<\/a> claim erroneously that it is for Energy Security<\/a> in the United States<\/a> and for lower gas pricees. Thats false. Will the Keystone Pipeline<\/a> create jobs . Of course it will. I dont dispute facts. But i do dispute the lies that people say when it is going to reduce gas prices. There is nothing about this pipeline project that is about lowering gas prices for american consumers. Thats a bit after red herring. People arent making lower gas during the they sure were oilers to refiners for gasoline. Ken green, i want to ask you about this export issue. My impression is that it is certain distoluates exported. We need it to the gulf to be ex ported to the east and west coast. What is your take on that . That is my understanding as well. And the refineries will also capture profit for their investors and their workers, giving them more do t. O. Do. It is not as if they work for free for the canadians. They will also profit, as well as those building the pipeline. Canada is a share of the world Greenhouse Gas<\/a> emissions. The whole country could shut down and it wouldnt change the climate trajectory of the future. China and india reafarmed they wont accept Greenhouse Gas<\/a> control. Greenhouse gas is from canada as a threat to the world is really just bogus. We are the least last one ken grown, real fast. What about north American Energy<\/a> independence . This changes our security position relative to the middle east. It has to be a good thing. I give you 20 seconds. Yeah. Global trade and energy is good but we are already on the way to north American Energy<\/a> independence between our own growth in oil and gas and ka kan das export to the United States<\/a>. We can easily be there in 20 years. At which point north america would be an Energy Powerhouse<\/a> exporting energy to around the world to everybodys benefit. Thank you, gentlemen. Tyson and ken. Have a good thanksgiving. This slast thing you want it see on one of the busiest travel days of the year. Union workers protesting outside l. A. International airport. Are you kidding me . One of the best parts of this story is no one even invited them. The very people they think they are representing dont want to be represented by them. And im going to ask the president of that union what is up with her thinking. Next on kudlow. I dont spend money on gasoline. I am probably going to the gas station about once a month. Last time i was at a gas station was about. I would say. Two months ago. I very rarely put gas in my chevy volt. I go to the gas station such a small amount that i forget how to put gas in my car. [ male announcer ] and its not just these owners giving the volt high praise. Volt received the j. D. Power and associates appeal award two years in a row. Governor of getting it done. You know how to dance. With a deadline. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. This is awesome. [ male announcer ] yes, it is, business pro. Yes, it is. Go national. Go like a pro. Riding the dog like its a small horse is frowned upon in this establishment luckily though, ya know, i conceal this bad boy underneath my blanket just so i can get on etrade. Check my investment portfolio, research stocks. Wait, why are you taking. Oh, i see. Solitary. Just a man and his thoughts. And a smartphone. With an etrade app. Nobody knows. [ male announcer ] etrade. Investing unleashed. Does this sound familiar . Mortgage loans going to people with bad can credit . Buying a home with just 3 down . Sounds like what got us into the housing mess to begin with, right . Still happening. Still happening all thanks to the government and now the government will have to bailout yet another housing agency. Thats what it looks like. Here now is steve maister managing partner at maister selig and fine. Welcome back, steve. This is the federal housing administration, right . Fha. They are short, you tell me, they are short 56 billion in reserves. Thats to me, puts them on the edge. Bankruptcy. Thats right. Theres no question as taxpayer bailout coming here. Look, the government, Obama Administration<\/a> just loves sub prime mortgages. This whole enterprise, this fha, is really a garner to of sub prime mortgages and taxpayers are going to pay big time larry. As though we havent learned anything from 140 billion bailout of fanny and freddy. Correct me if im wrong, but 40 , roughly, 40 of the loans that they insured just under the last year or two, have been sub prime loans. They havent learned a thing. They havent learned a thing. Or maybe they just dont care. But yes, youre absolutely right. 40 sub prime loans. Moreover what it is, is people who have gone through one, sometimes two foreclosures, bankruptcies and have razor thin down payments. For some reason, that i cannot possibly fathom, there is this push to quote unquote demock ra advertise credit. What is wrong with renting . Why would someone through two foreclosures be put into a new loan. And what is it going to do for that person . Look what happened to minorities with the housing crash. Is the fha deliberately trying to pick up the slack from what is not being done, thankfully any more, by fannie and freddy . Thats what i want to know. To me, thats what these guys are doing. I think thats absolutely so, larry. And i think what happened is the dirty little secret is the push that began in the clinton era with janet reno and Agency Task Force<\/a> to force banks into making sub prime loans, thats not happening any more. Banks are requiring real down payments. Now they are just insuring the loans through the outright federal agency, fha. It just goes to prove that they love, just love the sub prime loans and they are making banks pay up, larry. They squeezed a billion dollars out of major banks to help fund the fhas bankruptcy. I love this. Really, alleged clerical errors more than anything else. And they are trying to shake them down to finance the fha mess. Ive owned a bunch of properties down through the years. Homes, you know, houses, ive owned apartments and what not. Ive always had to pay, at least 20 . And my last question to you is, why dont we restore 20 down payment . Larry, when i was growing up, as a young man, thats what it was. You went it a bank, it was sleepy old time underwriting. 20 down. You had to have enough income and little enough other debts to make a very simple underwriting. Thats why housing never went down for 50 years. But when you push sub prime loans and the Government Forces<\/a> them to be made, now through a direct agency, the government, of course you will have an asset bubble. Maybe another housing bubble. I just dont know get it. I dont know why were not just returning to that and leaving well enough alone. It worked for half century. You betcha. You betcha, steve maister. Thanks for helping us tonight. We switch gears. Seiu gears are snarling traffic outside lax. One of the busiest travel days of the year. They are claiming to worepresen workers that dont want anything to do with the seiu. What do they hope to achieve, aside from contributing to major traffic delays . Here is the International President<\/a> of that union, seiu. Mary kay henry. Ms. Henry, with all due respect, as i read every single news news article about your operation, you are not only tying up traffic on one of the busiest days of the year regarding airplanes, but you claim to represent employees that dont want anything to do with your union. Whats up with that . I was proud to stand for jose la bara who worked for stave guard for years today at lax airport. He was ginned by hundreds of fellow coworkers at the airport because we are fighting for good jobs at lax. Thats not what they are saying. Thats not what the company is saying. The company is saying, Frederick Mcneil<\/a> says you bring if outsiders to block traffic and that people in their union have been trying to get out. They are trying to get out of the seiu. Youre helping people that dont want your help and it sounds, ms. Henry, like you are bringing outside agitators. People that dont work at lax, in order to do it. Thats what it sounds like. No, larry. We are standing up for rebuilding the american middle class. Ed with workers that were asked to sign a paper, getting rid of their union, if they received a 5 increase. And the employer withdrew recognition and took away healthcare benefits. We think that is just plain wrong tp it is illegal. We have been trying for a year to unsettle it. The company is unwilling. We went to city hall, the bargaining table. We took this dramatic action today because workers are very concerned about their loved ones that are trying to get healthcare coverage. They keep saying they want out of your union and they can get Health Benefits<\/a> on their own or, by the way, i suppose go into obama care. Which i know you support. Across the country, workers need a raise they dont want your help. Ms. Henry, you know what you are doing to middle class people . Just making their thanksgiving rotten. Larry, you are repeating an inaccurate statement from the employer. Over 50 of these workers support their union. They want good jobs with wages that they can feed their families on. We want to restore middle class jobs at lax. Then why dont you do it in an orderly way . Weve been trying for over a year to do that. Instead of disrupting a big airport like lax on thanksgiving. There are ways to we tried even though they disagree with you, they say they dont want your support. We have been doing that for a year, larry, and the executive director of this airport, anna marie lindsay, could have handled this situation by stepping in and requiring aviation safeguard to live by the living Wage Ordinance<\/a> that guarantees living wage and healthcare for every worker in l. A. Thats what we think needs to happen for airport workers all across the country. Ohare workers demonstrated. Jfk workers were demonstrating today. Take them to court pch youron union is going to be so unpopular as a result of tying up traffic. We will stay in the streets until we get justice for airport workers. I wish you a happy thanksgiving, even though i absolutely totally disagree with what you are doing. Thats it for tonights show. Thanks for watching. Happy thanksgiving. [ male announcer ] at scottrade, we believe the more you know, the better you trade. So we have ongoing webinars and interactive learning, plus, inbranch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade, seven dollar trades are just the start. Our teams have the information you want when you need it. Its another reason more investors are saying. [ all ] im with scottrade. Its another reason more investors are saying. If we want to improve our schools. What should we invest in . Maybe New Buildings<\/a> . What about updated equipment . They can help, but recent research shows. Nothing transforms schools like investing in advanced teacher education. Lets build a strong foundation. Lets invest in our teachers so they can inspire our students. Lets solve this. Try running four. Ning a restaurant is hard, fortunately weve got ink. It gives us 5x the rewards on our internet, phone charges and cable, plus at Office Supply<\/a> stores. Rewards we put right back into our business. This is the only thing weve ever wanted to do and ink helps us do it. Make your mark with ink from chase","publisher":{"@type":"Organization","name":"archive.org","logo":{"@type":"ImageObject","width":"800","height":"600","url":"\/\/ia601609.us.archive.org\/33\/items\/CNBC_20121122_000000_The_Kudlow_Report\/CNBC_20121122_000000_The_Kudlow_Report.thumbs\/CNBC_20121122_000000_The_Kudlow_Report_000001.jpg"}},"autauthor":{"@type":"Organization"},"author":{"sameAs":"archive.org","name":"archive.org"}}],"coverageEndTime":"20240620T12:35:10+00:00"}