Get ready to rumble, america. The First Political battle of 2013 is on. It starts in washington. Where today president obama for some reason went ahead with his decision to nominate chuck hagel for secretary of defense. Hagels a republican, but hes been accused of antisemitism toward israel and hes also soft on iran. And epa regulatory menace lisa jackson finally resigning because president obama apparently will approve the Keystone Pipeline. Thats the latest from a number of sources. And i say good riddance to her, but good for the Keystone Pipeline. Here is a disgraceful story tonight. New reports that welfare cash is being spent on strippers, booze, and important shows. Whatever happened to work requirements. And the battle everyones waiting for in miami tonight, notre dame looks to win the National Championship over obama. But in one way, the fighting irish may have already won. And last but not least, im going to tell you why i think a debt ceiling and Government Shutdown, bad idea. Im going to show you a better way. The kudlow report begins right now. First up, amid allegations of antisemitism and antiisrael sentiments, president obama nonetheless nominated former republican senator chuck hagel for the position of secretary of defense. That today, also reportedly soft on iranian sanctions. So is there any truth to these charges . Here to discuss eliot abrams, a senior fellow at the council on foreign relations. Eliot, happy new year and as always, welcome back. Are these charges is there merit to these charges . First of all, antisemitism. Look, i cant read his mind. I can only go by the Public Record. The Public Record suggests hes got a problem with jews, frankly. Theres reports from the members of the tiny nebraska Jewish Community that they never had a politician in nebraska who was so indifferent, their word, indifferent to the community. Who took no interest, who was completely nonresponsive to any requests they made. Theres a beginning. Then you have these quotations of his. The jews this and the jews that. There was a story when he was president of uso trying to close the uso site in a port that a lot of u. S. Navy ships were visiting. A Jewish Organization came to argue with him it should be kept open. He said, apparently, well, let the jews pay for it. Theres a pattern here. Any one of these things taken alone isnt much, but you start putting this together. He does an interview a couple of years ago where he says im the United States senator, i took an oath to our constitution, not to israel. Well, who was he saying that to . Thats an incredible slap, eliot. Yeah. I read with great interest your rendition of the story. That was an usa operation working very, very well with an israeli leader and israeli general or Something Like that which he closed down. But this thing what you just said now, can you repeat that . Because nobody talks like that nowadays. Nobody talks like that. Right. This was an interview he did a couple of years ago where he said this is the one where he used the term jewish lobby. But he also said, you know, im a United States senator, im not an israeli senator and i took an oath to pour constitution. One of the problems if the senate says okay to this is what its saying okay to really is a new level of antijewish rhetoric. This is something we had driven out of public life. You can disagree about policy with respect to israel, but thats a challenge of dual loyalty. And from what i gather, senators like Chuck Schumer and menendez and other democrats, eliot may vote against them. Well, theyre certainly holding up to see what he says a the the hearings. One of the questions well have to decide at the hearings or they will have to decide when they vote. If he recants on all of this, can you take it seriously . Its like the statement you made about, you know, sort of turned around on gay rights. He had 15 years to turn around, he does it the week when hes up for secretary of defense. So you have to ask yourself, if he now says, oh, i was misquoted and i didnt do this and i didnt mean that and im sorry if anyone took offense, how seriously do you take that those kind of recantations a the the last minute. And one last one, eliot abrams. He voted against or he was against iranian sanctions when he was in the senate. What does that tell you about how hes going to deal with iran now . It sounds like a soft position to me. He voted against the iran libya sanctions act in 2001. I think the real problem here is that the message to iran is you dont have to make any deals, you dont have to make any compromises because there wont be any military pressure. The president used a lot of tough language during the campaign. Im not for containment. He said im for prevention. All options are on the table. But hagel has said that a military option is not viable. Never mind not wise, not viable. So i think this completely undercuts any notion that iran is under pressure. It oddly enough makes it probably more likely that there will in the end be a failure of negotiations and a military attack. But he doesnt seem to support the president s policy, at least in all the speeches hagel has made, he has been very soft on iran. All right. Well leave it there. Former secretary of state National Security council eliot abrams, thank you very much. All right. Now to react to ambassador abrams, lets bring in our distinguished panel tonight. We welcome back general wesly clark and a former president ial candidate, cnbc contributor tony fratto, former bush 42 White House Deputy press secretary. Welcome back. First of all, whats your reaction to eliot abrams charge, in particular, the antisemitism and the antiisrael . You know, i just dont see that. Ive been around senator hagel when i was on active duty. We talked about a number of National Security issues. Hes been there presiding and on the panel when ive testified. Ive had informal reactions with him. I never sensed any of that. I sense a guy who has paid the price for serving in uniform. He served his country, knows what its like to be wounded. Knows what its like to have members of your family in the service and hes had a generation to reflect on the experiences of vietnam. I think hes going to be a guy who knows how to use force decisively and effectively and avoids ineffective and indecisive commitments of u. S. Forces. Well, certainly no one including myself doubts his valor as a soldier. Thats not the issue. But tony fratto, it sounds like hes also soft on iran. He voted against iranian sanctions, that in turn makes me think or wonder or fear that, in fact, he would not put war on the table if iran got nuclear weapons. Your take . Yeah, i think thats really the bigger question, larry. A lot of questions about some of the things that hagel has said over the course of his career i dont know him wouldnt presume to make a comment on what his views are on the Jewish Community. He has well earned a reputation for saying a lot of things to get attention. Some of those things purely critical of his own party. Which is one of the ways to unlock, you know, the key to unlock the way to become a media darling in washington is to be critical of your own party. His views on purely defense issues are really the questions that matter most and shouldnt matter most right now. Questions on preparation and force towards iran are really the critical questions. And the critical questions for the Armed Services committee to get out when he comes up for his hearings. Some people are speculating. Of course, obama likes them, thats one part. Obama likes them, they serve in the senate together. I have no problem with that. Others are speculating that mr. Hagels going to the Defense Department and take a budget axe into the budget. A staunch defender of the budget. Thinks the cuts are way too much. Is that why hagels going in there . Hes going to slam, slash and knock down the Defense Budget . No, i think the opposites the case. I think you cant have anybody thats going to be more sympathetic to the men and women in uniform and the defense needs of the country than chuck hagel, hes worn the uniform, hes been there, hes going to be an effective defender. I would say this on the sanctions issue, though, as ive discussed with his people, he never had an objection of multilateral sanctions. But hes had an objection to unilateral u. S. Sanctions because he doesnt think theyre effective. And he wanted the administration to not just take a political position and say okay were sanctioning, but actually show the International Leadership in the International Community to bring collective sanctions. And thats precisely what the Obama Administration has done. Quite effectively. The problem with that, general, is it was a bilateral sanctions put us in a position to be able to get unilateral sanctions. A lot of sanctions started as bilateral sanctions led by the United States, work that the u. S. Treasury department did. And to extend those to countries and firms operating in other countries. This is theion with hagels actually his question of judgment on some of these things. Do i think, you know, is hagel, youre not going to hear me calling him soft on iran or soft on, you know, questions regarding israel. Look at very specific issues that he has had to weigh in on and hes just been wrong on some very big questions, including the surge in afghanistan and the surge in iraq. I think that when you look at the sanctions, for example, i dont think its a problem he voted toward unilateral u. S. Sanctions. Sanctions dont have to start out as unilateral. Thats a decision of the administration and a function of their leadership. The Bush Administration didnt have the leadership in the international and didnt put the effort into it. We actually did. That was actually how excuse me. Can i just sorry, general. I want to finish this part. I think its very important that you have a secretary of defense come who appreciates the need to get our allies into the boat with us. Thats what chuck hagel appreciates. But thats exactly the point im making, though. Bilateral sanctions was a way to get to multilateral sanctions, the only way that going to get the europeans to eventually go along. I have to leave it there. My point is i dont think that is the only way. And i think when you look at the way the United States is handling itself now, you could say theres not an only way to do this. And thats the point chuck hagel was trying to make. Theres not an only way. That doesnt mean its the only way to do it. Ive got to leave it there. I think there are so many questions that will come out in these hearings about his positions relative to iran, relative to israel, and relative to budget cutting in the department of defense which i think is going to be a tough one. Many thanks, appreciate. As always, tony, please hang tight, well be seeing you more of you later this hour. Now, lets switch gears and turn to the stock market. Coming off last fridays fiveyear high, the dow and s p dropped a little bit today. But heres a thought experiment. Follow me on this. Take washington out of the equation, just take it out, i think youll see the economy and the market Getting Better not worse. Here now chief equity strategist at ubs. They will make a deal on sequestration. They will not default on u. S. Bonds. Its that simple. I said weeks and weeks ago they would extend the tax cuts and they have. If you take that out, is it the economy looking a little better at the margins, not worse . Its looking a little better if you think a 2 economy is a good economy. So the real question here and i feel like im going to sound like larry kudlow for a second, wheng we get through the debt ceiling debate, is there something that feels like a progrowth agenda . Are we going to have the issues under control . Is it enough to get businesses confident in the future . And i think when we get through this, well be left with a 2 economy, 4 earnings growth, and its going to be okay, but uninspiring. 4 , 5 earnings growth, plus 2 for dividends, thats not a bad year for the s p. Itll get you to 1,550 . We are in a mid single digit equities environment. Its not horrible as long as youre not expecting something thats, you know, thats 10 . Look at some of these releases. Im very impressed with the isms for services. Very impressed with capital goods, factory order spending, factories isms, even the employment report showed good hours worked in income. Are we underestimating the economy . Forget washington, put that aside. Are you underestimating the economy . Itll be 3 instead of 2 . It could be. Lets put it this way. If you look, for example, at the cbo budget numbers, they are looking for this thing to get to 3 , 4 , 5 , over the next two or three years, i think those are silly numbers. Could we be in the high twos . Not without a question. Especially if you can unlock this lack of Business Confidence thats out there, that to me is the most important. I love the fact that gold is falling almost on a daily basis. Because when gold falls, people are investing in more productive assets. Reminds me of the 80s and 90s. You know, youre stiealing m script on gold. Its a nonproductive use of their capital. Thats a really bad thing for the economy. Its a great sign. Look at what corporations doing. Theyre not doing mergers, not investing in the infrastructure, theyre not doing theyre not paying out, you know, buy backs are actually stalling out and would be midcycle levels. If you unleash that, thats your upside. There is upside here, but and, and, and okay. I would say maybe we might move in washington down the road. Im bringing back my own experience to Corporate Tax reform that will lower business tax rates for large and small businesses. Is that possible . Its possible, and if you know, listen, thats what you really need. If you can get youre talking about the things that could unleash this. Things which create confidence in the future. Lowering Corporate Tax rates which get capital flow into the United States, thats a huge positive. If you unlock overseas cash, thats a positive. But you need to convince businesses theres something to look forward to and spend the money. Very, very good point. Very, very good point. Jonathan, thank you very much. We had a good thought experiment. Now, does this look like a place we should be spending our tax money . A new report says welfare recipients in new york routinely use atms at strip clubs, bars, even Liquor Stores and spend the money right on the premises. We are goinging to look at this disgraceful story next up. And, yep, notre dame, the home of touchdown jesus, but did you also know its the home for successful mix of academic and athletic folks . The fighting irish about to play for the National Championship for the First Time Since 1988 against a very good alabama team. And dont forget, folks, free market capitalism is the best path to prosperity. Notre dame and alabama, im kudlow, well be right back. So if you have a flat tire, dead battery, need a tow or lock your keys in the car, geicos emergency roadside assistance is there 24 7. Oh dear, i got a flat tire. Hmmm. Uh. Yeah, can you find a take where its a bit more dramatic on that last line, yeah . Yeah i got it right here. Someone help me i have a flat tire well its good. Good for me. What do you think . Geico. Fifteen minutes could save you fifteen percent or more on car insurance. 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. All right. Here is a disgraceful story, the New York Post reports today that welfare recipients used Electronic Bank transfer cards to take out cash for strip clubs, Liquor Stores and xrated shops. This is a disgrace. Here now is bestselling author, syndicated radio talk show host larry elder, author of dear father, dear son. I thought welfare was for safety nets with strict work requirements. Whats going on here . Well, larry, put me firmly on the side of antiusing your Welfare Benefits for strip clubs. But the real problem here is the 800pound elephant in the room. And that is the poorly performing economy. Why are so many people on welfare . George w. Bushs last year, right now were talking about 100 billion on food stamps. And the offenders of obama remind me of the losing coach who blame, first of all, the team he inherited and then blames injuries, then the media, then the schedule. Sooner or later, you are what your record says you are. Were entering the fourth year of this socalled economic recovery, the fifth year of his presidency and we are underperforming. Thats what the issue is, larry. Thats bad enough. And i basically agree with that, okay. Underperforming economy. But the perversion of this welfare program, it mean years ago we had welfare reform with strict work requirements. Now, as the New York Post is reporting, the money is going into liquor and strip clubs. And a lot of people, theres a lot of rumors that food stamps are being exchanged for cash and people are abusing that program just as much. This is corruption on a grand government dependency scale, is it not . Well, it certainly is. And the welfare reform act of 1996 was spectacularly successful. And thats really the scandal here. And again,